HEDGED.BIZ

A look at economics, markets, finance and the irrational human being

Equity and Bond Correlations. Inflation. Commodities. Implications.

In 2014 we saw stronger equity markets and falling bond yields. In 2015 we see slowing equity markets, slower growth and rising bond yields. The 2014 correlation went against historical correlations but could be explained by equity valuations being supported by falling discount rates and thus rerating. Also, despite a stronger economy, bond yields fell
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USD. Strength or Weakness

Where will the USD go, up or down? We dealt with the possibility that the Fed would delay the rate hike and concluded that any resultant USD weakness would be temporary. As long as rate hikes were on the horizon, any USD weakness would be temporary. If a rate hike was ruled out indefinitely, then perhaps
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Japan. Abenomics and the BoJ Run Out Of Options.

Japan is a cautionary tale of what happens when an export dependent economy has an inadequate domestic demand base. The Bank of Japan appears to have run out of options. QQE on its own can exert pressure on interest rates and boost output but on the fiscal policy side, tax hikes have the ability to
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So You Want To Run An Asian Private Bank

When the going gets tough the tough find another gig. Basel III and Dodd-Frank getting in the way of your investment banking business? Taxpayers tired of footing the bill for your proprietary trading desks’ follies? Pesky shareholders asking you what your next trick is going to be to get the share price rising again? Wealth
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Just One More Thing… Central Banks Are Cutting Rates Like There Is No Tomorrow

This year we have apparently seen 23 central banks cutting rates; personally, I have lost count. The question is, why now? How dire are things? And what are these things that are apparently so dire. The US and the UK are the only two majors not cutting rates. Lets exclude the basket cases and currency
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