In its recent annual report, the Bank for International Settlements (BIS) slammed the world’s major (and minor) central banks for their profligate monetary policies since the days of the financial crisis. While the BIS doesn't go so far as to say intervention wasn't needed, it leaves readers of the annual report with the distinct impression that QE has gone on long enough. Here are some excerpts from the annual report that we found interesting. (Our emphasis added in bold). Two major interrelated trends have characterised the conduct of monetary policy over the past five years. First, policy … [Read more...]
Why You Should Beware Bond ETFs
Recent market volatility has been jarring for some investors. The volatility has whacked bond ETFs particularly hard. Last week bond ETFs sold off sharply and their prices diverged from their net asset values (NAVs). If one considers the characteristics of ETF investing, deviations from NAV should not happen. Especially hard hit last week were emerging market bonds, as evidenced by the iShares JPMorgan USD Emerging Markets Bond Fund (EMB). On Friday the discount of EMB shares to NAV was 1.93% (Chart 1). While that may not sound like much, in today’s low interest rate environment, that is … [Read more...]
Entrepreneurs from Developing Markets Lead the Field in Wealth Accumulation
In 1989 only 21% of the people on the Sunday Times Rich List had made their money themselves, the rest were heirs to great wealth. Now, in 2013 the Rich List has essentially flipped, with 80% of those on the list earning their fortunes themselves. A new study from Barclay’s says that globalization and technology have created a path for entrepreneurs to earn vast fortunes of the type that were once restricted to wealthy heirs. The outcome of these twin forces of globalisation and technology has been an explosion of entrepreneurship around the world and a decline in inheritance as a … [Read more...]
What We’re Reading 6-21-13
A roundup of articles we found interesting this week. The Young Won't Buy ObamaCare, Holman W. Jenkins, The Wall Street Journal Bernanke Rides the Bull, Review & Outlook, The Wall Street Journal Fitch says China credit bubble unprecedented in modern world history, Ambrose Evans-Pritchard, The Telegraph QE addiction may be hard to kick, Satyajit Das, Financial Times Second-quarter profit warnings target record, Matt Andrejczak, Market Watch Volcker: Fed Is Too Big for Its Britches, Gene Epstein, Barron’s Corporate Share Buybacks Often Disappoint Investors, S.L. Mintz, … [Read more...]
VIDEO: The Next Fed Chief: Who’s Best to Replace Bernanke?
Bloomberg -- Bloomberg Economics Editor Michael McKee handicaps candidates to replace Ben Bernanke when his time is done at the Federal Reserve. He speaks on Bloomberg Television's "Bloomberg Surveillance." … [Read more...]
VIDEO: Taper Anxiety Fuels Market’s Jitters
CNBC: Harvard University's Martin Feldstein discusses how the Fed's policy has created a "bubble" in the long-term bond market and investors have been losing money as the market has come to "adjust" to it. … [Read more...]
What We’re Reading 6-14-13
A roundup of articles we found interesting this week. Nigerian cook survives 2 days under sea in shipwreck air bubble, Joe Brock, The Globe and Mail Quantitative Quicksand, Alan Meltzer, Project Syndicate Can Bernanke Avoid a Meltdown in the Bond Market?, Jim O’Neill, Bloomberg Are Americans Saving Too Much or Too Little?, Matthew C. Klein, Bloomberg The Fed has turned markets upside down, David Rosenberg, Financial Times World has 10 years of shale oil, reports US, Gregory Meyer, Financial Times For Anyone Who Still Thinks Earnings Matter, Tyler Durden, … [Read more...]
United States vs. the World
During the collapse of 2008 and through the rebound of 2009 U.S. markets and foreign markets closely tracked one another. But toward the end of 2009, and more so ever since, the U.S. has diverged from world markets. While the rest of the world has developed a very flat look, the S&P 500 has reached new highs. Whether or not this is the effect of the Federal Reserve debasing the world’s reserve currency, it leaves a big question mark as to what to expect from second quarter earnings at U.S. multinationals. In 2011 (latest data available), 46.1% of S&P 500 sales came from outside … [Read more...]
The Emperor Has No Clothes: Markets Abandon the Fed
It would seem that the emperor has no clothes. In the last few weeks, markets have begun to act as though they no longer think the Fed’s strategy is credible. Same goes with the world’s other interventionist central banks. [expand title="Click here to read more."] The sole purpose of global central bank monetary policy in the last five years has been to keep rates low. The theory goes that low rates will encourage borrowing, which will encourage spending and that, in turn will strengthen the economy. The big problem? It hasn’t worked yet, and it appears that market participants may be … [Read more...]
What We’re Reading 6-7-13
A roundup of articles we found interesting this week. [expand title="Click here to read more."] Can the Fed Make Up Its Mind on QE?, Caroline Baum, Bloomberg Quant hedge funds hit by US bonds sell-off, Sam Jones, Financial Times Printing Out Barbies and Ford Cylinders, Clint Boulton, The Wall Street Journal Poll: What is the Primary Cause of Speculative Investment Bubbles?, David Larrabee, Enterprising Investor Fed's Fisher: We Cannot Live in Fear of 'Monetary Cocaine', CNBC How Teachers Unions Make The Best People Want To Quit Teaching, Josh Barro, Business Insider One … [Read more...]
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