Reflections

By | 2017-10-18T07:35:39+00:00 October 18th, 2017|Global Market Update|

What have we learned from the last 10 years? S&P 500, log scale. Source: Bloomberg In October 2007 the stock market was reaching new highs – levels it did not reach again for another six years. We had begun to hear troubling news about foreign hedge funds and sub-prime mortgages, but those noises seemed like distant thunder on a summer day: of concern to those caught in the downpour, but local, isolated problems. Little did we know that the rumbling was actually the heavy [...]

In Europe We Trust?

By | 2017-09-22T07:20:40+00:00 September 22nd, 2017|Global Market Update|

Why didn’t Europe fall apart? Horace Vernet, “The Battle of the Barricades.” Public Domain. Source: Wikipedia In 1848, revolution swept across Europe. Governments fell in Italy, France, Germany, Denmark, Hungary, Poland, and elsewhere. In all, over 50 countries were affected. The uprisings were led by shaky ad hoc coalitions of reformers, intellectuals, and workers, which didn’t hold together for very long. They were often violently put down, but resulted in lasting social changes, even if the political order was only temporarily overturned. This history [...]

Ode on a Grecian Turn

By | 2017-07-17T12:22:43+00:00 June 30th, 2015|Global Market Update|

“What men or gods are these? What maidens loth? What mad pursuit? What struggle to escape? What wild ecstasy?” The Townly Vase. Source: British Museum That’s what John Keats wrote almost 200 years ago while contemplating the bas-relief on a Greek vase. But the words could almost be applied to the political and financial situation in modern Greece. Not much has changed since the last time we discussed Greece, except that the deadline for Greece to make its debt payments has gotten closer. Last [...]

Greece is the Word

By | 2017-07-17T12:22:58+00:00 April 22nd, 2015|Global Market Update|

Is Greece on the road to default? Photo: © Martina Misar-tummeltshammer Source: Dreamstime Stock Photos When I consider Greece I think of classical literature and ancient ruins. Others picture sparkling beaches and whitewashed architecture. We usually don’t imagine a bustling commercial center. And it’s unlikely that we look at Greece as the key to the Euro-zone’s financial stability. But that’s what’s in the news. […]

Draghi’d Forward

By | 2017-07-17T12:23:07+00:00 January 23rd, 2015|Global Market Update|

Exceeds expectations. Photo: Frankfurt Skyline; Source: Wiki Commons/Thomas Wolf That’s what I thought when I read about the European Central Bank’s program to expand the Eurozone’s money supply by buying government bonds, commonly known as quantitative easing (QE). A week ago, rumors were circulating that they would buy about €700 billion worth of bonds. But yesterday Mario Draghi announced that the program would be more than €1.1 trillion. Markets around the world rallied on the news. […]

The Indispensable Country

By | 2017-07-17T12:23:07+00:00 January 13th, 2015|Global Market Update|

“The graveyards are filled with indispensable men.” – Charles De Gaulle Source: Le Monde Among the ironies of Sunday’s march in Paris were leaders from Saudi Arabia and Russia demonstrating on behalf of free speech, while US leaders avoided the procession. But irony aside, the direction France now takes matters immensely to the rest of the world. Initial reports indicate that over 5% of France’s population attended Sunday’s rally. […]

Yielding Nothing

By | 2017-07-17T12:34:13+00:00 October 3rd, 2014|Global Market Update|

What’s up with negative interest rates? Source: Bloomberg The last auction Germany held for their 2-year bunds produced an obligation sold are par with no coupon. The bonds promptly went to a premium, resulting in a negative yield. Around the world, yields for 2-year Government bonds are negative in Germany, Holland, France, and Switzerland. In Switzerland it’s especially bad: you have to pay a 4 ¼% premium to get a 2-year note with a 2% coupon. […]

Elections Uber Alles (Part Zwei)

By | 2013-09-24T09:43:07+00:00 September 24th, 2013|Global Market Update|

Maybe they’ll care now? On Sunday Germany’s electorate gave Angela Merkel a stunning victory, increasing her party’s share of the vote from 33.8% to 41.5%. It’s the best result for the Christian Democrats since 1990, when Helmut Kohl won a third term. In fact, she almost won an outright majority in the Bundesrat, Germany’s lower house. Now she has to form a coalition. The CDU’s current partner, however, is not available. The Free Democrats’ share fell from 14.6% four years ago to 4.7% now—not [...]

Euro / Dollars

By | 2013-07-23T10:42:51+00:00 July 23rd, 2013|Global Market Update|

Why is the Euro so strong? A couple years ago there were widespread expectations of a Euro-zone breakup. Greece was facing ejection, and when small nations like Estonia joined the Euro, the biggest question was, “Why?” Many observers expected the Euro exchange rate to go to parity with the Dollar, or lower. But that never happened. In spite of Europe’s entering a second recession a year ago or so, the currency has been remarkably stable. At its weakest, it was about $1.20. Now it’s [...]

The Whipping Boy

By | 2013-03-29T10:30:41+00:00 March 29th, 2013|Global Market Update|

Does Europe have its own Tim Geithner? In January I asked rhetorically whether Jeroen Dijsselbloem was up to the task of leading the Euro Stability Group during these tumultuous times. It turns out we may have an answer, and it isn’t good. To deal with its banking crisis, the President of Cyprus proposed taxing all deposits—even small deposits. Over Dijsselbloem’s objections, this plan was aired last week. After being voted down, it was back to the drawing table—this time directly with Europe’s “troika,” cutting [...]