Tag Archives | central banks

Expect $25 – $30/bbl oil and lower chemical prices in 2016

More than $2.3tn was wiped off the value of global stocks last week as China’s slowing economy and currency depreciations spooked investors around the world, leading to the worst start to a year for markets in at least two decades.  This is the Great Unwinding of policymaker stimulus in action. Worse is likely to come. […]

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ECB President has New York temper tantrum as Board blocks major new stimulus

“There is no doubt that if we had to intensify the use of our instruments to ensure we achieve our price stability mandate, then we would.”  (Mario Draghi, New York, Friday) Pity poor Mario Draghi, President of the European Central Bank (ECB).  He is used to the adulation of markets – and adores his nickname […]

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Budgeting for the Great Unwinding of policymaker stimulus

There have been 35 “flash crashes” in US oil markets so far this year, when prices swung up or down by 200 basis points (2%) – before reversing the move by > 0.75%.  That’s 35 occasions when the markets were out of control.   It is tempting to blame this on misfiring algorithms at the […]

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US incomes have plateaued since 2001 as Boomers turn 55+

More and more people are lining up to support our argument that central bank stimulus programmes are damaging the economy, not helping it.  The latest is bond guru Bill Gross, who wrote yesterday: “Zero bound interest rates destroy the savings function of capitalism….(whilst companies) have plowed trillions into the financial economy as they buy back […]

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Financial markets head towards chaos as Great Unwinding continues

Financial markets are slowly descending into chaos.  The process began in China over the summer, and has now started to impact Wall Street and other developed markets as the Great Unwinding of policymaker stimulus continues. The problem is that successful investment, whether in financial or chemical markets, requires the combination of A clear understanding of […]

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US interest rate dilemma highlights fragile global economy

Should it really matter that the US Federal Reserve might raise US interest rates by 0.25% tomorrow?  Surely the IMF/World Bank should not need to argue that such a small increase could really be critical for the world economy? The fact that such a debate has been taking place at all, highlights the damage done by stimulus […]

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Fed’s loss of credibility risks causing investor stampede

Credibility is hard to gain.  And once gone, it is very hard to regain.  That is the challenge facing the US Federal Reserve today.  The New York Times is just one of the mainstream media now starting to highlight the issue, as last week’s Fed meeting led to a further deferral of the promised rise […]

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Gloom turns to boom as US economic data disappoints, again

“If only US GDP growth could remain negative in Q2, what a lot of money we could make”.  You could almost hear the excited chatter in financial markets on Friday, as news spread that revised data showed the US economy had seen negative growth in Q1. This is yet another example of the upside-down world […]

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Economic impact of ageing populations is obvious, but ignored

Too many policymakers, companies and investors are continuing to ignore the dramatic changes taking place in the age profile of the global population.  Yet common sense tells us these must have a major impact on the economy.  The impact comes from 2 equally important developments: One is the rise in the number of people in the New […]

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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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