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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
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Each dispersal of the fog reveals greater sub-prime losses, contagion to other markets and more reasons to expect a continually falling dollar. And bond market liquidity is again worsening.
Published November 2007 Bridport bond outlook
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A rebound in stock prices after several days of falls could signal a change in mood, but we doubt it as the underlying US economic problems are far from resolved.
Published November 2007 Bridport bond outlook
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If you thought it was
Published November 2007 Bridport bond outlook
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Beyond the week-to-week developments of financial markets, a “mega-trend” is firmly underway, providing a background to individual events: the shift of economic power from the West to the East.
Published October 2007 Bridport bond outlook
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From Euromoney’s AsiaHedge Conference in Hong Kong, the USD and the US economy look very weak. Investors here plough on, while in the West “wait and see” rules.
Published October 2007 Bridport bond outlook
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Whether the USA and other countries are heading for inflation or deflation is far from obvious. Consider both sides of the argument to review likely Fed rate moves.
Published October 2007 Bridport bond outlook
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The UK has US-like symptoms of a housing bubble and a sub-prime mortgage market, fed by unscrupulous selling, inadequate due diligence and lax supervision. Expect changes in financial market regulation.
Published October 2007 Bridport bond outlook
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One of the financial market problems, bank illiquidity, is slowly being solved. However, the US economy is facing slowdown or recession. We hope the rest of the world will cope.
Published October 2007 Bridport bond outlook
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The Fed rate cut may have been justified, but it does not solve deep-seated problems, notably falling house prices. But at least serious rebalancing of the world's economy is underway.
Published September 2007 Bridport bond outlook