Asking the Right Questions
Everlasting Monetary Policy and Rising Equity Markets
The major US equity indices closed at new record highs on Friday, with the S&P 500 rising 1.75% over the week. The tech-heavy NASDAQ Composite breached the dotcom bubble peak reached in 2000.
Weekly Market Recap: April 13th 2015
Market Recap Global equity markets surged higher last week, as we were reminded once again that nothing really matters other than the actions of those benevolent central banks. The weaker than expected US jobs report the previous Friday provided the initial springboard for equities,…
Has the world gone mad, or is it me?
These words from Ben Howard, the immensely talented singer-songwriter, ring in my head when I think about how much financial markets have been conditioned to respond to monetary stimulus. While central banks have engineered risk free rates on cash to zero (or negative in…
Monetary Policy: All Talk!
“When I was at the Federal Reserve, I occasionally observed that monetary policy is 98 percent talk and only two percent action” The above is the catchy opening line from Ben Bernanke, previous Chairman of the US Federal Reserve, on the inauguration of his…
Beggar-my-neighbour policies
There seems to be an increasing sense of uncertainty developing on how the US Federal Reserve will manage policy over the next six months. The narrative emerging is that the Fed have backed themselves into a corner on a rate hike, something that is…
Rising Inequality: The Side Effect of Monetary Policy
The wealth effect theory – where rising asset prices makes consumers feel wealthier, causing them to spend more – has been the prime driver behind the expansionary monetary policy pursued by the world’s major central banks in their efforts to stimulate an economic recovery….
Thoughts on the mortgage arrears crisis; the great contradiction
Last Friday the Central Bank of Ireland released the Residential Mortgage Arrears and Repossessions Statistics, updated to December 31st 2014. The report is particularly timely given the huge increase in repossession orders being lodged with the courts and as more high profile cases garner…
Irish 30 Year Bond Issue & Record Low Long Term Eurozone Bond Yields
Irish Government get €4bn 30 year interest only loan at 2% The Irish government came to the market last week with their first ever 30-year bond for sale, maturing in February 2045 and with a coupon payment of 2%. In the lead-up to the auction it was…
Mario Draghi: confidence or arrogance with ECB efforts?
While Mario Draghi had equity markets salivating last week, the Germans will be wincing in the knowledge that their monetary policy is now firmly in the hands of the money printing Italian,
All eyes on Mario Draghi and his QE announcement
While Mario Draghi has argued for years that Europe is not turning Japanese, in terms of a deflationary spiral, the performance of European government bonds would suggest that the battle is being lost against deflation.
