I have no inside knowledge on whether Janet Yellen or Larry Summers is most likely to be given the job as the next chairman the Federal Reserve. It is not an exaggeration however to suggest, however, as many commentators have already noted, that this is probably the most important appointment that Mr Obama is likely to make in the course of his second term. If the media reports are to be believed, the White House is pushing the claims of the imperious Mr Summers over those of Mr Bernanke’s deputy, even though the former will face the tougher ride at Senate confirmation hearings.
Category: Old articles
The Art and Artifice of Fed-Watching
Mr Bernanke’s pronouncement about the possible tapering of QE – call it a promise, call it a threat, according to taste – sent global financial markets in June into a spin. That is emblematic of the bizarre ways in which financial markets sometimes behave, for if tapering were indeed to begin in September or soon after, it would be a mostly positive development for anyone who still retains the capacity to think things through for the longer term. It would be ironic if fear of a negative market reaction was to jeapordise that outcome.
Bond Fugitives and Valuation Extremes
There is no bigger issue in the fund management circles that I frequent than the question of whether it still makes sense to hold the big global franchise stocks that have served investors so well over the past few years. In a world of artificially low interest rates, driven by the hair-raisingly experimental unconventional monetary policies now being pursued by the world’s main central banks, global businesses with strong free cash flow, balance sheets, an established competitive advantage and a consistent dividend track record have become the darlings of all fugitives from the return-free QE-squashed world of government bonds.
Markets’ Dance is Misleading Bankers
The primary job of any professional investor in bonds used to be to worry about what might go wrong, just as it was for equity investors to hope that things might go well. Today, you would think, there is even more reason for bond investors to worry when a vast swathe of fixed interest investments are priced to deliver negative real returns, now and into the future. One of the many strange features of today’s markets is that bond investors nevertheless seem to have transmuted into the market’s optimists.
Springtime for stockbrokers
You know when you are in a bull market when bad news simply gets shrugged aside and even the most indifferent events get greeted exuberantly. Nine months ago the result of the Italian election, which drags the future of the Eurozone back into question, would have induced a market panic. This time round the world’s equity markets barely blinked before resuming their attempt to breach the all–time peak they reached shortly before the onset of the global banking crisis.
a sub-par sage can still be a Genius
Has the Sage of Omaha, now 82, lost his touch? In his annual letter to the stockholders of Berkshire Hathaway published last week, Warren Buffett admitted a “subpar” performance in 2012. He acknowledged that his next annual letter may show that, for the first time, his fund had underperformed the S&P index over a five-year period.
Jonathan Davis 