Posts Tagged ‘Monetary Policy’
No Man’s Land
an anomalous, ambiguous, or indefinite area especially of operation, application, or jurisdiction definition two: financial market direction over the 2015-2016 period The meandering, low-volatility, sine wave oscillations of the tape continue. How did markets arrive at a point where a 3% pull-back is petrifying, and a 5% pull-back feels like a crash? The Brexit pull-back…
Read MoreMidsummer Issues Persist; Divergent Global Central Bank Actions Create Challenges
The market moves fast. Thankfully, in the rest of the world, trends of all kinds, generally move at a measured pace. The market overreacts to events and day-to-day happenings based on crowd think and behavioral issues. A change in trend will often start with a subtle data point or indicator, which in hindsight, ignites a…
Read MoreStanley Fischer’s Jackson Hole Speech: Fed Determined to Lift-Off
Stanley Fischer delivered a critical speech this weekend at the Jackson Hole, Economic Symposium, outlining the Fed’s forward looking view on inflation and the potential for a lessening of factors that dampen inflation. This speech signals the Fed is staying the course and determined for rate hike lift-off on the advertised time-table. CJF interprets this…
Read MorePhilippine Central Bank – Another Emerging Market Set to Ease Monetary Policy in the First Quarter
The Philippines is a very large nation that is off the radar of most mainstream economic analysis. The country has a population of 93 million, and the economy has enormous potential but exhibits inconsistent growth. The economy of the Philippines has a decently developed electronics/semiconductor industry and a large export industry for fruits, palm oil,…
Read MoreInvesting Ahead of a European Recession
Investing ahead of a recession is like a trip to the dentist for a filling when the Novocain isn’t quite right. You know you are in for some pain, but it’s unclear just how much, and how long it will last. Europe is accepting the German path forward, which will at a minimum, lead to…
Read MoreECB Cuts Rates 25 Basis Points to 1% – Hawkish Press Conference Q&A Squashes Hopes of Sovereign Debt Purchases in Larger Amounts
The ECB issued a terse press release detailing an interest rate cut for the main refinancing operations of the Eurosystem (from 1.25% to 1.0%) commencing on December 14th. In addition, the ECB cut rates on the marginal lending facility and deposit facility by 25 basis points. This move was widely expected and had a limited…
Read MoreChina Starts Monetary Policy Easing Cycle & Rest of World Provides Additional Liquidity
Overnight, financial market sentiment turned around pretty dramatically. The China A-Share market sold-off by 3.3% and approached the vicinity of recent lows. Fears started to mount that Chinese central bankers were going to be slow to ease monetary policy based on continued inflation concerns. After Asian markets closed, the People’s Bank of China announced that…
Read MoreQue Lastima – Spain in a Vice as Interest Rates and Unemployment Soar
I’ve been writing about the impossibility of the ECB running appropriate monetary policy for 17 different nations. The dilemma couldn’t be more evident when contrasting the economy of Spain with the economy of Germany. Spain actually has less sovereign debt relative to GDP than does Germany. The problem for Spain isn’t the level of debt…
Read MoreChina’s Trade Balance is Adjusting – the Largest Imbalance in the World is no Longer Growing
Markets in China rallied to start the week. Part of the rally resulted from “catch up” to US markets which closed strongly. But part of the rally was based on positive economic comments coming from Chinese officials. China’s President Hu Jintao pledged to focus on building imports which would boost global economic growth. IMF Deputy…
Read MoreEurope Must Decide Its Future – Self Induced Financial Crisis Has Led Europe to the Brink
After Wednesday’s market action around the world, it’s a good time for a big picture assessment on the state of the financial markets. The attitude out of Europe has pendulated between nonchalance and vitriolic attacks among the EU-17. Italian sovereign rates spiraling above 7% have brought the eleventh hour upon the region. Escalation of the…
Read MoreChinese Inflation Turning Down – More Confirmation on Inflection Point
Overnight, China released inflation data for October, which came down as expected and declined meaningfully from the previous month. Chinese consumer inflation, which includes food and energy prices, rose 6.1% in September, and 5.5% in October. This data shouldn’t be a complete surprise because China is on a tightening campaign with higher interest rates, lower…
Read MoreMagnifico! – Getting to Know Mario Draghi & Analysis of the ECB Monetary Policy Press Conference
The global equity markets have been held hostage by fears of a crisis since the summer. Taking another step back; crisis fears, macro, and policy responses have really been driving all financial markets since the summer of 2008. To be clear, the economy always has a meaningful impact on the investing environment, but the recent…
Read MoreAnalysis of the Fed Minutes – Dovish Tone Remains
The Fed minutes released today at 2:00pm didn’t provide anything that was too much of a surprise. The general impression I felt after reading the 12 pages was that the Fed remains exceptionally dovish. Economic growth, while not rolling-over, remains disappointing, so the Fed is looking to remain accommodative. Inflation was discussed in dovish terms.…
Read MoreChina PMI – No Evidence of a Hard Landing
China’s official PMI was released over the weekend (after financial markets closed on Friday) and the September data point came in slightly higher than last month and slightly higher than expected. The total manufacturing PMI index came in a 51.2 which is the strongest month of the past 4-months. As important as the slight uptick,…
Read MoreBen Bernanke’s Jackson Hole Speech: A Step In The Right Direction
I just read Ben Bernanke’s speech at Jackson Hole, and think it is one of the better speeches he has done in some time. I read some acknowledgement that there is little more the Fed can actually do to improve the US economy. This is of course true. Bernanke realizes he can only create an…
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