Topic
Blog
A collection of 125 issues
Blog: Is the Fed's 2% Target a Pipe Dream?
At his press conference last week, Fed Chair, Jerome Powell, said that he was confident the Fed would reach it's 2% inflation target "over time." We should not only be skeptical of this claim, but also of the relevance of the 2% target. Paul Volker, the
Blog: The Fed's Three Body Problem - Inflation vs. Employment vs. Financial Stability
In physics, the “three body problem” involves predicting the motion of three objects, or bodies, when the bodies are attracted to one another by gravity. Newton solved the two body problem, but not the three body equivalent. The French mathematician, Henri Poincare, studied this problem in the late 19th century,
Blog: The MOVE Index is not what it seems - Part 2
On Sept 1, 2022 I posted that the MOVE index is often misinterpreted. Last week's SVB failure makes this discussion relevant and worth continuing.
The MOVE is an implied volatility index of US Treasuries. The index uses options on 2, 5, 10, and 30 year on-the-run US Treasuries.
Blog: Reflation comes back - For one last scare?
Blog: Hard, Soft or Aborted Landing?
Aeronautical terms have been popular form of market jargon for a long time. These days, of course, it’s what type of recession we’re going to have: a “hard” landing (which is a nice way of saying, a crash) or a “soft” landing, where we glide in without disturbing
Blog: Is the VIX Broken? Nope.
Recently I’ve read some market commentators declare the VIX1 “broken" as a fear index because it’s not always down when the market is up and up when the market is down. I’ve heard this story several times over the years, but the only time the VIX
Blog: Bond Yields and Markets Before the "Before-Time"
A phrase from Star Trek: The Original Show became popular during the 2020 pandemic, referring to the time before COVID-19 as the “before-time.” The phrase was lifted from a 1966 episode entitled “Miri.” The story took place on a planet of children where the adults had been killed off during
Blog: Groundhog Day (not the movie!) for the market
Aspiring market pundit, Punxsutawney Phil, saw his shadow on Thursday, forecasting 6 more weeks of winter for the northeastern US, and a potential bear market. While there is no evidence that Phil, or any other groundhog has forecasting power, the media continue to follow the ritual as a matter of
Blog: Is "risk appetite" growing, or are investors just feeling lucky?
Implied volatility measures have been falling pretty dramatically. As usual the press is saying “risk appetite” is growing. But what does that mean? It sounds like the media is saying investor's desire to take risk is higher today. Which must mean they're feeling luckier today than