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Oil shock, repo spikes and divided Fed – all this happened in one week. Markets are so far relaxed but surely something isn’t quite right. For now, the odds of recession probably haven’t increased that much – at least that’s what macro strategist John Tierney thinks judging from credit markets. US rates guru, George Goncalves, outlines why a 50bps cut could have been justified, while EM expert Gary Licht argues central banking needs an engineering, not an economics, mindset. In our fourth piece, I lay out three implications of the oil shock.
Finally, in my personal blog, I list all the business advice billionaire Michael Bloomberg has given over the years.
Recession Risk? Not Yet, Says The Corporate Bond Market (4 min read) Macro strategist, John Tierney, argues that the constant calls for an imminent recession are overdone. Credit spreads have a solid track-record of leading recessions, and they are giving benign signals. It’s time to stop relying just on the yield curve as a market indicator for recessions.
(John Tierney | September 19, 2019)
Easing For Markets Helps a Levered Economy (5 min read) US rates guru, George Goncalves, outlined his scenarios ahead of Wednesday’s FOMC meeting. His base of a 25bps cut with poor guidance turned out to be the right call. But George’s argument for a 50bps cut is well worth a read.
(George Goncalves | September 18, 2019)
Central Banks Need Engineers, Not Economists (3 min read) In this piece, EM expert Gary Licht reflects on the recent rate cuts from the ECB and Fed. He outlines why their “economics-centric” approach has not delivered the results the market expected. Instead, he suggests an “engineering-centric” approach would yield different policy responses. He uses the latest ECB policy moves as a case study.
(Gary Licht | September 18, 2019)
Three Thoughts On The Oil Spike (2 min read) Bilal Hafeez gives three consequences from the recent oil price surge. It’s weak inflationary impulse, which allows for continued Fed dovishness, the negative impact on Chinese growth and confirmation of the US stepping away from being the world’s policeman.
(Bilal Hafeez | September 17, 2019)
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