HEDGED.BIZ

A look at economics, markets, finance and the irrational human being

Weak Inflation, Fed Policy and US Bond Yields. Bond Rally To Continue?

Given the importance of inflation to central bank policy and thus to investors, it is useful to look not only at headline growth rates of CPI but also at the components of the index and the behaviour of each component. Housing represents 42.6% of the basket. Within that, owners’ equivalent rent, not a cash flow
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How High/Low/Long Can You Go?

Can US equities sustain a bull market or even current levels without central bank support? Prior to unconventional monetary policy, the last 2 bull markets lasted from 1995 – 2000, and 2002 – 2007, or roughly 5 years in each case. What is not so easy to explain is why equities and corporate bonds have
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Europe. Growth, Value and Slightly More Stability (well, relatively)

Europe is in steady recovery mode, benefiting from the delayed effects of QE. Eurozone Purchasing Manager Indices (PMIs) have been rising across manufacturing and service industries for the last 6 months. Industrial production is growing at a steady 1.9%. Inflation has risen to 1.9% headline and 1.2% core. GDP is forecast to rise at 1.70%
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OPEC Is Managing The Oil Market Poorly. Oil Prices Likely To Rise.

OPEC is doing a terrible job of managing the oil price. The oil price prognosis depends on the time frame. In the very long run, oil will no longer be a viable fuel for a planet facing global warming. In the very long run, demand will disappear as cleaner, more sustainable sources of energy are
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Why Is Volatility So Low? Is It Complacency? No Its Not.

VIX, an indicator of implied volatility for the US stock market, has been chronically low, and surprisingly low given the geopolitical and economic concerns in the economy. Market consensus is that the US stock market is expensive and that growth may not be as strong as expected, especially if the expected fiscal stimulus policies of
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