macro13

Why I Love the Stock Market

“The thing that most affects the market is everything.” – James Playsted Wood

oil

The Good, the Bad and the Ugly of Falling Energy Prices

The recent correction in the price of crude oil should have an immediate positive impact on the US consumer as well as on a number of business sectors. However there also may be a significant economic downside to this adjustment. Here are some facts to consider.

question_mark_WP

Sunday Q&A

I wanted to open the comments up here for a Q&A since I haven’t done one in a while.  With the markets so volatile and the global economy looking shaky again I figured people might have some questions.  So fire away if you want.  Anything goes….

bull

Three Bullish Macro Charts

You didn’t think I was going to let you go into the weekend all depressed now did you?  I mentioned last week that the recent downturn in stocks appears to be a purely non-USA event.  That is, the US economic data that’s been coming out in recent weeks really looks no…

Read More→

rollercoaster

Implied Vol Dislocation

The recent spike in volatility has created a “dislocation” in US equity options markets.

strategy1

“Why Did the Stock Market Decline?”

Whenever the market moves violently in one direction or the other we tend to ask questions after the fact.  In recent days the stock market has been falling rather rapidly.  And people want answers.  But I find this questioning misguided.  Who cares why the stock market went down.  Answering that…

Read More→

happy

REDEMPTION!

9% decline in the S&P and suddenly everyone who predicted constant recession, bear market, hyperinflation and the end of the world have their sweet redemption!  Recency bias at its best….   H/T reader rconners    

think

Three Things I Think I Think

A few thoughts on a crazy day in the markets…

Interest_Rates

So Much for Rate Increases…

It seemed like just last week we were debating the potential for the Fed to raise rates.  And then today we have Fed officials discussing the potential for more QE.  What a manic world.  One little 7.5% decline in the stock market and people start assuming that the world is…

Read More→

Nobel

The Nobel Prize in Economics is Among the Most Influential Prizes in the World

I’ve been mum on the Nobel prize in economics because I honestly don’t know much about Jean Tirole and his microeconomic work.  But I think we should silence one discussion that inevitably arises every time the award is handed out.  That’s the idea that the award is somehow fake or…

Read More→

Fail_WP

The State of Macro is Awful

In his latest piece Paul Krugman defends the state of modern macro citing how much of the modern modelling was used quite effectively by certain economists (basically, himself and a few others).  He says this was a big deal because it led to many accurate predictions.  Which is fine except…

Read More→

myth

Understanding the Deposit:Loan Discrepancy & Why It’s Not Scary

I’ve received a number of emails about this post at Zero Hedge which shows the deposit:loan ratio at JP Morgan.  The authors cite this as a sign of “all that’s broken with the US financial system”.  That description isn’t far off, but I do think it deserves some clarification. First, forget…

Read More→

Interest_Rates

Five Ways to Keep Out of the Bond Liquidity Trap

Bond investors are used to managing interest-rate risk and credit risk. But the financial crisis should have taught us that there are times when liquidity risk can be just as important to manage. Now is one of those times.

mad-scientist-o

Economics is a Social Science, not a Natural Science

Economics is categorized as a “social science” alongside anthropology, psychology and sociology.  Which makes complete sense considering that economics studies the relationships that dictate how we produce and consume goods and services within the society.   But you wouldn’t know that from the way many economists discuss economics.  Too often…

Read More→

bond_market

The Changing Face of the Global Bond Market

This meshes nicely with my recent discussions about the importance of understanding the global financial asset portfolio for the purposes of portfolio construction (see here and here).  I’ve emphasized that the only truly “passive” portfolio is the portfolio of total outstanding financial assets.  Of course, that portfolio is constantly changing…

Read More→