I have written at length both on Youngresearch.com and in Young Research’s Global Investment Strategy about why another round of money printing by the Fed is a mistake. Not only is the Fed debasing the dollar, inflating asset prices, encouraging a misallocation of capital, punishing responsible savers, and risking much higher future inflation, but ultraloose monetary policy erodes the competitiveness of U.S. business. If a business requires a depressed U.S. dollar and zero interest rates to remain viable, it probably shouldn’t be in business to start with. Bernanke & Co. have long … [Read more...]
Municipal Bonds Plummeting
Muni bonds are cratering. The iShares National Municipal Fund is down more than 5% since the beginning of November. Rising long-term interest rates, a flood of new muni issuance, and lingering state and local budget issues are all contributing to the violent move down in muni bond prices. … [Read more...]
Senator Bob Corker on the Fed
This is a giant leap in the right direction. The Fed’s dual mandate is harmful to the long-run stability of the U.S. economy. Monetary policy does not create sustainable employment. While I would take Senator Corker’s proposal one step further and take the Fed out of the business of managing the economy, this is a step in the right direction. Urge your Senators and Representatives to get on board with Senator Corker’s proposal to scale back the Fed. … [Read more...]
Sky-High Silver
Silver prices have gone parabolic. The metal is up almost 60% since August. If history is any guide, this isn’t going to end well. … [Read more...]
Selected Quotes from the Myth of the Rational Market
I recently finished reading The Myth of the Rational Market by Justin Fox. The book is a chronological history of modern economic and financial theory. It’s lighter reading than it sounds. The book is a good read for those of you with a deep interest in finance or economics. I read the book on my iPad using Amazon’s Kindle app. This was the first book I read from cover to cover electronically. Reading for long periods of time on the iPad takes some getting used to, but it does have its advantages. One of benefits of the Kindle app is that all of the items you highlight and notes you make … [Read more...]
Wilmington Trust “Take-under”
The $10 billion, Delaware-based Wilmington Trust was acquired this week in a “take-under” by M&T bank. The take-under was announced the same day that Wilmington reported a massive unexpected loss due to souring construction loans. The regional banking sector continues to struggle with loan losses. … [Read more...]
Featured Video: Debate on Fed’s $600 billion Money Printing Crusade
After watching this video try to you guess which of these Bloomberg guests worked for a major Investment Bank for 30 years? … [Read more...]
QE 2 is Risky
QE2 is Risky and Should be Limited - Martin Feldstein, Financial Times “The Federal Reserve’s proposed policy of quantitative easing is a dangerous gamble with only a small potential upside benefit and substantial risks of creating asset bubbles that could destabilise the global economy. Although the US economy is weak and the outlook uncertain, QE is not the right remedy…Like all bubbles, these exaggerated increases can rapidly reverse when interest rates return to normal levels. The greatest danger will then be to leveraged investors, including individuals who bought these assets with … [Read more...]
Bernanke Outsources Monetary Policy to Wall Street
Fed Asks Dealers to Estimate Size, Impact of Debt Purchases - Rebecca Christie and Craig Torres, Bloomberg You can’t make this stuff up. The Fed has asked bond dealers to weigh in on their expectations of quantitative easing 2.0 (a.k.a. more money printing). The Fed is trying to gauge market expectations to avoid a potential downside surprise. This is idiotic. The Street knows what the Fed is up to and they are the primary beneficiaries of more money printing. Do you think Goldman is going to tell the Fed that they only expect a few hundred billion in money printing? Not a chance, bond … [Read more...]
Featured Video: CNBC Interview with UPS CEO Scott Davis
UPS has its finger on the pulse of the U.S. economy. The company moves 6% of U.S. GDP each day. UPS’s quarterly earnings reports and management comments offer important anecdotal evidence on the strength of the U.S. economy. UPS CEO Scott Davis is looking for 2% to 2.5% GDP growth next year and a 2-3% increase in holiday sales this year. … [Read more...]
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