Blog Posts
Looking Back, Looking Ahead
A Happy New Year to All! While 2022 turned out to be one of the worst years for financial assets, it turned out to be one of the best years for common sense. A decade of macro distortions caused by central banks were unwound, as central bankers realized that they […]
With a Little Help from My Friends
I recently listened to the angst filled cover version of the Beatles classic “With A Little Help From My Friends”, by bluesy crooner Joe Cocker. If you have not heard it recently, please quit reading right now and play it. Here is how the chorus goes: Oh, I get by […]
Being Mulish: I Buy Treasuries Direct
If you listen to the Fed, this is what you will hear: There will be no pivot! That is, they are not planning to lower rates any time soon come hell or high water. Each time there is a mini-hiccup in the global economy or the markets, many look for […]
It Ain’t Over Until the Banks Cry Uncle
I would like to thank the New York Fed for inviting the public (virtually) to the conference last Friday on financial stability considerations for monetary policy, not the least because it allowed the masses to hear the “state of the art” on the interaction of markets and monetary policy. With […]
Inflation Fighting is Coming to an End, Financial Stability Concerns are Here – The Bank of England Pivoted and the Fed is Next
Today the Bank of England, just a few days before it was supposed to start running off the assets it had accumulated as part of the quantitative easing program, announced that it would buy unlimited amounts of UK sovereign bonds (gilts) to support market functioning. Here is the statement: “In […]
Bloodletting and Central Bank Pseudoscience
I was recently reading a book on the life of Beethoven, the composer, and what caught my attention was that he almost lost his life when doctors of the time recommended his deafness be cured by bloodletting! Apparently Mozart, Charles II, and many others were not so lucky. Even George […]
TIPS ‘n’ STRIPS
I am not a big fan of Fish ‘n’ Chips. But give me tips and strips and I am very happy! Having grown up vegetarian in India, I came to the United States when I was 18. The only on-campus job I could get was flipping burgers at the Red […]
Absolute Or Relative: Why Focusing On The Right Thing Matters More Than Ever
Last week I completed my first self-supported, multi-stage, ultra-marathon “race” in Lapland, above the Arctic Circle. After more than 50 previous ultras, none of which have lasted more than a couple days, I spent almost a week in the swamps of Northern Finland, carrying a 25-pound pack (freeze dried food, […]
Killing Me Softly Or Killing Me Quick: Investing in Default Risk Versus Inflation Risk
After more than thirty years trading bonds, which became super boring in the last fifteen, I am beginning to feel that the glory days of bond trading are coming back again. The main reason, of course, is that central banks are now fish out of water, grasping for tools in […]
Maybe Treasury Inflation Protected Securities are the Place to be Again
As far as managing longish-term, market-implied expectations go, the Fed could declare victory now. The 5-year forward 5-year breakeven inflation rate computed using Treasury Inflation Protected Securities (TIPS) and Nominal bonds, has dropped (again) right to the 2% level (of course since the Fed is majority owner of both nominal […]
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