Monetary Policy at the ZLB: Three Quasi-Natural Experiments

Can monetary policy still pack a punch at the zero lower bound (ZLB)? For Market Monetarists, the answer is an unequivocal yes. For others, the answer is less clear. Paul Krugman, for example, made the following comment recently on the efficacy of monetary policy during liquidity traps: [T]he liquidity trap is real; conventional monetary policy, it turns […]

Fed’s Tapering Decision Bears Out RGE’s Out-of-Consensus Call

NEW YORK—18 September 2013—Roubini Global Economics (RGE), an independent, global macroeconomics and strategy research firm, highlights its out-of-consensus call that the U.S. Federal Reserve would not “taper” the pace of quantitative easing at its September policy meeting, an assessment confirmed by the Federal Open Market Committee (FOMC) in a statement today. RGE first expressed this […]

Weighing the Week Ahead: Is It Time To Book Profits?

In last week’s WTWA I predicted a snoozefest, and that was pretty accurate. I also wrote, “Because column inches and air time must be filled whether there is real news or not, I expect a week laden with speculation about tapering, who will become the new Fed chair, and whether economic data warn of a […]

The Elephant In The (Money Management) Room

The concept of risk management receives a lot of attention in the investment realm, and rightly so. Chasing return directly, by contrast, is almost certainly doomed to failure. In other words, risk management is the only game in town. But talking about it is one thing; applying it in a meaningful, productive way that delivers […]

Weighing the Week Ahead: A Vacation Snoozefest?

In last week’s prediction for the week ahead I guessed that it was time for action. That was an accurate guess for the bountiful news flow, but not so much for the markets. We had some significant intra-day swings, but the reports had an offsetting effect. Those who were not following the daily news might […]

Rates Update: The Bernanke Uncertainty Principle, Real Yields & Volatility

In quantum mechanics, the Heisenberg Uncertainty Principle states that there is a limit to the precision with which the position and momentum of a particle can be known simultaneously. The Fed is discovering that by transitioning economic decision making from private actors to central bank interventions, it is trapped in its own uncertainty principle, unable […]

Pondering Simplicity In Asset Allocation

“The biggest pitfall [for all investors who decide on an asset mix and invest accordingly] is behavioral, when people don’t want to rebalance,” Brad McMillan, chief investment officer at Commonwealth Financial Network, tells The Wall Street Journal. What’s the solution? The Journal article makes a case for simplicity in asset allocation, perhaps as few as three […]

A Guide to Political Power in Italy

This piece is an abbreviated analysis of a longer paper available in PDF here. “Who rules Italy?” Knowing the answer to this question is important to providing investors with a sense of how the country really works and allowing any serious reform project a chance to succeed. But understanding the dynamics of Italian politics is […]

Hold Those Bonds

The recent sell off … Over the last month, after the US Federal Reserve (the Fed) signaled it might curb – and progressively end – its bond-buying program, the markets slumped. Under the threat of reduced central bank stimulus and higher interest rates, all asset classes co-moved, downwards. Bonds were most affected: June was the […]

Conventional and Unconventional Fiscal and Monetary Policy Options

The Nature of Current Macroeconomic Problems The focus of this article is principally on Europe (including the UK, Cyprus, and others), Japan and the United States, and other countries suffering generally from inadequate private demand, high unemployment, a deflationary tendency, a liquidity trap and a high level of public debt. Some of these countries have […]