Category Archives: Economy

BOE, ECB, Economy, FED

Unprecedented stimulus by the Fed and other central banks made many traditional models useless,

If the insatiable demand for bonds has upended the models you use to value them, you’re not alone.

Just last month, researchers at the Federal Reserve Bank of New York retooled a gauge of relative yields on Treasuries, casting aside three decades of data that incorporated estimates for market rates from professional forecasters. Priya Misra, the head of U.S. rates strategy at Bank of America Corp., says a risk metric she’s relied on hasn’t worked since March.

After unprecedented stimulus by the Fed and other central banks made many traditional models useless, investors and analysts alike are having to reshape their understanding of cheap and expensive as the global market for bonds balloons to $100 trillion. With the world’s biggest economies struggling to grow and inflation nowhere in sight, catchphrases such as “new neutral” and “no normal” are gaining currency to describe a reality where bonds are rallying the most in a decade.

http://www.bloomberg.com/

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    http://www.bankofengland.co.uk/publications/Documents/speeches/2017/speech986.pdf https://www.bloomberg.com/news/articles/2017-06-28/draghi-s-prudence-warning-confirmed-by-reaction-to-his-own-words      
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  • Reminder :: Quantitative easing alone will not do the trick
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    Very low inflation poses a mounting threat to the economic stability of the eurozone. The rate of consumer price inflation has been below 1 per cent since October, and hence far below the European Central Bank’s (ECB) target of just below 2 per cent. This highlights the degree of weakness…
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  • No central bank had considered any of these measures
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    Who would have thought that six years after the global financial crisis, most advanced economies would still be swimming in an alphabet soup – ZIRP, QE, CE, FG, NDR, and U-FX Int – of unconventional monetary policies? No central bank had considered any of these measures (zero interest rate policy,…
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Economy, Trading

European bonds signaling trouble?

The quick move higher in the yields of Europe’s weakest sovereigns from historic lows may be just the beginning and on the edges it could start to affect other low-rated credits where investors have hunted for yield—such as U.S. junk bonds.

Driven by speculation about the European Central Bank and selling by major investors, the prices of peripheral European bonds have been weakening since last week. As a result, the yields of sovereigns—Spain, Italy, Greece, Portugal and Ireland—have all moved higher, while the core German bund yield has edged just slightly higher.

The 10-year Spanish bond, for instance, was yielding 3.008 percent Tuesday, after reaching a low of 2.832 percent last Thursday, its lowest level in 20 years. As investors sell, Greece’s 10-year yield is creeping back toward 7 percent, after making a four-year low of 5.85 percent in April.

http://www.cnbc.com/id/101690083

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Economy, Trading

When George Soros Broke the British Pound

In 1992, George Soros brought the Bank of England to its knees. In the process, he pocketed over a billion dollars. Making a billion dollars is by all accounts pretty cool. But demolishing the monetary system of Great Britain in a single day with an elegantly constructed bet against its currency? That’s the stuff of legends.

Though just two decades ago, Soros made his nation-shaking bet in a very different time. Back then, hedge funds hadn’t yet entered the public consciousness, restrictions on capital flowing from one country to another were just lifted, and the era of the 24 hours a day news cycle had just begun.

To appreciate how Soros made a fortune betting against the British pound requires some knowledge of how exchange rates between countries work, the macroeconomic tools governments use to stimulate economies, and how hedge funds make money. Our readers are invited to correct us if we stumble in explaining any of these concepts.

And so onwards with the story of how George Soros led a group of traders to break the entire foreign currency system of Great Britain and profit handsomely at the expense of British taxpayers and others who were on the wrong side of the greatest financial bet of the 20th century.

Read more here : http://priceonomics.com

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Economy, Startup

V.C. Firm Names Robot To Board of Directors

In case you needed more proof that all our jobs will one day be occupied by robots, a Hong Kong V.C. firm has just named an artificial intelligence tool to its board of directors. The company’s also insisting the tool will be treated as an “equal” to the other board members.

Sure, it’s all probably a bid for press — but it’s still pretty funny.

A press release from Aging Analytics UK, a company that conducts research on biotechnology and regenerative medicine, made two announcements this morning: first, that they’ve launched an new A.I. tool called VITAL (Validating Investment Tool for Advancing Life Sciences); and second, that they’ve licensed VITAL to Hong Kong V.C. firm Deep Knowledge Ventures, where the tool will become an “equal member of its Board of Directors.”

Yes, that means it’ll have exactly the same power as a living, breathing, presumably college-educated human being.

Read more at http://betabeat.com/

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Economy, Startup

Why Square Wallet failed, and why Coin card is next…

Square’s recent troubles are not exactly a secret. The Wall Street Journal published a detailed analysis on April 21, detailing Square’s financial troubles and its rapidly shrinking cash position. Square took on a $100 million debt financing option earlier this year, but even with that option, WSJ and The Verge reported that the company only had about nine months of operating cash before it hit “predetermined ‘cushion’ of funds set aside as a last resort.” To add to its woes, Square was called out on removing Square Wallet from the iTunes and Google Play stores today. While Square Wallet is not Square’s core business (I would argue Square Register with its dongle still is), the app was intended to be the next big thing in payments. While Square is repositioning its platform around its “Square Order” app, it is clear that the wallet app didn’t take off.

http://www.bankinnovation.net/

 

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