Inside ETFs – A breakdown of zero interest-rate policy (ZIRP) David Kotok, co-founder of Cumberland Advisors explains what ZIRP means for your clients and why you should pay attention to being at zero. Feb 25, 2020 Links to other websites or electronic media controlled or offered by Third-Parties (non-affiliates of Cumberland Advisors) are […]
Surveillance: Negative Rates with Mohamed El-Erian (Bloomberg Radio Podcast) Hosts: Tom Keene, Jon Ferro, and Pimm Fox David Kotok, Cumberland Advisors Co-Founder & CIO, says negative interest rates are at a peak. Michael Holland, Holland & Co. Chairman and Founder, thinks the Fed is far more important for markets than a U.S.-China trade deal. Dana […]
In the famous 1939 movie Gone with the Wind, Scarlet O’Hara (Vivien Leigh) delivers this poignant entreaty to Rhett Butler (Clark Gable): “Where shall I go? What shall I do?” Rhett counters with the retort, “Frankly, my dear, I don’t give a damn.” A blockbuster line delivered in just seconds, it has endured for decades. […]
Cumberland Advisors’ David R. Kotok talks about his current market and investment outlook. Hosted by Lisa Abramowicz and Paul Sweeney. Running time 07:54 Play Episode Before it’s here, it’s on the Bloomberg Terminal. LEARN MORE Also see David’s Nov 25, 2019 commentary on NIRP: https://www.cumber.com/cumberland-advisors-market-commentary-nirp-lagarde-trump-dickens-holidays/ If you’ve enjoyed this exchange, please feel free to explore […]
Cumberland Advisors’ David R. Kotok talks about negative interest rates, NIRP, and says the European Central Bank’s (ECB) Christine Lagarde has a difficult task right now. He also discusses China, the pork shortage, and the impact of viruses on the global food supply. Running time 25:02, David is introduced at the 10:45 mark – Play […]
Excerpt from ForexLive’s “Negative interest rates aren’t working” Nov, 25 2019 Author: Adam Button There haven’t been any victories in the negative-rate world. The ultimate test of any theory is in the results. The idea behind negative interest rates is that they will spur borrowing and economic activity, leading to inflation and a weaker currency. It […]
Negative-interest-rate policies (NIRP) have been criticized by some (me included) and pursued by others, including Europeans aligned with former European Central Bank (ECB) president Mario Draghi. However, growing numbers of Europeans are becoming disenchanted with NIRP, and some are now shifting away from it. In our view, negative rates have, predictably, damaged growth for over five years. The ECB’s new president, Christine Lagarde, seems to understand that she faces a daunting task in extricating ECB policy from reliance upon negative rates.
Here is an excerpt from her first speech:
“In my view, since our challenges are common ones, we must meet them with a common response. This involves moving towards a new European policy mix, which has a number of key elements. The first is monetary policy, which I start with because it is my area of responsibility and which will undergo a strategic review due to begin in the near future.”
Hat tip to Kevin Humphreys for the reference. Kevin is manager, European money markets, for BGC Partners. He is based in London. Kevin has kindly given us permission to share his observations with our readers. We completely agree with his view.
“Having had a few references of late from board members to potential side-effects of European Central Bank monetary policy, it was perhaps of little surprise that the ECB in their financial stability report should highlight that sub-zero interest rates have forced large investors to take on more risks and businesses to take on more debt. Equally unremarkable were the other two main observations, that bank profitability prospects have weakened and that mispriced assets may represent a vulnerability.
Peter Boockvar, a Camp K fisherman and a super-sharp analyst, sent the note and chart below. We thank him for giving us permission to share his note below. It is logical that gold would outperform $14 trillion of negative-interest-rate sovereign debt issued by creditworthy governments like Germany and Switzerland. Remember: Gold counts as a monetary […]
On July 29 we published a long piece entitled “Cash, NIRP & Bonds” (https://www.cumber.com/cash-nirp-bonds/). We published Part-2 on this past Monday. See https://www.cumber.com/cash-nirp-bonds-part-2/. Having talked about cash, let’s now add negative rates to the calculus an investor must perform. With a positive rate, we can compute the sensitivity of a bond’s price to a change […]
On July 29 we published a long piece entitled “Cash, NIRP & Bonds” (https://www.cumber.com/cash-nirp-bonds/). Now we see a German bank succumbing to pressure and starting to charge its customers a pass-through of the negative interest rate that the commercial bank is paying to the central bank. In the eurozone, the lowest negative rate is minus […]