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Following the FOMC’s announcement of its third consecutive rate cut after its meeting this week, speculation immediately broke out among market participants about whether additional cuts or even rate increases might be on the horizon going into 2020. However, such speculation is probably more noise than substance at this point, since the Committee’s statement was […]
Bloomberg TV – Daybreak Asia October 30, 2019 Robert Eisenbeis, vice chairman and chief monetary economist at Cumberland Advisors, discusses the potential for another Fed rate cut in December and beyond and his thoughts on communication from the central bank. He speaks on “Bloomberg Daybreak: Asia.” (Source: Bloomberg) WATCH HERE (or click the embedded […]
of federal reserve interest rate risk (data from BloombergDuration.xlsm). CUMB-E Index of Federal Reserve Policy Flexibility. Note: An increase in the measure means the Fed’s interest rate risk exposure has decreased
As a follow-up to David Kotok’s piece last week on taxing wealth (https://www.cumber.com/cumberland-advisors-market-commentary-wealth-tax/), it may be useful to remind readers what the potential incentive effects might be when it comes to the implications of wealth tax proposals to tax wealth may have on entrepreneurs and business structures. Proponents of a wealth tax are motivated by […]
We wrapped up our Labor Day Camp Kotok with a round of excellent on-the-record discussions that we’re happy to share with you here. David Kotok and Charles Plosser at Camp Kotok: The Challenges Facing Central Banks David Kotok and Christopher Whalen at Camp Kotok: Capital Markets, Debt and Deflation David Kotok and Doug Duncan at […]
“Americans will always do the right thing — after exhausting all the alternatives.” Winston Churchill? Abba Eban? An Irishman? Apocryphal? For a history of the quote, see: https://quoteinvestigator.com/2012/11/11/exhaust-alternatives/ . When it comes to interest rates, inflation, and financial markets, that hopeful outcome is being sorely tested. We’ll look at some current evidence of US economic trouble […]
The past couple of weeks have been breathtaking for bond investors and observers of the bond market. The yield on the 30-year Treasury bond is now at a record low – it dipped under 2% this week – and the 10-year Treasury is not far off its record low of 1.36% set in July 2016 […]
The FOMC decided to throw a pass by cutting rates; but given the market’s response, it looks like they were tackled for a loss. In Woody Hayes’ parlance, the one positive of a forward pass turned into a negative. Powell attempted to offer three justifications for the policy move: to insure against downside risks, to […]
In our previous discussion of the three options facing the FOMC – raise the funds-rate target, hold the rate steady, or cut the target rate – we argued that there were risks and potentially negative consequences associated with each. The first option would shock markets and raise questions about the Committee’s rationale, regardless of what […]
Ohio State’s Woody Hayes used to say that his problem with the forward pass was that “Three things can happen, and two of them are bad.” Well, after Chairman Powell’s testimony last week, the FOMC may find itself in a similar position, only maybe worse. The Committee can do three things – lower rates, keep […]
