Archive | Fed

What the FOMC Did to Volatility

Thursday, September 19, 2013


I'm attaching a cross asset volatility monitor that allows you to compare price and volatility changes across equity, commodity, and currency markets. After Wednesday's post-Fed rally, several...

When will gold lose its luster?

Monday, February 4, 2013


The outlook for gold in 2013 was more mixed than in years prior, but several investment banks maintained bullish price targets. Morgan Stanley, Barclays, Bank of America, and Société Générale all have year-ahead price targets of $1800 or higher. Here’s the thematic outlook from a recent report by the cross-asset team at Soc Gen: Our commodities team is calling for renewed price strength in gold prices into 2013. They currently forecast gold rising to an average of $1,850/oz…

The Decline of Angry White Guys

Tuesday, November 6, 2012


This post discusses the election, what I expect to happen, and my views on fiscal and monetary policy. This is a normally politics-free blog, but economic policy impacts markets in a big way, and investors who believe myths about the nature of debt and money put themselves at a disadvantage. Comments engaging with the substance of the arguments below are welcome; the rest will be deleted. I predict Obama will win the election by at least 33 electoral votes. My…

Review: The Indomitable Investor by Steven M. Sears

Wednesday, August 1, 2012


The Indomitable Investor: Why a Few Succeed in the Stock Market When Everyone Else Fails by Steven M. Sears is a thoughtful, well-paced survey of the post-crisis market landscape. This is not a book that could have been written a few years ago. Readers here will know Sears for his coverage of the options markets for Barron’s, and he brings the same even-handed tone always exhibited there to this book.  The Indomitable Investor pursues several important and familiar themes, like…

Citi and the Stress Counterfactual

Wednesday, March 14, 2012

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Based on my understanding of the Fed stress test results, here’s an argument for why you should buy shares of Citigroup. Ceteris paribus, you should buy (short) shares of any bank that will have (will not have) adequate Tier 1 capital under the Fed’s stress scenario. If Citi revises its proposed capital actions after Q1 2012, it will have adequate Tier 1 capital under the Fed’s stress scenario. Citi is revising its proposed capital actions after Q1 2012. Therefore,…

Randomize the Fed

Thursday, May 21, 2009

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Felix Salmon offers a tongue in cheek solution to the problem of business leaders assuming the Fed will act to prevent recessions: How to fix this? Is it not the job of the Fed to try to minimize the severity of recessions? One alternative approach would be to consider it to be the job of the Fed to minimize the severity of the worst possible recession. What would happen if, for instance, rates were set using a random-number generator? Every…

American Comintern: Readers Respond

Wednesday, September 10, 2008


We got a lot of positive and interesting feedback in response to yesterday’s American Comintern.  Below are some selected remarks from readers: American Comintern…it’s also well to remember that honoring debts held by foreign bondholders is an imperative of the imperial project. Were debts of various government sponsored entities to be reneged on, then foreign national funding for American wars and bases would vanish. From your “comintern” post, I can see that we agree on the politics of the…

American Comintern

Tuesday, September 9, 2008

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“If anybody thought we had a pure free market system, they should think again.” - Robert Bruner, Dean of The Darden School of Business at The University of Virginia [h/t Top Gun FP] A number of readers have asked us for our take on the Freddie Mac/Fannie Mae bailout, so here it is.  In the financial blogosphere, reactions to events are immediate, if often half-baked; in academia, reactions are thoughtful but take months or even years.  We figured…

Incredulous Bears We Are

Tuesday, August 5, 2008


In spite of all the fashionable buying today, our outlook over the next week or so isn’t particularly bullish, and here are some reasons why: Historically, it is really uncommon for the market to move up 2% the morning before a Fed announcement… …and in general, these big Fed rallies tend to end either in boredom or in tears over the following several trading days.  Over the past decade, these kinds of flashy rallies have been sustained less than…

Midweek Reading

Thursday, July 31, 2008


The big news yesterday was that markets were able to push higher in spite of the rally in oil.  Of course, one data point doesn’t prove that equities and oil have decoupled, but this relationship certainly bears watching. Anyway, on our unending quest to help you procrastinate about whatever it is you should be doing, some links: Mish Shedlock offers some evidence that the credit crunch is only worsening: Businesses do not want to lend, consumers do not…


Jared Woodard specializes in trading volatility as an asset class. With over a decade of experience trading options and other volatility products ... Read More


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