Föhrenbergkreis Finanzwirtschaft

Nach den kristallklaren Aussagen des Föhrenbergkreises zur Finanzwirtschaft aus dem Jahr 1999 gibt es jetzt einen neuen Arbeitskreis zum Thema.

Mit ‘Inflation’ getaggte Beiträge

Hoisington Investment Management — Quarterly Review and Outlook Fourth Quarter 2013

Geschrieben von hkarner - 31. Januar 2014

John Mauldin, January 29, 2014

Last week Greg Weldon made the case for rising interest rates on US treasuries. This week Lacy Hunt offers us the case for a continued low-interest-rate environment for long-term treasuries. This is one of the most fascinating tugs-of-war in the investment world today. I’ve made the argument that we are in a deflationary deleveraging world for quite some time to come, or at least until the velocity of money turns around. Lacy makes that point, too, and offers some insights into the velocity of money. This is a fascinating Outside the Box, and I won’t spoil it by stealing any more of Lacy’s thunder.

I write from a sunny, if cold, Dallas. The thermostat has been a topic of conversation in my apartment lately, and not just because we need to keep turning it up. By now, the entire world knows that Google bought the thermostat company Nest for $3.2 billion, a good 50% more than the valuation Nest was trying to raise money on just a month earlier. I was rather surprised at the price, but I was also surprised that Google paid $1.65 billion for YouTube. Now, six years later, the YouTube franchise produced almost $6 billion in revenues last year. Clearly, the founders of Google saw something that much of the world did not see at the time. My suspicion is that Nest will end up ranking in the same category of return on investment for Google.

I have installed the cool new Nest thermostats in my new apartment. Having bought and installed thermostats on my own for various homes in the past, I was thoroughly surprised at the value of the Nest thermostat. Just a few years ago it would’ve cost some three to four times more to buy the same functionality that the Nest thermostat has. And this little toy does so much more. It actually adjusts itself to my personal habits and preferences and allows me to change everything from my iPad when I go to bed in the evening or get up in the morning, with a thoroughly programmable slate of settings. It even senses when I come close to it. It is just one element in what will soon be the Internet of Things that Cisco CEO John Chambers says will rapidly come to be worth $20 trillion.

I’m enjoying all the new technology that we’ve installed in the apartment, and we’ve designed and wired it to be able to adapt to what we think will be the direction of further change. I’m just hoping I don’t have to buy antivirus software for my oven.

Have a great week.

Your thinking about mortgage interest rates analyst,

John Mauldin, Editor
Outside the Box


Hoisington Investment Management – Quarterly Review and Outlook – Fourth Quarter 2013 Den Rest des Beitrags lesen »

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Needed in Europe: More Inflation

Geschrieben von hkarner - 27. Januar 2014

Date: 26-01-2014
Source: The Wall Street Journal

Stagnant Prices Restrains Recovery in Weaker ‘Peripheral’ Countries Such as Spain, Italy

As Europe’s economy recovers from its crisis, afflicted countries such as Spain and Italy are trying to pare their debts while also becoming more internationally competitive.

The trouble is, it’s hard to do both at once. And the euro zone’s weak inflation is making it even harder.

So, even as the world’s economic elite welcomed a strengthening global recovery at last week’s gabfest in Davos, Switzerland, the euro zone’s wounds are likely to heal only very slowly—and might even reopen.

Here’s why:

Until the crisis, the euro zone’s “periphery” countries, mostly in Southern Europe, had higher inflation than the region’s “core” economies around Germany. The periphery countries’ products became too expensive, often leading to unsustainably large trade deficits paid for by borrowing from abroad. Den Rest des Beitrags lesen »

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A consistent trinity for the Eurozone

Geschrieben von hkarner - 11. Januar 2014

Marco Buti (European Commission), 8 January 2014, voxeu

Though in the past two years substantial progress has been made in completing the structure of Europe’s Economic and Monetary Union, not all economic inconsistencies have been solved. This column discusses three main challenges that still need to be addressed. First, sound fiscal policies need to be conducted while keeping sustainable welfare systems. Second is the conflict between policy objectives and economic realities – vulnerable economies cannot reduce their debts and simultaneously gain competitiveness. Third, financial stability and integrated financial markets cannot be established unless the relationship between banks and their sovereigns is reformed. Addressing each of these challenges is important, and it could benefit all Eurozone members.

While it would be premature to declare victory, owing to sustained policy efforts at all institutional levels, major progress has been made in the past two years that has put Economic and Monetary Union (EMU) on much firmer ground. All strands of economic policymaking have been working together to overhaul economic governance, to ensure the efficient transmission of monetary policy, and to create effective financial firewalls. What made this possible was the clear political determination to safeguard the integrity and future of EMU. Den Rest des Beitrags lesen »

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Sluggish Inflation Poses Risk to Euro-Zone Economy

Geschrieben von hkarner - 9. Januar 2014

Date: 08-01-2014
Source: The Wall Street Journal

Consumer Prices in Euro Zone Up 0.8% in December

Annual euro-zone inflation weakened further below the European Central Bank’s target in December, rekindling fears that too little inflation or outright consumer-price declines may threaten the currency area’s fragile economy.

The report puts pressure on ECB officials to maintain their ultra-loose monetary policy and consider additional stimulus measures to keep deflationary forces at bay.

Euro Zone InflatioHowever, it is unlikely to prompt a policy response from the ECB when it meets Thursday, analysts said, amid signs that the currency bloc remains on a path of gradual economic recovery led by its largest member, Germany.

Consumer prices were up 0.8% in December from the previous year, according to the European Union’s statistics office, Eurostat, down from 0.9% in November. That is well below the ECB’s target of a little below 2% over the medium term and just a touch higher than October’s low of 0.7%, which spurred the ECB to cut its main interest rate to a record-low 0.25% two months ago.

After stripping out prices for food and energy, which tend to be more volatile, prices rose by just 0.7% in the 12 months to December—the lowest rate of “core” inflation since records began in January 2001. Den Rest des Beitrags lesen »

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Three Ways for Europe to Cut Its Debt Load

Geschrieben von hkarner - 4. Januar 2014

Date: 03-01-2014
Source: The Wall Street Journal

Europe has mostly refused to use some powerful medicines to reduce its debt burdens, but some economists doubt whether that will last.

Debt Hangover EZBRUSSELS—Before financial crises there’s the party, followed by the crash. Then comes the hangover: huge debt burdens that can leave countries with a yearslong economic headache of slow growth and high unemployment.

There are some powerful medicines for cutting this debt—all of which impose losses on creditors one way or another—but Europe so far has mostly refused to use them. Some economists doubt whether that will last.

It’s a question that is likely to loom over European financial markets this year. Since summer 2012, the pledge by European Central Bank President Mario Draghi to “do whatever it takes” to support the euro zone has kept a lid on bond yields across the currency area. The euro zone has emerged from recession—barely—and industrial production data from December show the expansion may be continuing. Den Rest des Beitrags lesen »

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Low Inflation Tests World’s Central Banks

Geschrieben von hkarner - 19. Dezember 2013

Date: 18-12-2013
Source: The Wall Street Journal

Subdued Prices Persist Despite Years of Easy Money; Deflation Still a Threat

Inflation is slowing across the developed world despite ultralow interest rates and unprecedented money-printing campaigns, posing a dilemma for the Federal Reserve and other major central banks as they plot their next policy moves.

U.S. consumer prices rose just 1.2% in November from a year earlier, according to Labor Department data released Tuesday. The subdued price data came as the Fed opened a two-day policy meeting at which the fate of its $85 billion-a-month bond-buying program—an effort to hold down long-term interest rates and drive up the value of homes, stocks and other assets—is a central focus. Den Rest des Beitrags lesen »

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Euthanasia of the Economy?

Geschrieben von hkarner - 4. Dezember 2013

A fantastic explanation of the effects of QE (hfk)

John Mauldin, December 3, 2013

Today’s Outside the Box comes to us from my good friend and business partner Niels Jensen of Absolute Return Partners in London. Niels gives us an excellent summary of how QE has affected the global economy (and how it hasn’t). I have found myself paraphrasing Niels all week.

Then there’s this quote that appeared in the Wall Street Journal this weekend, from Friedrich A. Hayek’s lecture “The Pretense of Knowledge,” delivered upon accepting the Nobel Prize in economics, Dec. 11, 1974:

To act on the belief that we possess the knowledge and the power which enable us to shape the processes of society entirely to our liking, knowledge which in fact we do not possess, is likely to make us do much harm. In the physical sciences there may be little objection to trying to do the impossible; one might even feel that one ought not to discourage the over-confident because their experiments may after all produce some new insights. But in the social field the erroneous belief that the exercise of some power would have beneficial consequences is likely to lead to a new power to coerce other men being conferred on some authority.

Even if such power is not in itself bad, its exercise is likely to impede the functioning of those spontaneous ordering forces by which, without understanding them, man is in fact so largely assisted in the pursuit of his aims. We are only beginning to understand on how subtle a communication system the functioning of an advanced industrial society is based—a communications system which we call the market and which turns out to be a more efficient mechanism for digesting dispersed information than any that man has deliberately designed. Den Rest des Beitrags lesen »

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Europe’s Real Inflation Problem

Geschrieben von hkarner - 4. Dezember 2013

Date: 03-12-2013Pisani-Ferry CC
Source: Project Syndicate

Jean Pisani-Ferry

Jean Pisani-Ferry teaches at the Hertie School of Governance in Berlin, and currently serves as Commissioner-General for Policy Planning in Paris. He is a former director of Bruegel, the Brussels-based economic think tank.

PARIS – “Having said that deflation in the United States is highly unlikely,” outgoing Federal Reserve Chairman Ben Bernanke famously remarked in 2002, “I would be imprudent to rule out the possibility altogether.” At that time, annual inflation in the US exceeded 2%, and the risk of it becoming negative was indeed remote; but Bernanke nonetheless felt it necessary to map out an escape route from a potentially catastrophic scenario. The response that he described was essentially a preview of the policies that the Fed implemented in the aftermath of the 2008 shock.

For the eurozone today, the threat is not remote. According to the latest inflation data, annual consumer price inflation is just 0.9% (and 1% if volatile energy and food prices are excluded). That is one percentage point below the European Central Bank’s target of “below, but close to, 2%.” With the economy clearly operating below full capacity and unemployment above 12%, the risk of a further decline cannot be excluded, especially given downward pressure from a gradually appreciating exchange rate and a global context of negative growth surprises and subdued commodity prices. So it is past time to recognize the deflation danger facing Europe and to consider what more could be done to prevent it. Den Rest des Beitrags lesen »

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OECD Global Inflation Rate Falls Further

Geschrieben von hkarner - 3. Dezember 2013

Date: 03-12-2013
Source: The Wall Street Journal

News Will Sharpen Focus on Stimulus Programs

The annual rate of inflation across the world’s largest economies fell for a third straight month in October, a development that suggests central banks may have to provide more stimulus, or at least not withdraw existing stimulus, to avert the threat of deflation.

The Organization for Economic Cooperation and Development on Tuesday said the annual rate of inflation in its 34 developed-country members fell to 1.3% from 1.5% in September, while in the wider Group of 20 leading industrial and developing nations it slipped to 2.8% from 2.9%.

The decline in inflation rates across developed countries will be of particular concern to central bankers, since many regard annual price rises of 2.0% as consistent with healthy economic growth. The developed-country inflation rate is now back at levels last seen in April, having peaked at 2.0% in July. Den Rest des Beitrags lesen »

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The Problem of Japan

Geschrieben von hkarner - 26. November 2013

Things that make you go hmmm… 25/11 Grant Williams

Japan is one of the most heavily indebted developed countries. Its total debt to GDP
is over 500%, compared to the US’s 370%. Japanese gross sovereign debt is around 240% of GDP, while its net debt is around 135%, substantially higher than most developed
countries. The government borrows to finance over 50% of its spending.
Then there’s that magic number that Japan breached this past summer when its public debt hit
¥1 quadrillion.
That number, hard to picture, looks like this:


Or, as I pointed out in a recent presentation, if you wanted to count to a quadrillion … it would
take you 31,709,792 years.
That’s a hell of an IOU to run up.
So the reason why Abe desperately needs inflation is clear; but let’s face it, 2% ain’t gonna do the trick. Den Rest des Beitrags lesen »

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