Author Archives: macrohart

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

Posted in Uncategorized | Tagged , , , , | Leave a comment

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

Posted in Uncategorized | Tagged , , , | Leave a comment

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

Posted in Uncategorized | Tagged , , , | Leave a comment

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

Posted in Uncategorized | Tagged , | Leave a comment

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

Posted in Uncategorized | Tagged , , , | Leave a comment

China’s FX Rate: Strategy & Opportunism

China’s latest FX adjustment is neither a “competitive devaluation” nor the opening shot in a “currency war”. Given the negative contribution of net exports to growth as of late, it is also unrelated to efforts to boost growth. Instead, the … Continue reading

Posted in Uncategorized | Tagged , | Leave a comment

Three Simple Reasons Why the New Greek Government Will Blink

As the positions between the Greek government and the Troika harden, it appears that an agreement to extend the current bail-out program or secure some other form of official financing becomes ever more elusive. Yet, it is highly unlikely that … Continue reading

Posted in Uncategorized | Tagged , , , | Leave a comment