The rise of passive investing is upon us. Years of substandard performance from active fund managers promising to be experts able to beat the market consistently has led to a meaningful shift toward lower-cost investing. Continue reading Central Bank “Distortion” Is a Red Herring
A barrage of comments from FOMC members last week has bumped up market expectations of Federal Reserve rate hikes. However, it’s not clear that market players are adjusting their rate expectations correctly; the U.S. Treasury curve has steepened (Figure 1). Continue reading Are Market Players Mispricing Fedspeak?
Weak economic activity, central bank balance sheet risks, and misaligned investor incentives can be alleviated. My latest at the Huffington Post: http://www.huffingtonpost.com/european-horizons/draghi-other-central-bank_b_11968802.html
Financial transaction taxes have long been a topic of discussion in econ circles, the most famous of which is the so-called “Tobin tax” designed to help protect against undue currency speculation. Considerations of their potential utility have risen again since the financial crisis that brought down the world economy in 2008. Continue reading Is There a Place for a Financial Transaction Tax?
Today, we are very fortunate to have a guest post from Andrey Sazonov of the University of Iowa:
Recent developments in Russia suggest that the regime is experiencing major economic challenges. Low oil prices in combination with sanctions have led to serious budget deficit (4.3% of GDP in the first half of 2016) and pressured Kremlin to look for other sources of revenue. Continue reading Putin’s Chess Game on the Domestic Front: Making Russia Great Again
Perhaps a better question is, why are Bloomberg and others calling them “premiums” and fretting about this? The Bank of England’s new quantitative easing (QE) program to combat the negative economic consequences of Brexit means there is an extra $1.5 billion of sovereign bond demand a week. Continue reading Why Is the Bank of England Paying Premiums?
I recently re-came across this economic research memo from Taylor, Schularick, and Jordà from the San Francisco Federal Reserve from a year ago. The “tl;dr” summary is as follows: The Federal Reserve’s monetary policy should not share any of the blame for the housing boom and bust associated with the Great Recession. Continue reading Monetary Policymakers’ Colossal Non Sequitur