Breaking China

For some months now, we have been warning of the stresses building in China’s credit structure and warning that, if unaddressed, they would lead to pain in asset markets and potentially to weakness out in the real economy. Here, we lay out the arguments in detail.

17-11-28 China

 

Where’s the Off Switch?

In our latest piece we look at the ECB’s overkill and all manner of possible over-valuations at work in different markets around the world – the two not being entirely unconnected, the reader might note! Continue reading

It was THIS big…

A theme which frequently pops up in current financial and economic commentary is that of the burgeoning levels of outstanding debt under which all too many nations are said to groan. Typically, reference will be made to the percentage of GDP which this mountain of obligations entails, usually by way of putting it into a context which is deliberately slanted to be alarming. But how valid is this comparison? Continue reading

Easy Money, Hard Times

Though the connexion is not always explicitly drawn, one obvious corollary of the perceived current shortfall in corporate investment spending is to be found in the lacklustre nature of the gains being recorded in something called ‘productivity’.

This latter deficiency is often said to have ‘puzzled’ the Good and Great who presume to be able to influence such matters for the better, but one can readily identify factors which implicate the policies of those same would-be helmsmen of the economy, themselves, in the discouragement they offer for capital formation and by the incentives they afford for less than ideal practices among businesses, consumers, and governments, alike.

For a downloadable PDF version of this article, please click: 17-10-27 Easy Money

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Shifting Sands

There are signs that not only is money beginning to circulate more rapidly through cash registers everywhere, but that Corporate America is beginning to make good some of its recent, much-cited lack of physical investment and, conversely, is starting to eschew some of its contemporary over-indulgence in financial engineering.

It may be early days to be jumping to overly grand conclusions, but the last few quarters’ trend nonetheless bears watching. Continue reading

Once through with feeling

Some readers may be interested in putting a voice – and even a face – to the author. Below are links to three recent audio-visual publications in which I discuss US & Chinese macro as well as the interrelations between the three great asset classes of stocks, bonds, an commodities. Following on is a wider sampling of my views. Continue reading

Ten Years After

A little over 10 years ago, a hitherto obscure German institution called IKB – majority-owned by an arm of the German government – suddenly made headlines around the world.

On the last day of July 2007, a company which ironically had its origins in a foredoomed effort to ‘stimulate’ the German economy in the aftermath of the Weimar Republic’s disastrous by financing small businesses, but also by partaking of the contemporary, pre-Depression boom in real estate, revealed that, once again, it had been seduced by the lure of a property bubble. [A version of this article appeared as part of the inaugural edition of ETF StreamContinue reading

Gibson’s Non-Paradox

Birmingham statistician and financial forecaster Arthur H. Gibson’s so-called ‘paradox’ came about from his detailed empirical findings that the level of bond yields (as measured by the price of British Consols) tended to follow – with a lag of around a year – the price of wholesale commodities (a measure he adopted, as he himself explained, as a proxy for what he thought was the real crux of the issue, the cost of consumable necessities for which no comparable data existed). Argument has abounded as to the phenomenon’s true explanation, ever since.

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Here we go again…

As world stock markets have continued to climb to cyclical – if not all-time – highs, it has become almost the norm for industry Talking Heads to season their smatterings of media insight with a brief, talismanic expression of scepticism, uttered partly to appease the ever-jealous God of the Markets but mainly so as to be on record as ‘having foreseen the crash’ as and when one eventually occurs.

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Dreams of Gerontius

At the end of last month, the Mighty Oz’s and Grand Panjandrums of central banking descended upon the rural splendours of Wyoming in order to engage in a very public display of navel gazing and to enact a ritual, group reinforcement of confirmation bias.
There, we heard much nonsense talked about low – even negative -‘natural interest rates’ and of the seeming impossibility of triggering an alchemically meaningful dose of price inflation with which to restore the balance of the humours in the global economy.

It was most timely, then, for the ever-mischievous BIS to publish a paper first presented last year by Charles Goodhart & Manoj Pradhan which challenged much of the received wisdom of our monetary overlords and which broadly affirmed arguments I, too, have long been offering against their approach.

Please click the link to read more:-

17-08-24 Gerontius