Category Archives: Uncategorized

Central Banking’s Fundamental Misunderstanding of Inflation

Central banks operate under the premise that real growth is exogenous, except for policy mistakes in moderating inflation and the business cycle. The assumption is that they have dominating influence on the impulses to core inflation and the output gap, both … Continue reading

Posted in Uncategorized | Leave a comment

US Recession Callers Are Embarrassing Themselves

Through a combination of quackery, charlatanism, and inadequate utilisation of mathematics, callers for US recession in 2016 are embarrassing themselves. Again. The most prominent reason for recession calling may well be the Institute of Supply Management’s Manufacturing Purchasing Manager Index. … Continue reading

Posted in Uncategorized | 11 Comments

The Time For a Hike is September

Back in December of last year, in the midst of the downdraft of oil, I wrote that the deflation in headline prices we were about to see was symmetrically opposite to what we saw in the energy-driven headline inflation during 2011: In April of … Continue reading

Posted in Uncategorized | 3 Comments

Breaking the real rho even

The only rational way to value capital is by estimating your required risk premium against a safer benchmark expected return. This is why the correlation between investment grade bonds, Treasury yields and the S&P 500 earnings yield follow such similar … Continue reading

Posted in Uncategorized | Leave a comment

Say ‘Good-bye!’ to the “New Normal”

“Secular Stagnation.” “The New Normal.”. “The New Neutral.” “Lower for Longer.” These are the phrases which have been used to characterize the U.S. economic situation, and by proxy, interest rates. The thinking is both reactionary and rational: the after-math of the … Continue reading

Posted in Uncategorized | 7 Comments

Only Bernanke knew Oil is not inflation

In April of 2011, Ben Bernanke was universally lambasted and lampooned for claiming that inflation, which was accelerating and running above 3%, was “transitory”. He used this view to justify loosening monetary policy. The next few months of CPI were not … Continue reading

Posted in Uncategorized | 3 Comments

Why do the Japanese want growth?

It seems to be a universal truth that growth is good. There almost can be no bad growth. But what exactly is the purpose of growth, and why do we want it? Instead of viewing economic growth as the objective, … Continue reading

Posted in Uncategorized | 4 Comments

Why do stock markets crash?

With the S&P 500 off 5% from all-time highs, and the 10-day volatility in the 87th percentile, some observers are anticipating a 1987-style market correction. In this piece, we analyze the conditions that presaged prior violent corrections. Starting with what the … Continue reading

Posted in Uncategorized | 13 Comments

Dear Ms Yellen: Raise the inflation target

Dear Ms Yellen: Congratulations on both your appointment as well as becoming the first woman to head the Federal Reserve. This will potentially make you, at times, the most powerful and important person in the world. We are more alike … Continue reading

Posted in Uncategorized | 2 Comments

Estimating the impact of monetary policy normalisation on assets

A New Age of Policy Transparency The Federal Reserve, beginning in 2011, began a new era of transparency that began with the publishing of economic and monetary policy projections from Open Market Committee members.  Along with projections for unemployment and GDP, they … Continue reading

Posted in Uncategorized | Leave a comment