Posts Tagged ‘Paul McCulley’

PIMCO Slams The Brakes On US, UK, And Corporate Bond Buying, Amid Massive Debt Binge

PIMCO Slams The Brakes On US, UK, And Corporate Bond Buying, Amid Massive Debt Binge

Courtesy of Joe Weisenthal at Clusterstock/Business Insider

Young woman mountain biking, low angle view (blurred motion)

In a new 2010 outlook, via Bloomberg, PIMCO’s Paul A. McCulley reveals his firm’s uber-cautious stance towards bonds, amid the massive borrowing underway in the UK and the US.

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PIMCO Managing Director Paul McCulley leads the firm’s quarterly Cyclical Economic Forums, in which investment professionals from around the world gather to discuss the outlook for the global economy and financial markets over the next six to 12 months. In the following interview, Mr. McCulley discusses the results of the December Forum and its implications for PIMCO’s investment strategy in 2010.

Q: PIMCO recently developed its outlook for 2010. What are the general conclusions?
McCulley
: The global economic recovery underway will likely be very much de-synchronized, borne of heterogeneous initial conditions on display prior to the recession, with a full range of possible outcomes. In the developed world, we had double bubbles in property and credit creation. Much of the developing world, in contrast, had already gone through its “baptism by fire” a decade ago and actually had incredibly sound balance sheets in the public and private sector as a starting point.

In addition to these differing initial conditions, there is still uncertainty over three major issues, which in turn creates a range of possible outcomes in our forecast. Depending on how these issues progress, we’re looking at multiple potential resolutions of the inherent tension in the overall system. There will likely be some bipolar market outcomes. 

Q: Can you talk more about those three major issues?
McCulley
: The first issue is the peg between the Chinese yuan and the U.S. dollar, which essentially gives us a one-size-fits-all monetary policy in a very differentiated world. Progress, or lack of progress, on this issue could lead to several outcomes. If China were to let its currency appreciate, it could regain a degree of monetary policy autonomy and a better ability to manage the risk of overheating and asset price inflation. Another outcome, however, is that China refuses to let the yuan appreciate, essentially maintaining too easy of a monetary policy for itself and the developing countries that shadow Chinese policies. This would create bubble risk, particularly for assets such as…
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The Elements of Deflation

The Elements of Deflation

dna, complexity, economic complexityCourtesy of John Mauldin at Thoughts From The Frontline

The Elements of Deflation
The Failure of Economics
The Super Trend Puzzle
Final Demand and Income
Unemployment Was NOT a Green Shoot

As every school child knows, water is formed by the two elements of hydrogen and oxygen in a very simple formula we all know as H2O. Today we start a series that starts with the question, What are the elements that comprise deflation? Far from being simple, the "equation" for deflation is as complex as that of DNA. And sadly, while the genome project has helped us with great insights into how DNA works, economic analysis is still back in the 1950s when it comes to decoding deflation. Notwithstanding the paucity of understanding we can glean from the dismal science, in this week’s letter we will start thinking about the most fundamentally important question of the day: is inflation, or deflation, in our future?

But quickly, I want to thank the many people who wrote very kind words about last week’s letter. Many thought it was one of the better letters I have done in a long time. If you did not read it, you can read it here. And of course, you can go there and sign up to get this letter sent to you each week for free. Why not become of my 1 million (plus and growing) closest friends?

The Failure of Economics

Paul KrugmanAmong the economists and writers I regularly read, there are some who, if they agree with me, I go back and check my assumptions – I must have been wrong. Paul Krugman is one of those thinkers. I admit to his brilliance, but his left-leaning philosophy does not particularly square with mine, and I find that most of the time I disagree.

That being said, I strongly encourage you to read his essay in the New York Times Magazine, which comes out this weekend. It is worth the high price of the Times to read it, if you can’t get it online. It is a very hard critique and analysis of the failure of current macro and financial economic thought, which didn’t even come close to predicting the current financial malaise. Indeed, as he points out, most schools of thought said the state we…
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Krugman, 2002

Krugman, 2002: "Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble."

Tom, at Applying the Lessons of Free Market Economics: 

I check in with Stefan Karlsson’s blog once in a while. He is a young economist working in Sweden. Anyway, he put me onto this amazing Krugman column from 2002.
 
Has anybody ever made Keynesian thinking more transparent? And does anybody still think Krugman’s current prescriptions will be effective? More importantly, perhaps, does anybody still think the bubble was inadvertent? In How the Government Caused the Crisis I argued that the housing bubble was a deliberate Fed creation to achieve a particular political goal. To my mind, this Krugman column adds to the evidence. If Krugman could think like this, so could Bush Administration operatives — and we know that Greenspan was never anything but a tool in their hands.

Krugman and McCulley, Déjà Vu All Over Again

Courtesy of Mish

Paul Krugman says Stay the Course.

The debate over economic policy has taken a predictable yet ominous turn: the crisis seems to be easing, and a chorus of critics is already demanding that the Federal Reserve and the Obama administration abandon their rescue efforts. For those who know their history, it’s déjà vu all over again – literally.

In previous liquidity-trap episodes, policy makers gave in to these pressures far too soon, plunging the economy back into crisis. And if the critics have their way, we’ll do the same thing this time.

A few months ago the U.S. economy was in danger of falling into depression. Aggressive monetary policy and deficit spending have, for the time being, averted that danger. And suddenly critics are demanding that we call the whole thing off, and revert to business as usual.

Those demands should be ignored. It’s much too soon to give up on policies that have, at most, pulled us a few inches back from the edge of the abyss.

Flashback August 2, 2002

With thanks to "CS" for sending me the link, inquiring minds are investigating what Krugman was thinking on August 2, 2002.

Please consider Dubya’s Double Dip?

A few months ago the vast majority of business economists mocked concerns about a "double dip," a second leg to the downturn. But there were a few dogged iconoclasts out


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Phil's Favorites

A military perspective on climate change could bridge the gap between believers and doubters

 

A military perspective on climate change could bridge the gap between believers and doubters

A soldier stands guard at the damaged entrance to Tyndall Air Force Base in Panama City, Florida, Oct. 11, 2018, after Hurricane Michael. AP Photo/David Goldman

Courtesy of Michael Klare, Hampshire College

As experts warn that the world is running out of time to head off severe climate change, discussions of what the U.S. should do about it are split into opposing camps. The scie...



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Zero Hedge

The Angels Are Falling: Macy's Downgraded To Junk; Stock Tumbles

Courtesy of ZeroHedge View original post here.

More than two years after Horseman Capital first suggested shorting BBB names on the expectation that a coming recession would lead to an avalanche of "fallen angels", or 'just barely' investment grade names being downgraded to junk, resulting in a major hit to the high yield sector which, sized just over $1 trillion would not be able to absorb the roughly $3 trillion in BBB-rated credits without a corporate bond market crisis, the thesis is star...



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Kimble Charting Solutions

Tech Leader Facing Important Long-Term Breakout Test!

Courtesy of Chris Kimble

Since the 2009 lows, Semiconductors have been taken a leadership role as they have far outpaced the gains of the S&P 500.

Gains since the 2009 lows; SOXX Index = +821% S&P 500 = +273%.

The SOXX index has spent the majority of the past 10-years inside of rising channel (1), which first started at the  2009 lows.

As the SOXX index is testing the top of this 10-year rising channel, it is also testing its Fibonacci 423% extension level of its 2001 highs and 2009 lows at (2).

This leading index would send a positive message t...



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Insider Scoop

6 Consumer Cyclical Stocks Moving In Tuesday's Pre-Market Session

Courtesy of Benzinga

Gainers
  • Tesla, Inc. (NASDAQ: TSLA) shares rose 6.9% to $855.12 during Tuesday's pre-market session. The most recent rating by Morgan Stanley, on February 18, is at Underweight, with a price target of $500.00.
  • Foresight Autonomous, Inc. (NASDAQ: FRSX) shares moved upwards by 5.8% to $1.10.
  • NIO, Inc. (NYSE: NIO) stock surged 2.4% to $3.87. The most recent rating by Piper Jaffray, on December 03, is at Neutral, with a price ...


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Biotech & Health

Coronavirus: the blow to the Chinese economy could be felt for years

 

Coronavirus: the blow to the Chinese economy could be felt for years

Courtesy of Chusu He, Coventry University

Investors are still being fairly complacent about the novel coronavirus. After the number of new daily cases suddenly shot up to more than 15,000 on February 12 following more than a week of decline, there were some jitters in the markets. With Chinese authorities saying the increase was due to a decision to broaden the definition for diagnosing people, there were falls in the region of 1% in European markets, and smaller retrenchments in Asia and North America.

It is...



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Members' Corner

How to Stop Bill Barr

 

How to Stop Bill Barr

We must remove this cancer on our democracy.

Courtesy of Greg Olear, at PREVAIL, author of Dirty Rubles: An Introduction to Trump/Russia

...



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The Technical Traders

Is The Technology Sector Setting Up For A Crash? Part I

Courtesy of Technical Traders

One thing that continues to amaze our research team is the total scale and scope of the Capital Shift which is taking place across the globe.  For almost 5+ years, foreign investors have been piling into the US stock market chasing the stronger US dollar and continued advancement of US share prices. It is almost like there is no other place on the planet that will allow investors to pool capital into such a variety of strong assets while protecting against foreign capital risks.  Yet the one big question remains – when will a price reversion event hit the US stock
market?

So many researchers, even our team of researchers, believe we have found the keys to unloc...



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ValueWalk

Russell 2000 Index (RUT) hits an almost one-month high

By Gorilla Trades. Originally published at ValueWalk.

Ad the Russell 2000 Index (INDEXRUSSELL: RUT) hit an almost one-month high today, commenting on today’s trading Gorilla Trades strategist Ken Berman said:

Q4 2019 hedge fund letters, conferences and more

Russell 2000 Index (INDEXRUSSELL: RUT) Outperforms Large-Cap Benchmarks

While the overnight session was nothing short of scary stocks held on to most of yesterday's gains and small-caps even extended their winning streak. The Russell 2000 Index (INDEXRUSSELL: RUT) hit an almost one-month high today, finishing higher for the fourth day in a row while outperforming the large-cap benchmarks, and since the Volatility...



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Chart School

Dow theory warning from the Utilities Index

Courtesy of Read the Ticker

Charles Dow died in 1902, and the investors should thank him for his ever lasting Dow Theory Analysis.

Carrying on this blog theme looking at the Utility stocks. Previous post.
Dow Jones Utility index could trade like the FANGs
Formula for when the Great Stock Market Rally ends



You can learn about Dow Theory here

This post is concerned wi...

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Digital Currencies

Bitcoin Price May Hit $27K All-Time High By Summer, Predicts Fundstrat's Tom Lee

Courtesy of ZeroHedge View original post here.

Authored by William Suberg via CoinTelegraph.com,

Bitcoin is primed for average gains of almost 200% over the next six months, one of its best-known supporters has told mainstream media. 

...



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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

The ‘experts’ I hear from keep saying that once 300B more in reserves have ...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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