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Markets

A collection of 84 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?

Flash Report: Market Uncertainty State Moves from Fragile to Turbulent

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: 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: 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

Blog: Will the real inflation rate stand up?

One characteristic of our times is a surplus of data. When I started out, data was hard to come by, particularly timely data. This was true for money managers, economists, and central bankers. Now we may have too much data. So much it’s hard to see what's

Blog: What's Balanced Now, Anyhow? Rethinking the balanced portfolio

The “traditional” 60/40 (60% stocks, 40% bonds) portfolio has become controversial because of 2022’s performance, being among the worst on record. This has damaged the 60/40s reputation as the safe, neutral portfolio. But there are three things that have been left out of this debate: