Tag: currencies

Jensen: How long bonds could actually outperform equities

Jensen: How long bonds could actually outperform equities

Editor’s note: This was originally published by Absolute Return Partners in late August. So we are a little late in releasing it. Apologies. It is still good reading. The Absolute Return Letter, August/September 2015: Doodles from an eventful summer “There is something deeply troubling when the unthinkable threatens to become routine.” Bank for International Settlements Incidents of the summer 2015 […]

If we don’t understand both sides of China’s balance sheet, we understand neither

If we don’t understand both sides of China’s balance sheet, we understand neither

These debt-related shocks will occur regularly for many more years, and each shock will advance or retard the rebalancing process so that it affects the way future shocks occur. There are only a few broad paths along which the Chinese economy can rebalance, and if we can get some sense of the China’s institutional constraints and balance sheet structures, we can figure what these paths are and how likely we are to slip from one to another. In order to get Chinas right I would argue that above all we must understand the dynamics of debt, and of balance sheet structures more generally.

Pie in the Sky

Pie in the Sky

We are still in a post-crisis environment, and enough people are still negative on equities, and interest rates are low enough, to provide plenty of purchasing power. We therefore expect it to be an ok period for equities over the next year or two – not outstanding given our modest growth expectations but ok. The trick is to be careful on emerging markets. If the U.S. dollar continues to be strong, it is an accident waiting to happen.

China, Europe, and optimal currency zones

China, Europe, and optimal currency zones

Although I think China is clearly much more integrated as an optimal currency zone than Europe is today, it is probably less integrated than the US (I will use the US and Europe as the two extreme cases between which China falls). China of course does not have the problems of multiple sovereignty and taxation that Europe does, but there are still important frictional costs among provinces and regions that exceed those among US states and regions and that may make an adjustment to slower growth bumpier than expected.

QE will end, GDP growth expected at 3.0%, deflator at 1.4%

– This will be a busy week between stress tests and data releases, which markets have taken as positively
– Market expectations have settled down, and the Fed is widely expected to announce the finish of QE
– Economic news for Europe has been mixed so far, with M3 improving by German IFO disappointing
– The initial impact of the Ukrainian and Brazilian elections will be local

Steve Hanke on currency boards and Paul Brodsky on bottom-up investing

I haven’t posted to the blog portion of Credit Writedowns for some time because my schedule has been filled producing the finance show Boom Bust on RT. So I apologize for not having a lot of content for you. Last week, I hosted my first complete show on the TV show I produce called Boom Bust because the anchor, the wonderful Erin Ade, was out sick. It’s on currency boards and bottoms up investing. I also do a bit of a monologue on Apple.

Can the Jobs Data Give the Dollar Another Leg Up?

Can the Jobs Data Give the Dollar Another Leg Up?

The US dollar is consolidating yesterday’s gains that were scored largely in response to Draghi’s revelation that QE and a negative deposit rate were discussed at the ECB meeting. The consensus expects that the US economy grew 200k jobs last month and that the unemployment rate ticked down to 6.6% from 6.7%. In addition, the ISM for the service sector saw a strong recovery, providing new information we did not have at the start of the week. The bottom-line here is that US economic growth picked up in late Q1.

Calm before the Storm?

Calm before the Storm?

The US dollar is narrowly mixed, largely within its well-worn trading ranges against the major currencies with two exceptions. There have been several marginal developments over the 24 hours that are shaping the investment climate.