Spoiler Alert: The simple answer is that of course they can in the event of runaway inflation and/or an overheated economy, but in light of $26 trillion in federal debt that will soon rise by at least $1 trillion through additional stimulus (not to mention budget deficits for the foreseeable future), the question is whether […]
The Federal Reserve has two fundamental mandates: maximum employment and stable prices with an upper limit it sets for an acceptable inflation rate! When employment reaches a level that’s known as full and a strong economy results in a shortage of available qualified workers, upward wage pressure can cause the inflation rate to rise. Similarly, when commodity prices […]
While interest rates have risen from depths that saw the 10-year treasury yielding 1.36% on 7/3/16, to 2.25% today, given Fed plans to tighten and pledge to shrink its balance sheet should rates be even higher? The Fed will typically engage in the monetary policy of tightening and lift the Fed Funds rate when the two […]
With the US housing market having recouped most of its pre-financial crisis price levels (exceeded in some markets) in conjunction with the Federal Reserve having engaged in ZIRP (zero interest rate policy) for an extended period of time, is the market once again facing a moral hazard? First, how would one define moral hazard vis a vis the real […]
(Note: This article also appears at econintersect.com) This week both the Bank of Japan and the Federal Reserve will be meeting to chart the future course of interest rates! In the U.S. where prior to the recent small interest rate hike ZIRP or zero interest rate policy had been in place, speculation over whether the Fed will raise or stand […]
Summary: With the VIX near its lows why are there two so very different sides to the same coin? For those unfamiliar with the Credit Suisse Fear Barometer it is another metric for gauging investor angst and expectation! Knowledge Is Power – Francis Bacon To the everyday stock market watcher the most commonly used metric for […]
ZIRP AND NIRP! For potential property buyers and current owners of property who are thinking of refinancing a mortgage, ZIRP has been, and NIRP may someday be, fantasticmonetary policies! ZIRP? NIRP? For those unfamiliar these acronyms are not the sounds an infant might make but instead are deadly serious policies that are being used by central bankers around the world in […]
As all of the Capital Asset Pricing Model (CAPM) fans out there know, the value representing the ‘risk-free’ rate is a critical data point! But for those who may be unfamiliar with CAPM, it’s ‘a model that describes the relationship between risk and expected return and that is used in the pricing of risky securities.’ […]
In my first job as a municipal bond analyst and strategist a key datapoint to consider was the steepness of the yield curve! When the curve was at its steepest, investors would be ‘getting paid’ in the form of higher yields to assume the price and reinvestment risk of moving out to longer maturities. When flat, meaning […]
How many acronyms will fit in one article title? For this weeks articles we’ll cap it at three! Many of this past weeks articles at the Hallmark Abstract Service blog focused on the global economy in conjunction with the turmoil in financial markets around the world. These three acronyms played a critical role… PIIGS: These are the five […]
