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In combating inflation the credit squeeze may suffice in the medium-term, but, while waiting for its impact, central banks want to hold the fort with one or two rate increases.
Published July 2008 Bridport bond outlook
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The American consumer is now noticing the diversion of his already restricted spending power to costly food and fuel, squeezing his ability to pay back mortgage and other debt.
Published June 2008 Bridport bond outlook
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Inflation and recession together, and central bankers recognising that they had better fight the former now than risk a greater recession later: what does that mean for fixed-income investors?
Published June 2008 Bridport bond outlook
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In the debate dual-mandate versus inflation-focus for central banks, the ECB approach of “control inflation and the rest will follow” seems ahead with even the Fed coming round.
Published June 2008 Bridport bond outlook
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This week is seeing three turning points to do with the commodities bubble, vehicle technology and the attitude of the Fed towards inflation. The credit crisis’ second phase is underway.
Published June 2008 Bridport bond outlook
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High oil prices and a credit squeeze together: no coincidence. In fact, knock-on and secondary effects of the cheap money policy of the USA are our themes this week.
Published May 2008 Bridport bond outlook
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Against a background of unrelenting bad economic news, we consider the looming dangers of the world’s largest unregulated insurance and financial market: credit default swaps.
Published May 2008 Bridport bond outlook
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The data used to calculate LIBOR may be improved by threatening the participating banks, but how can we deal with official statistics which have been creatively manipulated for decades?
Published May 2008 Bridport bond outlook
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All the economic news is negative or not so bad as expected. We therefore suspect a bear trap, which may even extend to some bonds. Beware Credit Default Swaps.
Published May 2008 Bridport bond outlook
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The central banks have done a good job on liquidity, but the credit squeeze, the US recession and inflation rather suggest the current calm is the eye of a storm.
Published April 2008 Bridport bond outlook
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Three dangers: credit crisis, recession and inflation. Only the first is being dealt with, and then essentially only in terms of liquidity. Expect a “U”-shaped recession with a long base.
Published April 2008 Bridport bond outlook
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We have long identified three underlying causes of the crisis, but this week the figure three arises again in the dangers threatening an orderly move to a rebalanced world economy.
Published April 2008 Bridport bond outlook
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Neither excessive optimism or pessimism is appropriate. US recession is a key component of economic rebalancing and just may be being given the time and conditions for orderly work through.
Published April 2008 Bridport bond outlook
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Can central banks give an implicit guarantee that they will allow no bank to fail without reintroducing the moral hazard which has done so much to cause the crisis?
Published April 2008 Bridport bond outlook
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The consequences of the credit squeeze have so many dimensions that we can appropriately speak of the end of an era, or of history in the unfolding.
Published March 2008 Bridport bond outlook
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Another Fed boost, another stock rally, but this is all palliative. Inflation and recession in the USA, but the Rest of the World may get off lightly.
Published March 2008 Bridport bond outlook
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This crisis is not just about illiquidity but also about insolvency and the fear that borrowers, including banks themselves, will not repay. The Fed “boost” misses the point.
Published March 2008 Bridport bond outlook
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The disarray in US economic policy in both the contradictory appeals by Paulson and Bernanke regarding mortgage bail-outs, and by a constantly changing approach to the monoline problem.
Published March 2008 Bridport bond outlook
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If you thought that banks had already recuperated off-balance sheet vehicles, think again. Variable Interest Entities, an Enron device, have yet to play out with the downgrading of monolines.
Published February 2008 Bridport bond outlook
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Cannons to the left of us, cannons to the right. In this case sub-prime losses being revealed across Europe, not just the USA, and monolines in slow collapse.
Published February 2008 Bridport bond outlook
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The signs are that, while talking reassurance, the US authorities are really moving towards damage limitation. What the Buffett intervention really implies is that monoline insurers can go hang.
Published February 2008 Bridport bond outlook
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If Europe and Japan authorities are reluctant to follow the same path their US counterparts, are we really moving towards serious rebalancing, even if via a shared recession?
Published February 2008 Bridport bond outlook
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Be a fly on the wall for a discussion amongst US policy makers. Any resemblance to people living or dead is purely deliberate. Be duly frightened!
Published January 2008 Bridport bond outlook
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Greenspan put Mark II has been put into action, but seems unlikely to reverse economic decline. The UK is as bad as the USA, but inflation is more explicitly admitted.
Published January 2008 Bridport bond outlook
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Systems failure, first cited by us last July, is now apparent and will demand months or years to repair. Contagion from the USA is looking more serious than we thought.
Published January 2008 Bridport bond outlook
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For perhaps the first time in a hundred years, the world economy may be able to expand despite a slowdown, or even a recession, in the USA.
Published January 2008 Bridport bond outlook
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The central banks are doing all they can to resolve the liquidity crisis, but they can do so little about underlying solvency problems. Only time can solve them.
Published December 2007 Bridport bond outlook
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Against his better judgment, Bernanke has cut the Fed rate, thereby dissatisfying everyone, including himself. What the USA needs, and Bernanke knows this, is lower consumption for economic rebalance.
Published December 2007 Bridport bond outlook
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US consumers are still spending like there will be no tomorrow. That may be their motive! In the UK, in contrast, the credit squeeze is beginning to bite.
Published December 2007 Bridport bond outlook
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Another “Tuesday effect”, with Abu Dhabi buying into Citigroup, does not mean a change of fortunes. Now another securities class, “auction bonds” is contributing to the loss of confidence.
Published November 2007 Bridport bond outlook