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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 […]
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 […]
The Federal Reserve Bank of New York announced on Friday, Oct 4 that it would continue to offer a maximum of $75 billion in overnight repurchase agreements and at the same time offer a series of term repos through at least November 4 according to the following schedule:[1] This extension seems to be an attempt […]
In early September 2019 there was an unusual spike in rates in the repurchase (“repo”) market causing a liquidity squeeze on broker-dealers that use repos to finance their portfolios of Treasury and agency securities. It remains a mystery as to what catalyzed the liquidity squeeze. The response by the Federal Reserve Bank and market participants […]
The week of September 16 saw the Federal Reserve Bank of New York inject funds into the repo market in response to an unusual spike in rates that was above the initial target range for the federal funds rate of 2.0–2.25%. (The target rate was lowered to 1.75–2.00% after the close of the FOMC’s meeting […]
As David Kotok noted in his description of the intellectual discussions that occurred at Camp Kotok in Grand Lake Stream, Maine, one of the topics was so-called Modern Monetary Theory, or MMT.[1] There were four panelists, who were asked to take different sides for the sake of argument, representing positions from the most favorable to […]
Legislation has recently been introduced to require the Federal Reserve to develop a real-time payments system to compete with existing systems. Interestingly, a short time after the introduction of the legislation, the Federal Reserve announced its intention to proceed with plans to develop just such a system. In describing the intent behind the legislation, co-sponsor […]
Bob Eisenbeis, Vice Chairman and Chief Monetary Economist at Cumberland Advisors, and Former Director of Research at the Atlanta Fed, on the April 2019 FOMC meeting and markets.
Bob Eisenbeis, Vice Chairman and Chief Monetary Economist at Cumberland Advisors, and Former Director of Research at the Atlanta Fed, on the April 2019 FOMC meeting and markets.
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 […]
