CAPITAL MARKETS
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Taper Time, More Questions Than Answers By Tom Kutzen / Tksmartworth.com
Intro and Takeaway Questions Talk and expectations for a change in monetary policy are in the air. The policy members plan at an unknown date to taper the volume of the Fed’s bond purchases, perhaps shrinking their balance sheet as their previously purchased bonds mature and roll off. What are the implications? This article looks into structural implications and the resulting questions such as: How and how much will long term interest rates change?Basic financial market reactions, modest or severe?What [...]
Inflation Now: To Be Or Not To Be?
One thing is clear following the pandemic. There is pent-up demand for everything from "revenge-travel" to consumer spending on consumables in spite of shortages on materials that impede production and distribution. In spite of a spike in consumer prices, the Fed is so far holding firm on its belief that the current inflation is transitory. But, investors should beware. It's worth digging into the data and not assume the Fed is correct in its standing. The Minneapolis Fed calculates that [...]
Gold is Good, Bitcoin Better … Or Is It
Reading Ranjeetha Pakiam’s recent article in Bloomberg demonstrates some very significant money flows, finding reason to move into Bitcoin. While acknowledging that Gold is a good hedge against inflation, and possible declines in the dollar currency, the author and investor sees Bitcoin as a potential better performer and as such he has invested significantly in Bitcoin. A few comments might be in order. Some mangers looking to hedge inflation select a mix of assets that perform well when inflation rises. Energy, [...]
The Challenge of Volatility
Why do so many investors get caught short by volatility and end up suffering losses as a result? Let’s take a look at the various methods employed for trading volatility and see if they represent a rational approach. It is a popular trade and comes in a few forms, most of which invite a typical oversold posture. And finally, what results? Start with the truest instrument for investing using volatility: options. During the old days of studying option theory with [...]