FINANCE
We look at the cost of capital and we look into the money markets to understand the fundamental positioning of the cost of money. This takes us into considerations of central bank activities, the availability of leverage and the monetary system’s capacity for balance sheet growth.
Recent Posts
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 the implied probababilty of inflation averaging above 3% for the next five years has fallen from a high of 44% a month ago to 31% now. For [...]
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, Oil, Gold and Bitcoin or low-inflation-rate country currencies can create a basket of performance -- capturing whatever moves as a correlated asset to inflation. Even a short [...]
Crypto, or a Diamond is Forever?
Are Crypto Currencies here to stay? The invention of a digital currency is certainly a fantastic development. There are significant pluses to a market for new breeds of currencies. Bitcoin is the most established so far. Listed below (at the end of this post) are two articles that help define the mechanics and utility of using bitcoin, the most advanced digital currency in terms of participation. Yet, questions remain regarding the various motivations for owning a digital currency such as Bitcoin. Considering diving into the Crypto market? Here are the key areas to examine: Why is there so much volatility in the price of Bitcoin relative to the US dollar?Will the limitations on supply hold [...]
The Days of Easy Money Are Over
The Fed and its new chairman, Jerome Powell, are at the beginning of what could likely be a sustained period of tightening as the markets unwind past years of soft money policies. The import of this shift cannot be underestimated. Companies and individuals are going to have to analyze the changing market landscape carefully to ensure they fully understand the risks and opportunities. Rising geopolitical and trade tensions, as President Trump seeks to impose $50 billion in tariffs on China alone, make this more challenging than ever before. The resulting increase in volatility will make the test for managements that much tougher. The currency markets may be [...]