Tag Archives | Federal Reserve

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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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Speculative volume soars in oil markets

Crude oil has been a speculators’ paradise for the past 9 months. Central banks have been making large amounts of cash available at 0% interest. In turn, this has funded larger and larger speculative positions in financial and commodity markets. CME, the world’s largest derivatives market, saw volume up 31% in March vs 2010. The […]

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Home truths about the causes of the financial crisis

Darwin hit it on the nail when he wrote in ‘Origin of the Species’ that “Unless profitable variations occur, natural selection can do nothing“. His message is echoed today by US Fed Governor Kevin Warsh, one of the few policy-makers who deals in reality rather than wishful thinking. Warsh sets out to “debunk some popular […]

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“New normal” means major change – US Fed

The blog has argued for some time that the chemical industry is facing a “new normal” as growth returns to the economy. Now US Federal Reserve Governor Dan Tarullo has helpfully spelt out some important changes that he expects to occur. He notes that: • “Just about everyone understands we will never return to the […]

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Central banks warn on likely growth rates

Coincidentally, both the US Federal Reserve and the Bank of England yesterday signalled the probable end of the ‘the recession’ yesterday. But as the blog noted last month, statistics don’t tell the whole story. The issue is that economists usually define recession as simply being 2 or more quarters of negative growth. Automatically, therefore, any […]

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Smart shoppers focus on needs, not wants

After destocking, and then restocking, what next? The blog is a great believer in following the insights of the major retailers, who have been consistently “on the money” in their analysis. Thus it takes very seriously the comments of Wal-Mart CEO, Mike Duke, who has joined the camp of those who believe we face a […]

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GDP’s “statistical recovery”

The blog is very interested to see the different outlooks being proposed by central bank heads. US Fed Chairman Ben Bernanke claimed Friday that the financial crisis was due to “panic”, rather than fundamental problems such as reckless lending. As a result, with the “panic” over, he now saw the potential for securing “a sustained […]

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US housing loans still toxic assets

There are two main views on the financial crisis that began last September. The mainstream view, as expressed by the US Federal Reserve, is that it was a problem of liquidity. Banks became frightened to lend, and so the Fed stepped in as “lender of last resort”. So given time, everything will soon be back […]

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