China’s Oil Hoarding Is Raising Prices

By Nick Cunningham: China has been buying up oil at a record pace in order to stockpile reserves for a rainy day as part of its strategy to insulate the country from geopolitical conflict or supply disruptions. It’s modeled after the U.S. strategic petroleum reserve (SPR). However, the heightened rate at which China is purchasing oil is […]

Looking for Bear Markets With a Hidden Markov Model

  Would you know a bear market if you saw one? Hindsight suggests this is an easy task. The telltale signs are obvious… after the fact. From prices dropping below moving averages to negative rolling returns to an assortment of other technical signals there’s a long list of empirical facts that equate with bear markets. […]

The Challenges of Achieving Financial Stability

The end of the bubble in 2000 led to a debate over whether central banks should take financial stability into account when formulating policy, in addition to the usual indicators of economic stability such as inflation and unemployment. The response from many central bankers was that they did not feel confident that they could identify price […]

The Private Equity Limited Partnership Agreement Release: The Industry’s Snowden Moment

Last week, the Wall Street Journal released an important story that chronicled how the private equity industry kingpin KKR systematically took advantage of its credulous investors via taking questionable charges through its related company KKR Capstone. That story depended critically on the Wall Street Journal obtaining the terms of the investment from a 2006 KKR limited partnership agreement […]

U.S. Interest Rates: The Potential Shock Heard Around the World

By Serkan Arslanalp and Yingyuan Chen: As the financial market turbulence of May 2013 demonstrated, the timing and management of the U.S. Fed exit from unconventional monetary policy is critical. Ouranalysis in the latest Global Financial Stability Report  suggests that if the U.S. exit is bumpy (Figure 1), although this is a tail risk and not our prediction, the result […]

Increased Oil Production Offsets Effects of Geopolitical Tensions

By Nick Cunningham: Oil prices briefly hit a three week high this week as geopolitical tension and strong demand tighten oil markets. Saudi Arabia’s Oil Minister Ali al-Naimi said on May 12 that his country would make up for any shortfall that may result from the conflict in Ukraine. After pro-Russian eastern separatists held a referendum last weekend and […]

OPEC Questions Sustainability of North American Oil Boom

OPEC Secretary-General Abdalla el-Badri said oil supplies from North America “will play an important role in the coming few years,” but he cast doubt on their sustainability over the long term. Speaking May 15 in Moscow, el-Badri acknowledged that oil supply from producers outside of OPEC are expected to increase by more than 4 million barrels per […]