Post Tagged with: "bubble"

Country by country macro update, part 2, September 2014

Country by country macro update, part 2, September 2014

This is an abbreviated post from our subscription series at Credit Writedowns Pro. Yesterday, I did a broad overview of four markets of interest to global investors. And I wanted to continue my thoughts on this here with a few more markets and with a deeper dive into some of my thinking about the UK. Britain, Part 2 In the […]

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The Fed is already creating the next bubble

The Fed is already creating the next bubble

This is an abbreviated post from our subscription series at Credit Writedowns Pro. I would make the case that monetary policy is wholly inappropriate as a tool for steering against cyclical ups and downs exactly because it only has a secondary impact on the real economy and must act through the credit markets. As such, monetary policy is always about […]

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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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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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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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Australia: Is this the end of the natural resources boom?

Australia: Is this the end of the natural resources boom?

In yesterday’s commentary, I wrote that China was attempting to rebalance its economy, which ultimately means a slowdown in its use of commodities. This has hit the commodities currencies particularly hard, with the Australian Dollar down over 16%. Commodity producers are going to be the biggest losers from a Chinese rebalancing. And the question then is what happens to their economies. Let’s look at Australia

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Gauging China’s growth

Gauging China’s growth

China is a big wildcard for 2014. Growth slowed last year to a 14-year low. It isn’t yet clear if the trend will continue and what China’s leadership will do if growth does slow further.

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