Tag Archives | Federal Reserve

And now the stumble?

Last week the US Federal Reserve announced the second move in its so-called tapering process, and reduced its bond buying by another $10bn/month.  But there was only a temporary repeat in stock markets of the enthusiastic response to its first reduction in December.  We are thus about to test whether the blog’s theory of ‘two steps and a […]

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Can oil prices stay at $100/bbl forever?

Sometimes the blog’s mind goes back to its happy days in Houston, Texas, when it set up and ran ICI’s feedstock and petchems trading office.  And it thinks through the factors that it would have considered when deciding whether to buy, sell or sit on the sidelines. The memory came back during last week’s lively ACS webinar, when […]

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Demographics mean growth has slowed

Western politicians have failed to take responsibility for managing the Crisis. And so, as the blog noted last week, policy is instead being made by unelected central bankers – principally Ben Bernanke at the US Federal Reserve, and Mario Draghi at the European Central Bank. They are clearly well-meaning, and in normal times might do […]

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US jobs, auto sales still below pre-Crisis levels

The above 2 charts show US jobs and car sales on a monthly basis, side by side. They cover the years 2008 – 12, and the combination provides a clear message about demand trends: • The jobs total began to improve in 2011 (green line) • They rose 2m between January 2011 and last month […]

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US housing starts fall as the BabyBoomers get older

US subprime lending was the starting point for the economic crisis now spreading around the world. The blog believes a key cause was policymakers refusal to accept that the ageing of the BabyBoomers (those born between 1946-70) would cause a major change in demand patterns. Instead, they have continued to believe that underlying levels of […]

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Algebra is the new alchemy for central banks

The blog’s Boom, Gloom and the New Normal eBook highlights the impact of the ageing Western babyboomers on future demand patterns. Yet central banks such as the US Federal Reserve and the European Central Bank believe demographics have nothing to do with demand. For them, as one former central banker told the blog “demand is […]

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Central banks alchemy fails to convince

Alchemists have always claimed to be able to perform the impossible. The most common claim was that they could turn lead into gold. In Europe, the European Central Bank has been trying the same trick. It claimed to turn near-worthless Greek bonds into German-quality euros. Now its German board member Jürgen Stark has followed German […]

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Boom/Gloom Index suggests downturn resuming

A recession is often defined as being when your neighbour loses their job. A depression is when you lose your job. Latest industrial production data shows output is falling around the world. And US unemployment is rising again, with the wider measure at 16.2% as long-term joblessness becomes a major problem. Last month’s IeC Boom/Gloom […]

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Speculators begin to leave crude oil markets

Speculators, assisted by the US Federal Reserve, have driven crude oil prices to unsustainable levels over the past year. Now, the Fed is withdrawing the liquidity that has financed this rise. The above chart from Petromatrix shows the surge in crude oil speculation on the Chicago futures market since August. The light blue line shows […]

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Crude oil and stock markets begin to diverge

Financial markets have been fired up over the past 2 years via the arrival of high volume computerised trading. This now dominates market action. And until recently, the US Federal Reserve was happy to finance this activity, via its $600bn QE2 programme. The Fed’s aim was to generate inflation, and so avoid the risk of […]

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