The Fed’s Options

RGE’s Kevin Harris has a nice preview of the July FOMC meeting: in brief, FOMC members are locked and loaded, ready for a September hike, though they will refrain from committing to a move and do their best not to cause an overreaction across the yield curve, where too few hikes are priced in relative to the […]

The Evolution of the ECB’s Thinking on Negative Deposit Rates

The OECD has been telling the ECB to cut rates since November last year; today, after nearly half a year, the tortise-like ECB acted, cutting two rates that don’t really matter much. The ECB opened up two more doors today, though it hasn’t walked through them: first on securitization of SME loans into ABS, and second, to lower […]

Nowakowski on CNBC to Discuss Cyprus

RGE’s Senior Director of Research David Nowakowski appeared on CNBC to discuss the evolving situation in Cyprus, where depositors are moving out, Russian investors are cautious and bank runs have returned. View the videos below, or go to CNBC for clips here, here and here.

Krugman vs. Druckenmiller: A Blow by Blow Analysis

Paul Krugman (PK) recently accused Stan Druckenmiller (SD) of insensitivity to the working class because of the hedge fund superhero’s worries (as reported by Business Insider, from an interview with Bloomberg) that QE and an explicit policy of holding rates down for very long might [lead to bubbles]. Of course SD is NOT against recovery, per […]

Do New Laws and Budgets Automatically Supercede Old Laws and Debt Ceilings? A Legal Q&A

RGE Senior Manager of Research David Nowakowski sits down to discuss how new legislation is reconciled with older laws with attorney David Mollow, presenting implications for the debt ceiling, government borrowing and trade law. Nowakowski: If a law is passed that contradicts existing law, but does not directly make a reference to the current law being […]

The Rich Got $17 Trillion Richer

Despite the many negative headlines, 2012 was a good year for markets. Listed below is a rough snapshot of total returns in USD – most asset classes returned double-digits. 2012 was a year to look through pessimism – how did your PA do? I would estimate that Global Financial Wealth rose by $17,500,000,000,000 to $162 trillion (I ignore […]

Adoboli Verdict: Harsh or Lenient?

I have no idea if 7 years in prison and a ruined reputation is too harsh or too lenient. He was a bad boy and strict punishment is undoubtedly deserved. It’s true that if he went into a bank and stole $2.3 million, rather than lost $2.3bn in trading, he’d get a much stiffer sentence, […]

QE3 Will Work if it Shifts Expectations That the Fed Will Tolerate More Inflation

Beyond the straightforward mechanics of QE3 (i.e., the Treasury and MBS purchases), the Fed’s impact on expectations is key. The guidance indicated that support would remain in place until the economy is well in their clear. By aggressively pushing on bond yields, and more importantly, promising to maintain that effort, Bernanke and Co. definitely had […]

How Many Euro Breakup Scenarios Are There?

In a short note at, I calculate that there are nearly a quadrillion different permutations for the 17-member eurozone to break up into various single currencies, with a “rump euro” remaining if k>0. What are your views? And is the euro really irreversible, or is that just one possibility out of 1,000,000,000,000,000? Table 1: Euro Fragmentation Calculations […]

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