Author Archives: macrohart

What Happened in February? Is It the Start of Something New? And Where Will It All End?

Markets reacted strongly to what was possibly a fluke in the data in February. The sharp rise in volatility exaggerated the true significance of the sell-off. As the dust settles it becomes ever clearer that the “correction” was none at … Continue reading

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Another Year of MOTS and FOMO?

(first published January 14) 2017 was a stellar year for asset markets: simply being long risk was sufficient to achieve strong returns. For 2018, market participants are optimistic on the back of expectations of above-trend global growth and broadly ac-commodative monetary … Continue reading

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Why the Fed Balance Sheet Reduction Won’t Affect the Economy – And Why It Will

Quantitative Tightening, as envisaged by the Fed, implies an equivalent, and ultimately sizeable, reduction of bank reserves on the liability side of the Fed’s balance sheet.  However, changes in monetary aggregates have little impact on the real economy or inflation. … Continue reading

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Central Banks: Stopping the Addiction

As global economies recover, central banks are shifting towards ‘normalising’ their bloated balance sheets. Given the scale of the previous build-up, many investors fear that this could be hugely disruptive to markets. Yet, this is unlikely. The Fed’s balance sheet … Continue reading

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The BoJ’s New Monetary Experiment: Riddled with Inconsistencies

Adding to its already wide-ranging arsenal of of monetary policy tools, the BoJ last week introduced yet another feature: “QQE with yield curve control”. In addition to the short term rate, the new regime aims to peg the long term interest rate … Continue reading

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Is It Time to Buy Emerging Markets?

The dismal performance of emerging market equities during the past three years (a total of -20%) suggests that a rebound may lie around the corner. Yet, country-specific factors aside, three key global factors argue otherwise: 1) insufficiently attractive EM valuations, … Continue reading

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Third Time Unlucky or The New Sino-American Symbiosis

The global economy is facing its third deflationary shock in succession. After the US economy and the Eurozone, China is the epicenter of the latest crisis. The erstwhile Sino-American Symbiosis resurfaces in a new, more nefarious form. The causation runs … Continue reading

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