Category Archives: Monetary Policy

15th November 2013 — No bubble here – Part 1

Guggenheim Partners’ “Macro View” is written by the firm’s Chief Investment Officer, Scott Minerd. It is an excellent market round-up and is rare in that it offers genuine insight into what guides the decision making of one of the most successful fund managers around. And it’s free to sign up to!

OK so now I’ve got the fawning praise out of the way (and no I haven’t received a PR commission to write this blog) I want to draw attention to Mr Minerd’s latest piece. Building on last week’s theme, that liquidity drowned equity markets could be about to experience a crescendo similar to 1999, this week he’s used the S&P500 Equity Risk Premium as a means of further demonstrating that stocks still have some way to go in their irresistible march higher.

 

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8th November 2013 — Who do you think you are kidding Mr Draghi?

OK, referencing little war time ditties probably isn’t the most politically correct thing to do when talking about the ECB – but it made me chuckle.

Yesterday’s utterly, utterly pointless decision by Europe’s central bank to lower interest rates by a whopping 0.25% to 0.25% smacks of desperation and has convinced me the fear-on trade is due an almighty come back. In the last month we’ve seen the Fed’s nerve fail catastrophically, Carney suggest the BoE isn’t yet done in its efforts to prop up the financial sector and the Bank of Japan carry on with its extraordinary printing operation.

 

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29th October 2013 — Fed monetary policy – building a modern Tower of Babel

The story of the Tower of Babel is one of the classic legends of humanity overreaching itself.

Recorded in the Book of Genesis, the Babel story tells of a time when all the people on Earth lived united and shared a common language. They gathered in modern day Baghdad (a.k.a. Babylon) to build a great city and tower to celebrate their superiority and advanced learning. God, however, took a different view of their achievements. He came down from the tower, scattered the people across the face of the earth and introduced different languages, to confound future attempts at such hubris. Some non-Biblical versions of this story have God destroying the Tower of Babel as a punishment.

Whether or not you believe the story of the Tower of Babel, ancient insight into the human condition recognised the dangers our species can pose to itself when it becomes too assured in its ability to control all that it is surrounded by.

Sadly this lesson appears lost on modern central planners.

 

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23rd September 2013 — The MIDAS Touch

King Midas’ legendary ‘curse’ was that all he touched turned to gold. If only my trading fortunes were blessed with such ill (good) luck! Today, rather than a Midas touch, I find myself faced with a MIDAS test.

OK, I am sorry, enough of the terrible puns!

Immediately before the FOMC bottled making a decision (which in hindsight wasn’t much of a shock I suppose), I released this piece, which analysed the gold price in the context of the MIDAS method. So far this summer, MIDAS has made some fantastic calls in various commodity markets (copper, natural gas, silver and gold). During this time, experienced users of MIDAS will have been able to get in and out of these markets, as crucial levels of support and resistance were confirmed and failed.

 

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19th September 2013 — Making sense of the Fed

So, hands up if you expected the Fed to do nothing?

Are there one or two hands at the back there?

No, I thought not.

Last night, there was a valuable lesson for all of us. No matter how strong a consensus is, it can often still be wrong. Judging by the extreme moves across the board, it looks like there is a frantic amount of repositioning now happening. I am still long gold (and pretty delighted about that), but I’ve missed the boat on stocks (which I’m less happy about).

 

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