Tag: quantitative easing

The threat of an overheated German economy

The threat of an overheated German economy

The Eurozone economy is doing really well. Some data points to 3% growth. The German economy is doing even better – with some data pointing to 5% annualized growth. But there’s a downside – overheating. And with the ECB at negative rates and engaged in 60 billion Euros of QE to boot, overheating in Germany is a reasonable fear. Some thoughts below

Are bond investors crying wolf?

Are bond investors crying wolf?

The abrupt spike in interest rates from mid-April to mid-May is very unlikely to be the beginning of something much bigger and much more likely to be the sort of occasional panic attack that Japan has seen so many of in recent years.

Using QE instead of rate cuts for cycle trough stimulus for US adjustment

Using QE instead of rate cuts for cycle trough stimulus for US adjustment

Over the past couple of years, there has been a decent amount of chatter about the Fed’s not being able to ‘reload’ in order to have enough tools to deal effectively with the next cyclical trough. And while the fear of running out of runway during the next downturn should not effect present policy, it likely is as it is a background consideration for the Fed as it thinks about liftoff. Below, I want to talk about this reload process. But I also want to move forward to the end of the cycle and give some thought to what happens to monetary policy when the cycle turns down with rates pinned near zero percent. I believe unconventional policy actions like quantitative easing – potentially including short-term municipal debt – will be used.

Upgrading German and European growth

Upgrading German and European growth

One thing to keep in mind regarding both politics and shares in Europe is that upgrades to the growth outlook are coming and more should be expected. I see Germany doing particularly well given the decline in the euro. This is positive for shares but negative for Greece. Some thoughts below