Fed Chair Jay Powell just sent the most powerful signal from the Fed since March 2015. The Fed has taken a March 2019 rate hike off the table until further notice. At a forum in Atlanta last Friday, reported in this article, Powell used the word “patient” to describe the Fed’s approach to the next
When financial panics begin, they play out in similar ways. First, one asset class has a surprise drop. The leveraged investors sell the sinking asset, but soon the asset is unwanted by anyone. Margin calls roll in. Investors then sell good assets to raise cash to meet the margin calls. This spreads the panic
Regular readers are familiar with my “ice-nine” thesis on how the next financial crisis will play out. Ice-nine is a phrase invented by Kurt Vonnegut Jr. in his novel Cat’s Cradle. In the novel, ice-nine is a doomsday device involving a molecule that freezes any water it comes in contact with and converts that water
In 2017, every prominent economic forecasting entity was shouting from the rooftops about “synchronized global growth.” This was a reference to the fact that not only were certain economies growing, but they were all growing at the same time. Chinese GDP growth had come down but was still substantial at 6.85%. U.S. GDP growth was posting solid
Fed Chair Jay Powell just sent the most powerful signal from the Fed since March 2015. He has pretty much taken a March 2019 rate hike off the table until further notice. At a forum hosted by the American Economic Association in Atlanta last Friday, Powell used the word “patient” to describe the Fed’s approach
