Rabbits, Ducks, and Markets

By |2017-07-17T12:22:06+00:00March 28th, 2016|Global Market Update|

Is it a bull market or a bear market? Source: Wikipedia It all depends on your perspective. Like the famous rabbit-duck illusion. People who want to see a rabbit see long ears, a split nose, and a soft face. Folks who want to see a duck see a split bill, a tongue, and a bright eye. There’s no clear answer. The same thing could be said about the market right now. Those who want to see a bull market point to a growing economy, [...]

Interest Rates, Janet Yellen, and The Bard

By |2017-07-17T12:22:19+00:00December 17th, 2015|Global Market Update|

What did the Fed just do? Narrowly considered, the Fed simply changed the wording in their periodic statement, announcing that the range for inter-bank interest rates—Fed Funds—would go from zero to .25% to .25% to .5%. In other words, the rate will move from “essentially zero” to “almost zero.” Practically, if a bank borrows $1mm from another bank overnight, they’ll have to pay $13.89 rather than $6.94. You could almost call this the “Macbeth” interest rate move: full of sound and fury, signifying—nothing. But [...]

Federal Reserve Reservations

By |2017-07-17T12:22:45+00:00June 3rd, 2015|Global Market Update|

Do Fed officials make good stock market analysts? Source: Wikipedia That’s what I wondered when I read Ben Bernanke’s market musings in his latest blog. He argues that a stimulative Fed hasn’t really juiced stock prices; rather, the Fed’s actions have just returned the stock market to its pre-crisis trend. This is in contrast to current Fed Chair Janet Yellen, who noted last month that she thought valuations were quite high. […]

Employment, Wages, and the Fed

By |2017-07-17T12:23:03+00:00February 20th, 2015|Global Market Update|

Don’t put the cart before the horse! Source: Edublogs That’s what I thought when I heard that the Fed is targeting wages as an economic indicator. Over the past several years hourly earnings have been stagnant. Some say the Fed shouldn’t raise rates until household income improves. And since real wages haven’t moved, Fed policy should stay where it is. Only in the past couple years have wages begun to outpace inflation. […]

Getting it Right

By |2017-07-17T12:23:08+00:00December 29th, 2014|Global Market Update|

What did people get wrong in 2014? Source: Wikipedia By far the most popular wrong-headed call last year was on interest rates. In late 2013 almost all market-watchers predicted that a stronger US economy and more restrictive Federal Reserve would lead to rising bond yields. Boy, was that a mistake. A year ago 10-year Treasury Notes yielded almost 3%. Now they yield 2 1/4%. So while the stock market in the US has grown by 15% this year, treasuries have risen 5%, corporates 7%, [...]

The Wages of an Oil Bust?

By |2017-07-17T12:23:09+00:00December 17th, 2014|Global Market Update|

Could falling oil prices delay the Fed’s rate hike? Source: Federal Reserve Among economists the current consensus is that the Fed will begin to raise interest rates sometime in mid-2015. There’s discussion about their official statement which explains that they expect to maintain the current rate regime for a “considerable time” following the end of their asset-purchase program, which ran out in October. A change in the statement would continue to prepare the markets for higher rates—something the Fed wants to do. Gone are [...]

Slacker Market

By |2017-07-17T12:23:16+00:00October 17th, 2014|Global Market Update|

How much slack is there in the labor market? Source: Wikipedia It depends what you mean by slack. Most people think the unemployment rate is a good measure of slack, and it’s intuitively appealing: divide the number of job-seekers by the number of people in the workforce, and that tells you what percent of people want to work, but can’t find a job. After falling for the last five years, the unemployment rate—currently 5.9%–is almost back to its post-World War II average of 5.8%. [...]


By |2017-07-17T12:34:14+00:00September 17th, 2014|Global Market Update|

When I was a kid I loved dot-to-dot books. Whenever our family would go on long trips, they’d get me a stash of dot-to-dots and I’d be all set. Maybe it was playing with numbers; maybe it was trying to recognize the picture as soon as possible—whatever it was, those books would keep me entertained for hours. So maybe that’s why I find the Fed’s dot-plot so fascinating: Source: Federal Reserve June 2014 Materials […]

“My Kingdom for a Forecast!”

By |2014-09-18T09:58:40+00:00July 16th, 2014|Global Market Update|

Are equities facing a “Summer of Discontent?” After rising 5% since late May, equities can’t seem to get out of their own way. Fed Chair Janet Yellen explained yesterday that while the economy still needs a lot of support from monetary policy, it is improving. There’s still a lot of slack in the labor market, but if the labor market improves faster than expected, they may raise rates more quickly than most folks anticipate. Unemployment is currently just above 6%, but its fall from [...]

More is Less

By |2014-06-19T10:21:59+00:00June 19th, 2014|Global Market Update|

Is the Fed’s transparency confusing us? Yesterday the Federal Reserve concluded its two-day meeting and issued a statement—a long, meandering, abstruse statement. Reading the Fed’s press release has become a thankless chore. Most Fed-watchers just compare the current statement with the one from the prior meeting to look for word-changes that might indicate shades in what the Fed is thinking. The Fed knows we do this. So they discuss and debate every comma and verb tense. Sometimes committee members even dissent in their policy [...]