There isn’t much going on today. All the breathless excitement from the Mueller investigation came yesterday, the president of Catalonia escaped to Brussels, and Trump is dragging out the Fed Chair announcement. I’m going to do a quick write up with the Taylor Rule and the assumptions made by the San Francisco Federal Reserve (I’ll post it later), but see if you can win!
- See if you can set monetary policy better than the Fed. I got 4.49% unemployment and 2.36% inflation. SF Federal Reserve
- Tyler Cowen, my favorite economist, on Trump and the Fed decision. Bloomberg
- Despite additional PBOC measures, Chinese treasuries down. Yields highest since 2014. Nasdaq
- As much as we love the Powell/Yellen/Taylor race, the succession at the PBOC may be infinitely more important. Nikkei Asian Review
- Long form interview with ECB Executive Board Member Benoît Cœuré. ECB
Tuesday, 2017.10.31 (all times Central)
I’ve been talking a lot about Taylor and his eponymous rule lately. I’ve made a point of saying all along that I think Yellen gets renominated for Fed Chair, but those arguments all basically apply to Powell also. I’ve been looking at FOMC voting patterns to see if Powell is even a hair more hawkish or dovish than Yellen, and I found something interesting. No Fed Governor has dissented since the June 2012 meeting (Powell’s first).
Continue reading “The Board of Governors voted unanimously”
Political Risk on the agenda today: Paul Manafort being charged with stuff, Bundesbank is annoyed about QE, and Catalonian independence marches on.
- Former Trump campaign manager, Paul Manafort, told to turn himself in. This is a bit of style drift, but it’s important. CNN
- The most interesting thing about BOJ meetings is how many different ways they can talk about not doing anything. ForexLive
- I can’t believe they don’t throw a press conference at the end of every Fed meeting … although I also run a website about the FOMC. MarketWatch
- Cracks in Europe. Catalan officials only face 30 years in jail for Rebellion … not bad. BBC
- Cracks in Europe. Germany says they hate open-ended quantitative easing. Seattle Times
What should interest rates be now?
stir = π+ r* + 0.5(π – 2%) + 0.5(y – y*)
Continue reading “The Taylor Rule, part 2”
Here’s another instance of institutions pushing out the risk curve.
Banks once owned the majority of credit assets, leaving institutional investors with limited access to these markets. Although the financial crisis accelerated the banks’ exit from many of these investments, the process had begun earlier in the decade.
Continue reading “Private Debt”
Good piece in the FT about Jack Bogle (Vanguard) saying that ETFs and index tracking mutual funds could become 90% of the equity market. At some point, you must reach “peak passive”, right?
Passive funds, and their long term returns, work because there are active managers pricing stocks.
Continue reading “Passive investing”