Asking the Right Questions
European Central Bank: New Policy Measures
The European Central Bank was centre stage last week with their latest monetary policy announcement. It was only last night that I got a chance to watch his full press conference, after the Ireland match. I can say both were on par in terms…
When Bad News is Good News
Friday’s FT headline – “Stocks boosted by weak data” conveyed the general feeling in the markets that last week was another case of the ‘bad news is good news’, i.e. weak economic data will force central banks to keep monetary policy loose longer than…
Bank of England Inflation Report
In his latest inflation report press conference, Mark Carney, Governor of the Bank of England (BOE), concluded that the UK economy “is returning to a semblance of normality”. The BOE have reduced their central estimate of “slack” in the economy to around 1% of…
Eurozone Economic Recovery & Pressure on the ECB
The flash estimate of second quarter GDP, published by Eurostat, showed that the Eurozone economy was flat in the second quarter after growing by a mere 0.2% in the first quarter. While many of the peripheral countries recorded faster growth there was weakness was…
Janet Yellen: No Bubble, “In Aggregate”
On the central bank front, US Fed Chair Janet Yellen’s semi-annual monetary policy report to Congress offered few surprises in terms of the outlook for monetary policy. The overriding message is that the Fed will continue to support the recovery as “too many Americans…
Surprise Jump in UK Inflation
UK consumer price inflation rose to 1.9% in June, up from 1.5% in May and above the consensus forecast of 1.6%. Prices of clothing and food items were the key drivers behind the surprise increase, pushing inflation closer to the Bank of England’s 2%…
What does a deflationary trap look like? Ask Japan!
Japan has endured 15 years of deflation with an average annual rate of price decline of minus 0.3% over that time. Bank of Japan Governor, Haruhiko Kuroda, recently articulated this deflation trap in a speech entitled “How to Overcome Deflation”: “As actual prices declined…
Equity Markets: Valuation is in the Eye of the Beholder
With many of the major equity indices at or near record highs it is natural to ask whether equity markets are overvalued. First of all valuations differ dramatically by geographical region and second, one’s estimate of fair valuation is to a large degree subjective….
Central Bank Policy and Portfolio Construction
CFA Institute Magazine May/June 2013 Issue CFA Institute Magazine – Central Bank Policy and Portfolio Construction
Investors can rest easy, monetary policy to stay loose!
In his testimony to the Senate Banking Committee on Tuesday, U.S. Federal Reserve Chairman Ben Bernanke gave the green light for risk assets to push higher, with his defence of the Fed’s highly accommodative monetary policy. Bernanke reiterated the benefits of low interest rates…
