August 21, 2014

The Bond Market is taking Advantage of Janet Yellen`s Dovishness

By EconMatters

Push the Limits

It has been a common theme in financial markets to push the limits on any possible edge, so if there are restrictions on banks and financial institutions use of leverage, lobby for change, or if activity falls under a certain governmental regulation, alter the activity so that it is classified under a different interpretation so that previous limits can be exceeded.

August 20, 2014

Fed Meeting Transcript: ZIRP, The Magic Dragon

By Frederick Sheehan via  Contra Corner

 There is little else left in the asset-pricing world than central bankers. The redoubtable Ben Hunt, chief risk officer at Salient investment managers ($20 billion under management), wrote on David Stockman’s Contra Corner: “I’ve spent the past few weeks meeting Salient clients and partners across the country…. When I had conversations [with clients and partners] six months ago, I would get a fair amount of resistance to the notion that narratives dominate markets and that we’re in an Emperor’s New Clothes world. Today, everyone believes that market price levels are largely driven by monetary policy and that we are being played by politicians and central bankers using their words for effect rather than direct communication. No one requires convincing that markets are unsupported by real world economic activity. Everyone believes that this will all end badly, and the only real question is when.”

Europe Facing The New Economic Normal

By George Friedman for Stratfor Global Intelligence 

Russia and Ukraine continue to confront each other along their border. Iraq has splintered, leading to unabated internal warfare. And the situation in Gaza remains dire. These events should be enough to constitute the sum total of our global crises, but they're not. On top of everything, the German economy contracted by 0.2 percent last quarter. Though many will dismiss this contraction outright, the fact that the world's fourth-largest economy (and Europe's largest) has shrunk, even by this small amount, is a matter of global significance.

What Will Be Ukraine's Next Crisis?

By Robert Bensh for 

Ukraine's next crisis will be a devastatingly economic one, as violent conflict destroys critical infrastructure in the east and brings key industry to a halt, furthering weakening the energy sector by crippling coal-based electricity production. 

August 19, 2014

5 Risks of A Market Correction

By Lance Roberts at Street Talk Live

A couple of week's ago I asked the question "How Big Could A Correction Be?"  In that article, I compared several different technical models to establish potential correction levels which derived the following table of probabilities. Of course, as I stated at that time:
"There is no exact answer to the potential magnitude of a correction in the markets. 'This' depends on 'that' to occur which is why trying predict markets more than a couple of days into the future is nothing more than a 'wild ass guess' at best. However, from this analysis, as shown in the table below, we can make some reasonable assumptions about potential outcomes."