Post Tagged with: "prediction"

The wisdom of crowds and government bond markets

The wisdom of crowds and government bond markets






When you look at how markets are positioned, it’s clear that a lot of people see continued low growth for years to come – a veritable Japanification of the US economy. I hope this is one of those times that markets are wrong. But I am not willing to bet on the hope, just the opposite.

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On the Fed’s pause due to dual-barrelled monetary tightening

On the Fed’s pause due to dual-barrelled monetary tightening






Fed Governor Jerome Powell recommended a June hike and 2017 balance sheet reductions, in one of the last public speeches by a Fed official before the June FOMC meeting. When the Fed follows Powell’s game plan, we will be in the unchartered waters of dual-barrelled tightening, with the attendant risks that entails. Some comments below






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Markets actually aren’t freaking out about Trump

Markets actually aren’t freaking out about Trump






We are seeing decent selling in today’s US equity markets, with the VIX up some 25%. And most people are pointing to the Trump scandals. But this is only one day. What is happening with Trump – while negative – will not change the arc of the US economy and markets.






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Hammond’s ‘whatever it takes’ strategy for a hard Brexit






On Friday, I wrote why, unlike Bank of England Governor Mark Carney, I believe the economic threat of Brexit to the British economy is now higher. The gist of my remarks was that an actual trigger of Article 50 under hard Brexit circumstances is when we should expect any economic impact from diminished consumption and investment. Some brief comments below






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Why the Brexit risk is now higher, not lower






When the Brexit vote first happened, I indicated that I didn’t see the huge risk to the UK that others did. In fact, I thought the initial tail risks were elsewhere, like the Italian banking system. The economic risks for the UK were always overstated because of monetary, fiscal and currency offsets. But now that a hard Brexit comes closer, the risks have increased, not decreased, as Mark Carney, the Bank of England Governor contends. Some thoughts below






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Black Swan Investing and the breakup of Europe






This isn’t going to be a thematic post on how to profit from Europe’s breakup, despite the sinister title. Instead, it’s a potpourri post – a mashup of different ideas I have right now and want to run by you to organize my thinking about them. I used to do this a lot more in the past – and I found it useful; I hope you did too. So for lack of a coherent theme, I chose the title above. Here goes.






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Upbeat about the near-term, dubious on the longer-term






This is a quick post about the US economy. To put it simply, I am upbeat about what the near-term holds for the US economy. I have lots of doubts about the longer term. But whereas I might have led with the doubts earlier in the year, as the year ends, I want to lead with the optimism.






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Re-calibrating our thinking about Brexit after MPC rate cut

Re-calibrating our thinking about Brexit after MPC rate cut






The Bank of England has cut interest rates and started a quantitative easing program that includes both government and corporate bonds. This approach was enough to send the pound Sterling down to $1.31 and 10-year gilt rates to a record low of 0.677%. While I reiterate my previous bullish views on Anglo-Saxon long rates, US dollar strength and on the UK […]

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The British political landscape after the EU referendum

The British political landscape after the EU referendum






This is going to be a quick post to update you on where I think things are headed now that we have the two final candidates for UK Prime Minister. My overall view continues to be that the base case is for a moderate negative economic, assuaged by currency, fiscal and monetary offsets, causing the UK to avoid recession but with longer-term hits to growth from trade frictions and a loss to jobs in the financial sector. The issues now are immigration, the timing of the invocation of Article 50 and the single market.






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Britain's Home Secretary Theresa May delivers her keynote address on the second day of the Conservative party annual conference in Manchester, northern England September 30, 2013.  REUTERS/Phil Noble (BRITAIN  - Tags: POLITICS SOCIETY) - RTR3FFSM

Why Britain might not leave the EU and the next Prime Minister could be female






This is a quick run through of the post-Brexit vote decision tree. The opportunities and constraints after the UK vote to leave the EU are now coming into view. It is clear that the UK is likely to leave the EU given not only statements by Prime Minister Cameron but also the Home Secretary Theresa May, both of whom campaigned for ‘Remain’. But it is also clear that the EU will not broker formal or informal discussions with the UK until the UK has invoked Article 50, which can only be done by an act of Parliament. Below, I want to run through some of the constraints in order to build a few scenarios that I see as possible now that we are a week into the post-Brexit era.






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The downside risks introduced by the UK Brexit referendum

The downside risks introduced by the UK Brexit referendum






The unexpected ‘Leave’ victory in the recent referendum on EU membership introduces considerable political risk by elevating tail risk scenarios to reasonable worst case status. However, in a global economy that is already slow and already lacks policy space, the referendum outcome also introduces economic and financial risk. Below I have some general thoughts on those risks, with the US dollar, Italian banks, and Japanese deflation foremost among them. At a later point, I hope to also go into some more detailed scenario handicapping.






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Why I’m on US recession watch despite 2% growth

Why I’m on US recession watch despite 2% growth






As I start this post, I am naming it “Why I’m on US recession watch despite 2% growth”. I don’t know if that name will stick when I publish this piece; nonetheless, that is the theme I am trying to get across. When I look at the economic data, it shows a near-term in the 2% growth range – stall speed or slightly below. But when I look at the same data for medium-term clues, I still see reasons to be concerned, and, therefore, I continue to be on recession watch. Finally, I am not at all sure the Fed sees the picture as I do. December was a policy mistake. And I can’t rule out others going forward.






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