Opinion

James Saft

Taper on tap, sweeteners at ready: James Saft

Nov 21, 2013 21:32 UTC

Nov 21 (Reuters) – If you want to know what Janet Yellen
will do as Fed chair, ignore her congressional testimony and
watch Ben Bernanke’s lips.

Yellen, approved Thursday by the Senate Banking Committee,
will get the job, but the real action is in speeches by
Bernanke, who is less inhibited as he is on the way out, and in
the Fed minutes, released Wednesday.

Here is how it is going to go: The Fed will taper, probably
early next year, and will try to grease the skids by offering
some kind of forward guidance to ease the pain. A bit of
fiddling with the interest rate paid by the Fed to banks on
reserves is possible too, but a lot less likely.

Forward guidance is fancy central banker talk for making a
sort of a promise, or pledge, to keep rates at a particular
level in the future if particular conditions prevail. In this
case, the forward guidance will probably be to keep rates near
zero until unemployment falls below the current trigger level of
6.5 percent, perhaps as low as 5.5 percent.

“Even after unemployment drops below 6.5 percent … the
Committee can be patient in seeking assurance that the labor
market is sufficiently strong before considering any increase
(in the fed funds rate),” Bernanke said in a speech this week.

The age of the 5 percent Ponzi scheme

Nov 20, 2013 21:45 UTC

Nov 20 (Reuters) – Things have come to a pretty pass when
Ponzi schemes are luring in the chumps with promises of only a 5
percent return.

A Federal judge on Monday ruled that Anthony J. Lupas, a
Pennsylvania Alzheimer’s sufferer and accused Ponzi king, does
not have the mental capacity to stand trial for 31 counts of
fraud and conspiracy. (here)

Prosecutors say the 78-year-old’s alleged scam fell apart in
2011 after he fell, injured his head and could not keep up with
the payouts. The reported details of the scheme, whereby Lupas
is alleged to have relieved investors of $6 million, are
unremarkable, save one: he was only promising a 5 percent annual
return.

Households borrow while business stints: James Saft

Nov 19, 2013 20:00 UTC

Nov 19 (Reuters) – Households are borrowing like it’s 2008
but businesses simply won’t play along.

That gap, between households which once again are taking on
debt and businesses which can find nothing better to do with
record profits than hand the money back to shareholders, is at
the center of our economic malaise.

Understand the working behind this and you may be able to
parse not just why everything from art to wine is fetching
record prices but why employment and conventional inflation
remain mired at unacceptable levels.

Column – Yellen delivers; tougher times ahead: James Saft

Nov 14, 2013 21:41 UTC

By James Saft

(Reuters) – On the standards by which these things are judged, Janet Yellen’s confirmation hearings went well, meaning markets rallied with little volatility.

Speaking before the U.S. Senate Banking Committee, the Federal Reserve Chair nominee was dovish, but not so much as to scare the horses.

“I consider it imperative that we do what we can to promote a very strong recovery,” Yellen, currently the Fed’s vice chair, told the panel.

Yellen delivers; tougher times ahead: James Saft

Nov 14, 2013 21:38 UTC

Nov 14 (Reuters) – On the standards by which these things
are judged, Janet Yellen’s confirmation hearings went well,
meaning markets rallied with little volatility.

Speaking before the U.S. Senate Banking Committee, the
Federal Reserve Chair nominee was dovish, but not so much as to
scare the horses.

“I consider it imperative that we do what we can to promote
a very strong recovery,” Yellen, currently the Fed’s vice chair,
told the panel.

Zen and the hell of low returns

Nov 13, 2013 21:14 UTC

Nov 13 (Reuters) – You can’t beat the market but the market
is probably going to slap you around a bit.

That’s the upshot from hedge fund guru Ray Dalio, who thinks
investing alpha, or outperformance, will be in short supply in
coming years. What’s worse, he sees equity returns, sapped by
years of QE, as only averaging about 4 percent a year for a
decade, with no diminution in volatility.

It’s enough to turn an investor to another of Dalio’s
interests: meditation.

ECB, Fed pile risk upon risk: James Saft

Nov 12, 2013 20:00 UTC

Nov 12 (Reuters) – With the European Central Bank and U.S.
Federal Reserve pulling the same way, global interest rates will
be lower for longer, feeding an ongoing rally in risky assets.

But since monetary policy has a bigger impact on financial
markets than the real economy – arguably, anyway – the bigger
the paper gains get, the more acute the risks become.

The ECB surprised virtually everyone last week when it cut
its key lending rate to 0.25 percent, reacting to an
uncomfortable slide in inflation and an equally vexing rise in
the value of the euro.

Column: ECB, Fed pile risk upon risk – James Saft

Nov 12, 2013 14:05 UTC

By James Saft

(Reuters) – With the European Central Bank and U.S. Federal Reserve pulling the same way, global interest rates will be lower for longer, feeding an ongoing rally in risky assets.

But since monetary policy has a bigger impact on financial markets than the real economy – arguably, anyway – the bigger the paper gains get, the more acute the risks become.

The ECB surprised virtually everyone last week when it cut its key lending rate to 0.25 percent, reacting to an uncomfortable slide in inflation and an equally vexing rise in the value of the euro.

Column: Twitter and the coming crisis: James Saft

Nov 8, 2013 07:01 UTC

By James Saft

(Reuters) – The bad news is: we are going to have another crisis.

The good news is that by then promoted messages on Twitter will make it easy to find bankruptcy attorneys.

Yes, this was the week that Twitter (TWTR.N: Quote, Profile, Research) went public at a stratospheric valuation and the Federal Reserve, in two papers, set the stage for yet more aggressive monetary policy.

Those events are linked, of course, and though it may take a while, both will bear some bitter fruit.

Twitter and the coming crisis: James Saft

Nov 7, 2013 21:40 UTC

By James Saft

(Reuters) – The bad news is: we are going to have another crisis.

The good news is that by then promoted messages on Twitter will make it easy to find bankruptcy attorneys.

Yes, this was the week that Twitter went public at a stratospheric valuation and the Federal Reserve, in two papers, set the stage for yet more aggressive monetary policy.

Those events are linked, of course, and though it may take a while, both will bear some bitter fruit.

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