Post Tagged with: "bubble"

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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On the Canadian housing market

On the Canadian housing market

Fitch, the ratings agency, has reversed itself on Canada. It now believes that the housing market there is poised for only modest declines at worst. Previously, Fitch had said that Canada’s housing market was well overpriced and that a major correction was a serious risk. I believe the combination of high prices and high household debt means the risk of a major correction is still there.

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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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Faber: We are in a Gigantic Financial Asset Bubble

Faber: We are in a Gigantic Financial Asset Bubble

Marc Faber, publisher of the Gloom, Boom & Doom Report, appeared on Bloomberg Television’s “Street Smart” yesterday to discuss the impact of Fed policy on the global economy and his predictions for 2014. As you could imagine, he is bearish. Marc told Trish Regan and Adam Johnson that “we are in a gigantic financial asset bubble.” He has warned before […]

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When is a Bubble a Bubble?

When is a Bubble a Bubble?

Bubbles have become a major focus of discussion in today’s financial markets. But very few people actually define what they mean when describing this financial phenomenon.

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2014 as an inflection point

2014 as an inflection point

When I last wrote you I was talking about 2013 as being akin to the mid-cycle tightening year of 1994. In this view, we are well into a business cycle but it is far from over because of cyclical agents could spur the cycle on. But what about the opposite view, that we are nearer to the end of the cycle. Some very brief thoughts here

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Tightening into frothy markets in the asset-based economy

Tightening into frothy markets in the asset-based economy

On Friday, I read a post on the New York City housing market that got me to thinking about how we view interest rates and their effect on credit markets. Traditionally, we view higher interest rates as a net tightening and slowing of the economy, while interest rate cuts are a loosening that should aid the economy. But is this really true? I say no. Tightening into frothy markets produces more froth. Some thoughts below

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Bubbles, debt and economic growth, Paul Krugman edition

Bubbles, debt and economic growth, Paul Krugman edition

We need to abandon the Loanable Funds model of lending, which treats banks as “mere intermediaries” and therefore ignores them in macroeconomics. the Neoclassical belief in Loanable Funds is the biggest barrier there is to the development of a realistic, monetary macroeconomics. If Paul Krugman gives way on this belief, then maybe there’s hope that central banks and treasuries around the world will eventually do so too.

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