Market Commentary

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Myths

Author: Bob Eisenbeis, Post Date: November 12, 2008

At a Federal Reserve meeting I attended shortly after he took office, Chairman Bernanke remarked that the plural of anecdote was data.  In that spirit, a working paper last month by economists affiliated with the Federal Reserve Bank of Minneapolis sought to shed some empirical evidence on what they characterized as four myths about the […]

A Program With an Exit Strategy

Author: Bob Eisenbeis, Post Date: November 10, 2008

On October 27th the Federal Reserve began purchasing commercial paper through a special purpose vehicle (SPV) directly from registered insurers under its new Commercial Paper Funding Facility (CPFF). It did so pursuant to Section 13(3) of the Federal Reserve Act in order to provide additional liquidity to that market. The program is limited in the […]

Tinker to Evers to Chance

Author: David Kotok, Post Date: October 31, 2008

These are the saddest of possible words: Tinker to Evers to Chance. Trio of bear cubs, and fleeter than birds, Tinker and Evers and Chance. Ruthlessly pricking our gonfalon bubble, Making a Giant hit into a double — Words that are heavy with nothing but trouble: "Tinker to Evers to Chance." A 1910 baseball poem […]

Dammit! This is NOT the Great Depression

Author: David Kotok, Post Date: October 26, 2008

Bear markets fall into three categories: (A) the most common is the cyclical bear; they average about 20% to 25% down from peak to trough.  (B) Occasionally we experience a secular bear; they typically decline about 45% to 50% from peak to trough.  (C) Lastly and most rare is the devastating bear; these declines are […]

The Muni Hedge

Author: David Kotok, Post Date: October 24, 2008

The rapid deterioration of the municipal bond market in the past month has its roots in the sell-off of all markets in the aftermath of the Lehman Brothers collapse.  From an already cheap level versus US Treasuries, the Bond Buyer 40 (a long-maturity index of investment-grade tax-free bonds) soared to yields much higher than 6%, […]

Investing in a Global Bear Market

Author: David Kotok, Post Date: October 22, 2008

By the end of the third quarter of 2008, equity markets around the globe had registered declines well in excess of 20%, the magnitude commonly considered to indicate a “bear market.” The convergence in market performance is striking. Over the first three quarters of this year, global markets as measured by the MSCI World Index […]

An Offer They Couldn’t Refuse

Author: Bob Eisenbeis, Post Date: October 20, 2008

As the first step in promoting the government’s new voluntary bank capital injection plan, Secretary Paulson summoned the CEOs of the nation’s largest banks to Washington and “made them an offer they couldn’t refuse.”  He told them that as part of the government’s “voluntary” capital program, he was going to “invest” $125 billion of the […]

Shhh! Don’t tell anybody about the 4.2 basis points

Author: Michael Comes, Post Date: October 17, 2008

On July 30, 2008, the President signed into law the Housing and Economic Recovery Act of 2008 (“The Act”). The Act is segmented into three smaller acts, two of which have been highly publicized by the press; these are the Federal Housing Finance Regulatory Reform Act of 2008 and the Foreclosure Prevention Act of 2008. […]

Guardians of Global Financial Stability

Author: Bill Witherell, Post Date: October 15, 2008

Last weekend, as global markets experienced the worst financial crisis since the Depression and economies veer into a recession of unknown depth and duration, Finance Ministers and Central Bank Governors gathered in Washington, D.C., for the Annual Meetings of the IMF and World Bank, and the related, and on this occasion, more critical meetings of […]

The Next New Paulson Plan

Author: Bob Eisenbeis, Post Date: October 13, 2008

When George Allen was recruited by Washington Redskins owner Edward Bennett Williams to come to DC and rebuild the team, Williams said, “George was given an unlimited budget and he quickly exceeded it.”  It now appears that Hank Paulson has done the same.  Instead of using the money in the multi-billion bailout bill to buy […]

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