Weekly Market Update
Market Action Global stocks had their best week of 2016 thanks largely to softer expectations from monetary authorities. China continues to inject cash into the economy and reported strong credit growth last month. Meanwhile European authorities articulated a strong...
The Flattening of the Yield Curve and the Migration of Risks: The Path of Hedging Holdings and a Contrarian View on Market Trajectory
Historically, the inversion of the yield curve is a good predictor of recessions. On top of this when spreads of high yield bonds reach the current level of 850 bps (i.e. 8.5% above Treasuries) the probability to experience a recession within 8-12 months is between...
Weekly Market Update
Market Action Global markets posted another wild week even though Chinese markets were closed due to the New Year. Volatility out of Japan and Honk Kong and the poor performance of the financial sector weighed heavily on stocks despite a relief rally on Friday. Oil...
The Banking Sector, Collateral Velocity, and Credit Creation, Part I: Where are we Headed?
Modern finance depends on credit. Credit creation depends on inter-bank trust. Inter-bank trust depends on asset valuation. Asset valuation is an opaque process that is a function of several parameters (economic, financial, geopolitical, strategic, among others). For...
Weekly Market Update
Market Action Markets continued their poor start to 2016 with another down week. Technology and Biotech names were sold off especially hard due to a combination of poor earnings from some key names and regulatory scrutiny over drug prices. The U.S. employment report...
Market Hysteresis and Capitulation: Financial Stress and Secular Trends
It takes some time for the market to comprehend when stress is built up in the economic and financial systems. This is part of the hysteresis reality. When financial stress builds up for some time, a crisis ensues that is followed by a recession. The graph below from...
Monthly Barometer’s Forward-Looking Monthly Review: An Interdisciplinary View of our Complex Global Economy
The global economy is about to enter its “third dip” (after the subprime and the Eurozone crises). The IMF just revised downwards its 2016 forecast for global growth to 3.4% (from 3.6%) and the World Bank to 2.9% for real GDP growth (down from 3.3%). Most likely these...
Weekly Market Update
Market Action Markets finally posted a positive week in the U.S. thanks to a combination of some promising earnings reports and global central banks maintaining easy policies. While stocks posted gains in most markets, bonds rallied as well. Japan surprised markets...
Operation Market Garden: Can it Happen Again? (This time in the financial world)
Following the successful Normandy invasion in June 1944, the Allies executed that September the military operation known as Market Garden (Market referred to the airborne forces that were supposed to seize bridges, and Garden to ground forces). The purpose was to...
Weekly Market Update
Market Action Several major global markets netted gains thanks to a rally by the end of the week. Equities followed Mario Draghi’s lead after the ECB President hinted at more stimulus due to falling inflation expectations in the Eurozone. Other stimulus chatter from...
