Weekly Assessments

Markets The equity markets continued their modest recovery triggered the previous week by European central bankers. It gathered pace on Friday with a potentially end-of-the-month technical rally. Short-covering? Probably. What was clear is that the great “China is causing global turmoil story” proved a bit of a head-fake. The Chinese stock markets fell heavily but the rest of the world ignored them. The trickiest potential hurdle for equities was the FOMC meeting. It proved a damp squib: target rate held at 0.50% The Fed showed enough of a reaction to Fed-induced market turmoil to prevent further Fed-induced turmoil. Well done.… Read More

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Benjamin Cole/Jan 29, 2016 And so the Bank of Japan becomes the latest monetary policy-making body to introduce negative interest rates, in what has been a years-long yet curiously feeble battle by global central bankers to avoid sluggish growth, recession and deflation. From CNBC: “The Bank of Japan adopted negative interest rates for the first time at the end of its two-day policy review on Friday, buckling under pressure to ease concerns about the health of the world’s third-largest economy. [T]he BOJ said it will apply a rate of negative 0.1% to excess reserves that financial institutional place at the… Read More

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Markets The equity markets fall from the previous week gathered pace until non-US central bankers raised their heads and promised action. As expected by Market Monetarists, markets rallied at that point. The power of expectations is awful to behold, especially at turning points. Financial market participants often use the cliché that “bad news is good news”. This very often refers to the phenomenon when bad economic news is interpreted by markets as meaning central banks are likely to ease monetary policy. It usually leads to flat, directionless, stock markets. Things look best when “good is news is good news”. For… Read More

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