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Christopher Mahoney

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  • The FOMC Is Plotting 'Normalization' [View article]
    I certainly hope so!
    May 25 03:18 PM | Likes Like |Link to Comment
  • The FOMC Is Plotting 'Normalization' [View article]
    I could do it in one day: announce that the Fed will purchase all outstanding Treasury debt over the next six months. That would change expectations!
    May 25 03:17 PM | Likes Like |Link to Comment
  • The FOMC Is Plotting 'Normalization' [View article]
    The proper response to below-target inflation and low growth is not to tighten policy, even at the margin.
    May 25 03:16 PM | 2 Likes Like |Link to Comment
  • Inflation Is Not Dead [View article]
    Here's the PPI (all commodities) index for the past three years:
    May 25 10:43 AM | Likes Like |Link to Comment
  • Inflation Is Not Dead [View article]
    Inflation is indeed a monetary phenomenon: a function of velocity-adjusted money growth. When both money growth and velocity are declining, we should expect lower inflation, which explains why inflation has been falling.;category_id=
    May 24 11:14 AM | Likes Like |Link to Comment
  • Dudley Revisits Exit Strategy [View article]
    The FOMC believes that M2 growth, inflation and nominal growth are exogenous variables.
    May 22 06:59 PM | Likes Like |Link to Comment
  • 7 Signs China's Economy Is Headed For Collapse [View article]
    There are two Chinas: the public sector and the private sector. We will see evidence of stress in the private sector, including financial institutions which are not connected to the central government or a province. Creditors of these institutions may indeed suffer losses. The public sector, which includes all of the big banks, is a contingent liability of the central government or of the various provinces. These institutions seldom are allowed to default, especially those under the State Council. China has very little foreign currency debt, has $4 trillion in reserves, and prints Yuan. China and state-related entities are solid credits.
    May 18 04:06 PM | 4 Likes Like |Link to Comment
  • Can The Stock Market Stand Naked? [View article]
    The Fed has been going out for two and a half years:
    May 18 03:56 PM | Likes Like |Link to Comment
  • China Turns Japanese? [View article]
    China is just like Japan: a solid credit, which one should not bet against, and an awful stock market, in which one should never invest. Speaking personally, there is no Asian investment that I would ever touch. You can only make money in North America, the Anglosphere, and the civilized parts of Europe (the Benelux, UK, Eire). The whole idea of "global investing" is incredibly naive--an artifact of neocolonial thinking. Just ask yourself one question: do I believe the quarterly cash-flow statement or, more pointedly, is there a quarterly cash-flow statement? Foreign stocks are for people that believe in fairy tales.
    May 18 01:24 AM | Likes Like |Link to Comment
  • CAPE Fears Miss The Point [View article]
    I like CAPE, because it keeps the dumb money out of equities. Equities are for smart rabbits.
    May 18 01:17 AM | 1 Like Like |Link to Comment
  • CAPE Fears Miss The Point [View article]
    The range for the ERP since 1961 has been 2% to 7%. It is currently 5%, due to low bond yields. One can sit at home and cry over low bond yields and high equity multiples, but if one has fiduciary money to invest, it must be in stocks and must not be in bonds or cash. Any fiduciary sitting in "safe" fixed income today should be fired.
    May 18 01:15 AM | 1 Like Like |Link to Comment
  • Can The Stock Market Stand Naked? [View article]
    Fed stimulus has been declining since January 2012, which is two years and five months ago. Over that period the Dow has increased by one-third. The Dow has been thriving despite the withdrawal of stimulus, due to the reassertion of normal valuations after the trauma of the Crash.;category_id=
    May 18 01:11 AM | 2 Likes Like |Link to Comment
  • Wall Street Says It's Different This Time [View article]
    By all means, please sell all of your stocks and go into cash so that I can buy your stocks. I will receive a real pretax return of 7% while you will enjoy an attractive 0.0% return on your cash or gold, or an even more lucrative 2.5% return on your bonds. I say this on the assumption that you are so rich that you don't need your savings to grow--because they won't.
    May 18 01:01 AM | Likes Like |Link to Comment
  • Why Bond Yields Are Falling [View article]
    The market's expectation changed from inflation to deflation because money growth and inflation declined as the Fed ramped up it balance sheet from $900B to $4T. The Fed was pushing on a string due its decision to use only conventional policy instruments--government bonds (i.e., bank assets). Had the Fed purchased civilian assets such as metals, stocks, housing, commodities or REITs, we would have seen the desired result. By only buying bank assets, all QE did was increase sterile excess reserves. One can only conclude that the outlook is for continues policy failure and low bond yields--i.e., Japanization.
    May 18 12:57 AM | 1 Like Like |Link to Comment
  • Why Bond Yields Are Falling [View article]
    Low bond yields are always and everywhere a monetary phenomenon and are a direct result of policy decisions made by the central bank. We have low yields because the Fed is satisfied with low inflation and growth. The outlook for continued bond yields remains "subdued" due to:
    1. The Fed has very little control over money growth because they refuse to consider unorthodox policy tools--and have given up on the failed QE experiment.
    2. The declining relationship of money growth to nominal growth, as expressed by velocity.
    3. The mistaken decision by the FOMC to target 2% inflation, which is half of what the economy needs.
    Since I don't see any of this changing, I expect low yields to persist indefinitely. Which means that today's equity multiples are justified and stocks remain the only asset class which offers an attractive relative return.
    May 17 01:06 PM | Likes Like |Link to Comment