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Inflation Fighting is Coming to an End, Financial Stability Concerns are Here – The Bank of England Pivoted and the Fed is Next

Today the Bank of England, just a few days before it was supposed to start running off the assets it had accumulated as part of the quantitative easing program, announced that it would buy unlimited amounts of UK sovereign bonds (gilts) to support market functioning.  Here is the statement: “In […]

Bloodletting and Central Bank Pseudoscience

I was recently reading a book on the life of Beethoven, the composer, and what caught my attention was that he almost lost his life when doctors of the time recommended his deafness be cured by bloodletting! Apparently Mozart, Charles II, and many others were not so lucky. Even George […]

TIPS ‘n’ STRIPS

I am not a big fan of Fish ‘n’ Chips. But give me tips and strips and I am very happy! Having grown up vegetarian in India, I came to the United States when I was 18. The only on-campus job I could get was flipping burgers at the Red […]

Absolute Or Relative: Why Focusing On The Right Thing Matters More Than Ever

Last week I completed my first self-supported, multi-stage, ultra-marathon “race” in Lapland, above the Arctic Circle. After more than 50 previous ultras, none of which have lasted more than a couple days, I spent almost a week in the swamps of Northern Finland, carrying a 25-pound pack (freeze dried food, […]

Killing Me Softly Or Killing Me Quick: Investing in Default Risk Versus Inflation Risk

After more than thirty years trading bonds, which became super boring in the last fifteen, I am beginning to feel that the glory days of bond trading are coming back again. The main reason, of course, is that central banks are now fish out of water, grasping for tools in […]

Maybe Treasury Inflation Protected Securities are the Place to be Again

As far as managing longish-term, market-implied expectations go, the Fed could declare victory now. The 5-year forward 5-year breakeven inflation rate computed using Treasury Inflation Protected Securities (TIPS) and Nominal bonds, has dropped (again) right to the 2% level (of course since the Fed is majority owner of both nominal […]

Self-Inflicted Wounds: Dealing With The Powell Crash

The numbers are out. The first six months of 2022 have been one of the worst on record for financial assets. When investors receive their quarterly statements and have the courage to read them, they will be shocked, and with good reason. It seems like a sick joke that we […]

Getting Ready For The Dovish Pivot From The Fed

In the last few days, the chorus of Fed Officials talking about “getting to neutral” has reminded me of the famous Yogi Berra saying: “if you don’t know where you are going you might end up somewhere else”. The current state of affairs is probably more apropos of “Alice’s Adventures […]

Moving The Goalposts: How The Fed Will Fix Distorted Perceptions it Created and What Investors Can do to Score

By now it is common knowledge that the Fed (and the ECB) have not only missed on their recent economic forecasts, but also acted aggressively on these wrong forecasts that they now have to unwind. Amongst the many distortions that faulty policy has created there are three that have distorted […]

The Fed is Ready to Break Things and Two Year Treasuries are the Place to be

The message is clear to anyone filling their tank, or grocery shopping. Transitory is out, persistent inflation is in. The Fed is panicking, and investors who bet on the central bank propping up the bond market are trapped. The big elephant herd is running to get out of the keyhole. […]


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