Monetary Policy

Goldman Asks If Yellen Has Lost Control Of The Market, Warns Of Fed "Policy Shock"

"Despite two rate hikes and indications of impending balance sheet runoff, financial conditions have continued to ease over the past six months. Does this mean that 1) monetary policy has lost its ability to affect financial conditions or 2) Fed officials just need to deliver more rate hikes if they want to bring about an FCI tightening?"

Moodys Slashes Ratings On 6 Canadian Banks, Fears Asset-Quality Deterioration, Soaring Household Debt

Amid Poloz-described "unsustainable prices" in various cities, and just days after the collapse of Canadian mortgage lender Home Capital Group and our discussion of the dire state of Canadian savers (and their record household debt), Moodys has cut the rating son six of Canada's largest banks because of "ongoing concerns that expanding levels of private-sector debt could weaken asset quality in the future."

"Vol Be Crazy": Deutsche Wants To Know When The Insanity Will End

"one of the main themes this year has been the fall in vol. We argued three months ago that FX vol looked cheap given elevated policy uncertainty, but a pick-up was unlikely while the global growth pulse remained strong. Vol has since collapsed further."

SocGen: Beware The Ghost Of 1993

"The comparison with 1993 is worthwhile too - it ended badly for asset markets, after all. Whether the Fed should worry about over-frequent excursions to the zero lower bound, or focus on financial sector stability, the risk is plain – super-easy monetary policy is creating artificially low volatility and driving money into trades and investments that are mispriced as a result."

Key Events In The Coming Week: Inflation, Spending In The Spotlight

With the French election now finally in the rearview mirror, this week's focus is on global inflation releases, with the spotlight falling on the US and China. We also have BoE and RBNZ rates meetings. In other data we note industrial production in the Eurozone, UK and Norway along with US retail sales and Fed speakers.

Macron Victory Leads To "Risk Macr-Off" In Europe, Poor China Trade Data Doesn't Help

It was supposed to be Risk Macr-ON after Emmanuel Macron's avalanche victory in Sunday's French presidential elections; instead as some banks cautioned and as we showed early in the overnight session, the market reaction has been the opposite with the victory fully priced in and especially in the European currencies and stocks, as well as S&P futures, we have seen a modest episode of Risk Macr-Off.

FT's John Dizard Warns Of "Catastrophic Decline In Asset Values"

"Short term asset price declines have been reversed by the wall of money coming out of active investment managers and into the accounts of low-cost index products. But this comes at the expense of making the eventual decline in a broad range of asset values not just painful, but catastrophic."

How Governments Outlaw Affordable Housing

The current planners don't want more housing. The government planners only want a certain type of housing. Meanwhile, the renters live in smaller and smaller units, and drive further and further. But there's one thing of which we can be sure. "Capitalism" will be blamed for it all.