This column has always seen it as its solemn duty to keep readers abreast of the latest developments in the ideas as well as the action in the financial markets, even if these are no more than fads and ‘buzz words’ or phrases that have a brief season of popularity and then fade away into richlydeserved oblivion.

In that vein, it is now incumbent upon everyone who seeks to at least mount a pretence of knowing what’s going on, to talk with great authority about ‘the taper’. This is not, as some anachronistically-educated persons might think, something to do with medieval illumination devices. It refers, instead, to the possibility that the Federal Reserve might choose to begin, at some point in time in the not-too-distant future, to gradually reduce (as in ‘taper’) the amount of money it is pumping into the US and global financial system.

Continue reading ‘Taper Caper’ »

Just two weeks ago, this column discussed the threat posed by the increasing volatility characterizing the behavior of the Japanese financial markets. In the intervening period, two things have happened: there has been a dramatic increase in the degree of interest in and coverage of the Japanese markets, and those markets themselves have become still more volatile. Furthermore, that volatility has spread around the world, especially in bond markets.

Continue reading ‘Getting Jumpy’ »

A recent survey of fund managers found that whilst they are generally very optimistic about global markets — even more than fund managers normally tend to be – when asked about what their main concerns are, it transpired that their focus had changed. No longer was Europe regarded as the primary threat to the world economy, although it remained a problem. Rather, and pushing aside the PIIGS as the bogey-countries, the new threat identified by the money guys was a two-headed monster on the other side of the world.

Continue reading ‘Asian Perils’ »

Let’s revert to the domestic arena – not for lack of interesting developments overseas, but because the level of noise emanating from the ‘discussion’ surrounding the budget proposal and accompanying economic policy program is just so disturbing, in every sense.

Continue reading ‘Sound and Fury’ »

Most, although not all, major stock indexes in the US made new highs earlier this week and may make even newer before the week is out. In the case of the Standard and Poor’s 500 Index, this was a(nother) all-time high. In the case of the Nasdaq Composite Index it was merely a 13-year high. Other, less well-known indices were also powering ahead – as were their European peers, although in their cases, the highs were mostly of much shorter vintage. But the German stock exchange is not far from its all-time high, recorded in 2007 and the UK market is also within hailing distance of record levels.

Continue reading ‘Parallel Universes’ »

Typically, even when there is good news – seriously good news, not just a minor item or fleeting event – you wouldn’t know about it unless you made an effort to find out. The simplest explanation for this phenomenon is to see it as part of the information overload problem and the inability of the media to sort and filter the flow of information and data, so that what is important is extricated from what is secondary, or completely irrelevant.

Continue reading ‘The Black Hole Shrinks’ »

This has been a dramatic week in many countries and cities around the world although, fortunately and so far, not in Israel. Extraordinary and far-reaching events are taking place across a broad spectrum of geographies, polities, economic sectors and financial assets, but most of them are either not reported or glossed over. Even the ones that are given coverage are often misinterpreted, or are played up at the expense of even more important developments.

Examples? Available by the dozen, but here are a random few:

Continue reading ‘Getting to the Core’ »

The key fact to know about the financial markets today – all of them, including the markets for shares, bonds, currencies and every other kind of financial instrument – is that they are warped out of recognition and hence totally dysfunctional. Their proper function is to provide information – and to update said information on an ongoing basis – as to the relative value of the instruments traded on them.

Continue reading ‘Investing in La-La-Land’ »

First, the background facts. Haruhiko Kuroda is the new Governor of the Bank of Japan (the Japanese central bank). He was appointed by the recently re-elected Prime Minister, Shinzo Abe, with the mission of delivering on Abe’s central promise of pulling the Japanese economy out of a deflationary spiral that has lasted at least 15 years and shows no signs of ending. Kuroda has talked up a storm in advance of and subsequent to his taking office last month, promising to blast Japan out of deflation and get it to a rate of inflation of 2% per annum – within two years. Everyone agrees that this is an extremely difficult target and that it will require extraordinary measures to achieve.

Continue reading ‘Kuroda Goes to War’ »