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OFR Mar15

US watchdog warns on today’s “quicksilver markets”

What could go wrong in today’s financial world?  Many stock markets in the West are hitting new highs, and central banks are promising they will do nothing to spoil the party.  But as Gillian Tett of the Financial Times warned on Friday: “Before anyone gets too thrilled about equities, they should read a sobering research document from […]

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US$ breaks out of 30-year downtrend

Attention has rightly been focused on the collapse of oil prices over the past 6 months.  These have further to fall, but the major part of the move must now be behind us.  After all, Brent was at $104/bbl when I first forecast the move in mid-August, and closed at $56/bbl last night, so probably “only” has $20/bbl-$30/bbl further downside. […]

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European interest rates go negative as Draghi boosts stock markets

Historians will not look kindly on Mario Draghi, head of the European Central Bank. They will ask what he thought he was doing, issuing an extra €1tn ($1.05tn) of debt from March 2015, when the Eurozone was already struggling under a dead-weight of government debt: In the big countries, Italy has $47k of debt per person; […]

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Stock markets see Winners and Losers appear

The world’s major financial markets hit bottom exactly 6 years ago, on 6 March 2009.  They then began their recovery, fuelled by expectations of a quick V-shaped recovery as a result of G20 stimulus plans. At that date, prices had fallen in all markets versus their pre-Crisis peaks: The world’s largest Index, the US S&P […]

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What a difference a QE programme makes

 ”What a difference a day makes Twenty-four little hours Brought the sun and the flowers                                            Where there used to be rain” (lyrics, Renee Olstead) What would financial markets do without Mario Draghi, the head of the European Central Bank (ECB)?  A month ago, they were worrying about deflation arriving in the Eurozone and the […]

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Mckinsey says global debt now 3x global GDP, and rising

A major new report from consultants McKinsey confirms my concerns over the dramatic increase in global debt levels since stimulus policies began in 2008.   As their chart above highlights: Global debt has risen by $57tn to $199tn since 2007, nearly 3x global GDP Government debt is up by $25tn, with three-quarters of this in the developed […]

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US stock markets weaken as bond yields signal deflation is near

Increasing volatility in major Western financial markets suggests they are struggling to maintain their momentum. It is certainly hard to be very optimistic about the outlook for the major Western stock markets this year.  The reason is that investors are still failing to think about political risk.  They continue to believe, as they did a year ago, […]

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One day, the Fed will try to talk the market up – and nobody will listen

In March 2007, the Financial Times kindly published a letter from me arguing that the US Federal Reserve seemed “to confuse being market-friendly with being friendly to markets“, and had forgotten “The famous dictum of William McChesney, the long-serving Fed chairman in the 1960s, that “the job of the Federal Reserve is to take away the punch […]

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Fed jumps in to boost stock markets, yet again

Every time US stock markets weaken on a day-to-day basis, the US Federal Reserve now jumps in to support them, as the chart above shows: We saw this first on October 16, when the S&P 500 fell 5% in a week to 1862.  In jumped Fed Governor James Bullard to calm market nerves by suggesting that the Fed should […]

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Major investors worry about markets, focus on demographics

I had a breakfast meeting yesterday with the investment head of one of the world’s major asset managers.  He wanted to understand more about our Great Unwinding concept, and our correct mid-August forecast of $70/bbl oil prices. After that, we went on to discuss two critical and related areas: Would the oil price stay at today’s […]

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