An article in the Financial Times by Tracy Alloway gives yet another sighting that bond investors are getting a bit frantic in their hunt for yield. The piece has the eyepopping title, Yield-hungry investors snap up US homeless bond. It uses recent deals in the CMBS (commercial mortgage backed securities) market as a proxy for bond investors’ QE-driven hunt for more return.
Read more...The Fed is explicitly relying on the wealth effect to stimulate spending. It’s theory is that if asset values rise, people will feel richer and spend more. But that’s not exactly how this movie is playing out.
Read more...I had fun on this interview…
Read more...George Soros has caused a bit of a frisson by calling China the greatest risk to the global economy. The Chinese shadow banks are the trouble spot to watch.
Read more...Martin Scorsese’s film about a boiler-room stockbroker who managed to reach the major leagues of financial services industry swindling, The Wolf of Wall Street, has garnered both strong box office sales and heated denunciations.
Read more...Yves here. We described the funding mismatch with Chinese wealth management products during the first liquidity crunch earlier in the year, but given that most readers aren’t familiar with these structures, it’s good to have another summary as to how they work and more discussion of why they pose a risk to the Chinese economy. They are troublingly similar to structured investment vehicles, which were one of the detonators of the credit crisis in the US and UK.
Read more...Clarifying what believing in risk versus uncertainty means for how you view the role of interest rates.
Read more...Yves here. I thought this essay on money was useful in and of itself, and it also contains a useful primer on the views of major schools of thought in orthodox economics.
Read more...Yves here. As Wolf describes, in our brave new work of super-low interest rates, the 10 year Treasury breaching 3% was regarded with fear and loathing by the officialdom. Now with the Fed’s reassurances that the Fed funds rate will remain at just about zero for the foreseeable future, the stock market has popped the Champagne. But will the impact of the withdrawal of support for bond prices impact stocks sooner than the current rally would have you believe?
Read more...By George Bailey, who has worked in senior compliance roles at Big Firms You’ve Heard Of and is also a member of Occupy the SEC
The first few legs in the in the Volcker Rule repeal relay race are now under way.
Read more...I highly recommend this short interview by John Authers of the Financial Times with Amar Bhidé, a professor at Tufts, in which he argues that a proper reading of Friedrich Hayek would lead to considerable skepticism about whether most of the changes in finance over the last three decades actually represent progress.
Read more...Reader dSquib flagged a “bizarre” article by Mike Konczal in the New Republic titled, “Corporatism” is the Latest Hysterical Right-Wing Accusation: The secret history of a smear.” dSquib seemed quite perplexed that anyone would deem calling Obama a corporatist, which as we’ll demonstrate is patently true, a smear.
Read more...Nothing like being able to use something in the headlines to hide your real behavior. And even better if you can get a banking stalwart columnist to run PR for you.
Read more...An interview with Michael Hudson, a research professor of Economics at University of Missouri, Kansas City, and a research associate at the Levy Economics Institute of Bard College, on the Renegade Economists radio/podcast
Read more...If you are Jamie Dimon, a good deal is apparently never good enough.
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