Post Tagged with: "bubble"

The Fed is already creating the next bubble

The Fed is already creating the next bubble

Last week, I wrote a fairly comprehensive piece laying out some of the macro issues around the Fed and other central banks’ ultra-easy monetary policy. The gist of that piece was that, due to the political economy, monetary policy is now seen by policy makers as a good way to ‘steer’ the cyclical economy through peaks and troughs. Fiscal policy, […]

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Economic and market themes: 2014-06-27 Fed will trigger the next crisis

Economic and market themes: 2014-06-27 Fed will trigger the next crisis

The title here is a bit provocative I know. But it is really something I stole from an article about Stephen Roach’s view that I will use as a jumping off point for my Friday review.

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Some thoughts on the new Internet bubble

Some thoughts on the new Internet bubble

Going back to my comments from yesterday about the utility of macro, I want to talk a bit about credit excesses and valuation manias. The overall gist here is that manias are endemic to our system because psychology plays a big part in social systems. And while it is debatable how well macro policy can “lean against”, it is clear […]

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Economic and market themes: 2014-05-23 Credit excesses everywhere

Economic and market themes: 2014-05-23 Credit excesses everywhere

There are widespread signs of credit market froth. This is a telltale sign of top of the cycle or near top of the cycle excess. Think 2005, 2006 or 2007. The key bit here is that credit markets transmit distress in a way that equity markets do not because when the credit writedowns are forced onto banks, the knock-on effects are severe. Let me go through some of these signs of excess with you. As I do so, let’s be clear that the froth is largely due to investors reaching for yield due to excessively low nominal and negative real interest rates. Financial repression has consequences.

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Economic and market themes: 2014-05-16 China

Economic and market themes: 2014-05-16 China

The Chinese property bubble is bursting
Chinese wage pressure is rising
Chinese search for oil has increased geopolitical tensions

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Bubbles: Jeremy Grantham, Fingers of Instability and the Medium Term View

Bubbles: Jeremy Grantham, Fingers of Instability and the Medium Term View

I was reading a summary of Jeremy Grantham’s remarks in GMO’s recent quarterly analysis. And it occurred to me that a lot of what we see there is predicated on some embedded longer-term assumptions that I want to make clear. Grantham is talking about the potential, even likelihood of a bubble in equities by 2016. This has to worrying because it would usher in another period of deleveraging. But it also assumes that the real economy gets us through 2016 via expansion. Some thoughts below

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Canadian housing, Russian economy, Twitter bubble, and bogus tax proposals

Canadian housing, Russian economy, Twitter bubble, and bogus tax proposals

The Canadian housing market is providing a pro-cyclical boost
Russia is now in a recession
Twitter’s share collapse is emblematic of broader trends
Corporations pay tax for a reason

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Economic and market themes: 2014-04-21 United States

Economic and market themes: 2014-04-21 United States

I have been off since Thursday due to the Easter holiday. But I want to write my traditional Friday post today with a grab bag of different issues I am seeing. I actually just want to focus on the US this time.

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Economic and market themes: 2014-03-28

Economic and market themes: 2014-03-28

The West has accepted Crimea’s annexation and will likely only increase sanctions if Russia goes further The Ukraine – IMF deal will put the Ukrainian economy through the wringer Russia’s economy is going to tank due to capital flight Brazil’s economy is in jeopardy of recession The US is doing ok but not great as data have improved The Fed’s […]

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The big disconnect between leverage and spreads

The big disconnect between leverage and spreads

Market based information is telling us that spreads and leverage are now disconnected, fundamentals remain in-line with theory. Companies with higher net debt also have poorer liquidity positions.

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China’s raw materials bubble bursts

China’s raw materials bubble bursts

Steel, iron ore futures in China tanked on bloated (all-time high) inventories and apparent lending curbs by Chinese banks.

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Bitcoin as a deflationary force for bank fees

Bitcoin as a deflationary force for bank fees

In the wake of the financial crisis, bailouts and cheap money have done much to restore American bank balance sheets. Earnings for banks have returned to pre-crisis levels. But over the medium-term I believe banks’ earnings power will be damaged by a loss of fee income as bank fees come under assault. The problem is Bitcoin. Let me explain in this post.

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