by admin

The Fed is fighting a battle of credibility on two fronts. If it doesn’t cut it is accused of not understanding economic risk. If it does, it is accused of moral hazard. The Fed is responsibly focused on the economy. However, it understands that the financial market is a core aspect of the economy. When [...]

by admin

The following is a summary of my probability distribution of Fed outcomes., and relative market impacts.

by Markus

Academic research on private equity hasn’t been extensive in recent years. A fortiori a report published last weekend in Davos is illuminating the PE pros & cons. The study was led by Harvard’s VC capo Josh Lerner and advised by a group including hedge fund star David Swensen of Yale. Interesting conclusions (quoting the executive [...]

by Markus

Did some calc about the attractivenenss of Equity investments worldwide regarding the risk premium payout: The drop in January made Equities fundamentally even more attractive. Especially European Equities with a premium of 6+ % are significantly above the long term average of Equity premia.

by admin

I just listened to a great conference call on the current market volatility by the head trader of Merrill Lynch in London. He confirmed something I suspected, and bought more to my attention:The sell off has been driven by futures markets, which are trading at up to 4x usual volume (mostly S&P). They believe the [...]

by admin

Found a paper of Kenneth S. Rogoff, published a week ago, in which he historically compares the crisis in an international context. Worth reading. http://www.economics.harvard.edu/faculty/rogoff/Recent_Papers_Rogoff Together with his co-writer he concludes: “While each financial crisis no doubt is distinct, they also share striking similarities, in the run-up of asset prices, in debt accumulation, in growth [...]

by admin

I am asked how much the markets still can fall. I have already outlined my macroeconomic view in this blog. But the big picture cannot help you to estimate short term market movements. A better short term approximation is provided by technical analysis to read this snakepit charged with emotions called fear markets. Below 3 [...]

by admin

Wall Street performs its own “Rocky Horror Picture Show”DJI (close): -2,46%S&P500 (close) – 2,91%DJ US Banking Index (close): -4,47% I remember the discussions I had in early summer 2007 about the trigger that is initiating the market correction. Looking into the back mirror of history we now know the trigger: credit crisis and real estate [...]