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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Zero Hedge

A Corporate-Debt Reckoning Is Coming

Courtesy of ZeroHedge View original post here.

Via 13D Global Strategy and Research,

The following article was originally published in “What I Learned This Week” on March 26, 2020. To learn more about 13D’s investment research, please visit their website.

Corporate debt is the timebomb everyone saw ticking, but no one was able to defuse. Ratings agencies warned about it: Moody’s, S&P. ...



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ValueWalk

Pandemic-related deterioration may cause a drop in PMI

By Gorilla Trades. Originally published at ValueWalk.

In an intra Day note to investors, Gorilla Trades strategist Ken Berman, while commenting on the pandemic-related deterioration, said:

The major indices are all trading lower at midday following another choppy and bearish morning session on Wall Street. The continued exponential growth in the number of U.S. COVID-19 cases and the weak economic data have been weighing on investor sentiment, but stocks are holding up relatively well following yesterday’s bounce. The government jobs report was at the center of attention this morning following yesterday’s record number of new jobl...



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Phil's Favorites

Unmasking the Truth on Masks to Protect Against Coronavirus: Fire the Surgeon General

Courtesy of Pam Martens

By Pam Martens and Russ Martens: April 3, 2020 ~

On March 23 we wrote this:For want of a mask the largest economy in the world has been gutted, with Goldman Sachs now projecting that U.S. GDP could contract by as much as 24 percent in the second quarter.” Now, in the past two weeks, 10 million Americans have filed claims for unemployment. Let that sink in, 10 million of our fellow citizens have l...



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Kimble Charting Solutions

Depression Coming or Is the Bottom Already In? Joe Friday Says Your Answer Lies Here!

Courtesy of Chris Kimble

Are we headed towards a Depression or is the worst already behind us? In today’s world, comparisons to the great depression are easy to find.

Are the Depression concerns well founded or are the declines of late already pricing in a bottom?

In my humble opinion, this chart and the upcoming price action of this index will go miles and miles towards telling us if we are headed towards very tough times or if the huge declines of late are actually in a bottoming process.

This chart looks at the Thomson Reuters Equal Weighted Commodity Index on a monthly basis over the past 54 years. The index has been heading south, reflecting weakness in demand for basi...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Biotech/COVID-19

Antibodies in the blood of COVID-19 survivors know how to beat coronavirus - and researchers are already testing new treatments that harness them

 

Antibodies in the blood of COVID-19 survivors know how to beat coronavirus – and researchers are already testing new treatments that harness them

A person who has recovered from COVID-19 donates plasma in Shandong, China. STR/AFP via Getty Images

Ann Sheehy, College of the Holy Cross

Amid the chaos of an epidemic, those who survive a disease like COVID-19 carry within their bodies the secrets of an effective immune response. Virologists like me...



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The Technical Traders

Founder of TradersWorld Magazine Issued Special Report for Free

Courtesy of Technical Traders

Larry Jacobs owner and editor of TradersWorld magazine published a free special report with his top article and market forecast to his readers yesterday.

What is really exciting is that this forecast for all assets has played out exactly as expected from the stock market crash within his time window to the gold rally, and sharp sell-off. These forecasts have just gotten started the recent moves were only the first part of his price forecasts.

There is only one article in this special supplement, click on the image or link below to download and read it today!

...

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Chart School

Big moving Averages and macro investment decisions

Courtesy of Read the Ticker

When price is falling every one wonders where demand will come in.


RTT black screen Tv videos study the simplest measure of price (simple moving average). What has happen before guides us now. 














Changes in the world is the source of all market moves, to catch and ride the change we believe a combination of Gann Angles, ...

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Members' Corner

10 ways to spot online misinformation

 

10 ways to spot online misinformation

When you share information online, do it responsibly. Sitthiphong/Getty Images

Courtesy of H. Colleen Sinclair, Mississippi State University

Propagandists are already working to sow disinformation and social discord in the run-up to the November elections.

Many of their efforts have focused on social media, where people’s limited attention spans push them to ...



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Digital Currencies

While coronavirus rages, bitcoin has made a leap towards the mainstream

 

While coronavirus rages, bitcoin has made a leap towards the mainstream

Get used to it. Anastasiia Bakai

Courtesy of Iwa Salami, University of East London

Anyone holding bitcoin would have watched the market with alarm in recent weeks. The virtual currency, whose price other cryptocurrencies like ethereum and litecoin largely follow, plummeted from more than US$10,000 (£8,206) in mid-February to briefly below US$4,000 on March 13. Despite recovering to the mid-US$6,000s at the time of writin...



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Promotions

Free, Live Webinar on Stocks, Options and Trading Strategies

TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

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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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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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