Global Macro blog

Bernanke in Denial – a classic !

Karl Martin Lind — Thu, 19 Nov 2009 10:55:25 +0000

A Visual History of the Fed

Karl Martin Lind — Tue, 03 Nov 2009 18:07:28 +0000

Check out John Paul Koning’s latest chart of the Fed’s history.

For better of for worse, the Federal Reserve has been governing the monetary system of the United States since 1914. This chart maps the rise of the Fed from its origins as a relatively minor institution, often controlled by Presidents and the United States Department of the Treasury, into an independent and powerful body that rivals the Presidency in terms of prominence.

Multiple data series including the Fed’s balance sheet, interest rates and spreads, reserve requirements, chairmen, inflation, recessions, and more help chronicle this rise. While this chart can only tell part of the complex story of the Fed, I trust it will be a valuable reference tool to anyone curious about the evolution of this very influential yet controversial institution.

The Warning – Brooksley Born

Karl Martin Lind — Sun, 25 Oct 2009 15:08:29 +0000

Karl comments on “Discretionary Proprietary Traders Worldwide”

Karl Martin Lind — Fri, 23 Oct 2009 20:22:23 +0000

…. I like this “Moreover, don’t forget that EURUSD is an exchange rate and not an absoulte value.” It is true, sometimes ones view becomes so US centric that everything else seems better!?, but many LT factors are starting to favor the USD, demographics for one. Much of the negative bias towards USD rest on 2 factors, monetization and budget deficit – the latter leading the former. If Washington, the Treasury and the Fed (a BIG if) starts to take deficits spending seriously and in the process bite the bullet of a possible second recession, USD trend is very likely to reverse. Just my humble thoughts ! KM

Read full article on Linkedin

Macro Man: CPI-PPI and signs of strong earnings

Karl Martin Lind — Wed, 21 Oct 2009 12:02:25 +0000

Regular readers will know that Macro Man has been (incorrectly) fairly sceptical of the green shoots phenomenon and has fought the equity rally (if not position-wise, at least intellectually) for much of the way up. One factor that he almost certainly underestimated, or missed altogether, is that of margins. As a top-down macro guy, he doesn’t really gt his hands dirty with company- or sector-specific margin analysis; he has neither the data nor the expertise to do so.

But as a top-down macro guy with a penchant for crafting little indicators, he does have a proxy that he was watched for the last few years to give him a rough idea of what margins are like. Simply put, he looks at the y/y change in US CPI ( a proxy for corporate selling prices) against the y/y change in finished goods PPI ( a proxy for corporate costs.)

To be sure, the proxy isn’t perfect, nor is it intended to be. But it ain’t half bad as a rough-and-ready indicator, as you’ll observe that prior “negative margin” readings have typically coincided with recessions/bear markets/ticking timebombs.

As you can observe, after plunging to record negative territory in H2 of last year (a period that coincided with near-record negative equity performance!), the margin proxy screamed higher earlier this year. Macro Man ignored this signal to his detriment. Today, the margin proxy is stabilizing at relatively high levels which, much as Macro Man may hate to admit it, could suggest upside profit surprises (such as those observed thus far for Q3) if maintained.

Rest assured that he will pay this little indicator a bit more attention in the future; it won’t just be with currencies that Macro Man gets back to his roots.

Read full article on Macro Man

3 part interview with Julian Robertson

Karl Martin Lind — Fri, 16 Oct 2009 11:49:17 +0000

Rosenberg: This Is “One Overvalued Market”

Karl Martin Lind — Wed, 14 Oct 2009 13:49:35 +0000

Rosenberg: This Is “One Overvalued Market”

International Capital Controls…

Karl Martin Lind — Sun, 11 Oct 2009 21:58:42 +0000

International Capital Controls on the Rise ? http://bit.ly/Mz2wP

Bill Gross on 10Y & economy

Karl Martin Lind — Sat, 10 Oct 2009 14:59:02 +0000

The Fed Doesn’t Really Under…

Karl Martin Lind — Sat, 10 Oct 2009 08:45:47 +0000

The Fed Doesn’t Really Understand Asset Bubbles – http://bit.ly/9DZFw