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Matthew Claassen

 
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  • Is The Fed Losing The Battle For A Sustainable Recovery? [View article]
    Hi Mike,

    Good idea. Will do.

    Cheers
    Jun 6 08:47 AM | Likes Like |Link to Comment
  • Is The Fed Losing The Battle For A Sustainable Recovery? [View article]
    Drag-

    Hmm. You must have misunderstood something.
    This article is not about inflation. It's about the Feds waning ability to influence investor expectations. Don't confuse inflation expectations with actual inflation, it's like confusing a forward P/E with a trailing P/E. And yes, there is currently inflation, but at a very low level. If we did not have inflation, we would be experiencing deflation. Are you suggesting the US is currently in a period of deflation?

    If you read this article, and my past work, you will find I have been discussing the fact that inter-market correlations show that investors believe deflation is a greater risk than inflation since my article on The Three Bears in 2002.
    Jun 6 12:02 AM | Likes Like |Link to Comment
  • Is The Fed Losing The Battle For A Sustainable Recovery? [View article]
    Hi Jeffry,

    Thank you for your comment.

    I would disagree with the cause and effect you propose.
    The fact that commodities are down is a symptom of slowing global economies. It's not a stand alone inter market asset class. You can chart investor inflation expectations vs. the CRB and find a very tight positive correlation.

    As far as bond prices and statements; I remember when investors used to look at monthly printed statements. in the 1980's and 1990's we used to joke about intra-month corrections, with the market regaining composure just in time for the monthly statement to look good. But, no days most investors check their statements online weekly or daily etc. There isn't the monthly statement effect there used to be so long ago. Also, the treasury bond market is primarily institutions. Heck, it's mostly the Fed! I don't think the Fed or other institutions will react monthly volatility.

    1700 by the end of the month wouldn't surprise me either, but 2000 by the end of the year would.

    We'll see soon enough.
    All the best
    Jun 5 10:56 PM | Likes Like |Link to Comment
  • Is The Fed Losing The Battle For A Sustainable Recovery? [View article]
    yes, I meant the former
    Jun 5 08:26 PM | Likes Like |Link to Comment
  • Is The Fed Losing The Battle For A Sustainable Recovery? [View article]
    Mike -

    Subtracting the 5 or 10 year TIP yield form the 5 or 10 year treasury yield does not measure inflation, it measure inflation expectations. There is a difference.

    Regarding actual inflation, are you aware of MIT's Billion Prices Project? http://bpp.mit.edu
    Jun 5 04:39 PM | Likes Like |Link to Comment
  • Is The Fed Losing The Battle For A Sustainable Recovery? [View article]
    David:

    Thank you for your comment.
    You wrote: "The Federal Reserve can assist an economic recovery by ensuring that there is enough money, that that money is inexpensive to borrow, and that there enough money to be borrowed but it cannot put any money into the market place to spent."

    In economic times other than liquidity traps and deflation, when the Fed lowers the cost of money (bank rates), they can increase the demand for money (loans) which would then result in more business activity. Of course, there are other factors too numerous to detail here, but at historic lows and after 30 years of decline the impact of lower rates has experienced it own diminished return.

    The bottom line is that the degree to which the Fed can impact the economy is determined, in part, by where the economy is within its secular cycles.
    Jun 5 04:33 PM | 1 Like Like |Link to Comment
  • Is The Fed Losing The Battle For A Sustainable Recovery? [View article]
    From a technical perspective; I think $28 to $33 is a reasonable target for ABV over the intermediate term.
    Jun 5 04:25 PM | Likes Like |Link to Comment
  • Is The Fed Losing The Battle For A Sustainable Recovery? [View article]
    Hi Guard,

    re: "I am sure there is a way that the S&P 500 valuation to date could be calculated without Fed easing."

    I address that specifically in http://seekingalpha.co...
    Jun 5 04:01 PM | 1 Like Like |Link to Comment
  • Is The Fed Losing The Battle For A Sustainable Recovery? [View article]
    ejmoosa;

    In my article http://seekingalpha.co... I show that the Fed was able to push the DJIA up over 18% right through a recession in the 1940's....because they were buying almost all short-term treasuries outstanding. I also show how the market could not then, or now, enter a secular bull market as long as the Fed is still participating in supporting equities.
    Jun 5 03:59 PM | 1 Like Like |Link to Comment
  • Is The Fed Losing The Battle For A Sustainable Recovery? [View article]
    Hi Ted,

    You pose an intriguing question. I think the consumer already feels a higher rate of inflation than what the government prints as CPI. That is bad inflation; higher cost without higher wages and employment.

    What is needed is a stronger job market and higher wages. That is usually led by increased work hours, which will be a point of interest in this weeks jobs report.
    Jun 5 03:52 PM | 3 Likes Like |Link to Comment
  • Is The Fed Losing The Battle For A Sustainable Recovery? [View article]
    David,

    Thank you for your comment.
    Intermarket asset correlations show that US markets have had a greater concern for deflation than inflation since the Thai Bhat currency debacle in 1998. Thus, to some degree, the threat of deflation has been an issue for nearly 15 years in our markets.
    You can find a detailed discussion of this in past articles I wrote for Seeking Alpha as well as dating back to 2002 on my web site.

    I would disagree that declining monetary velocity is necessarily an indication of deflation, and its causes can be many.
    Jun 5 03:46 PM | 1 Like Like |Link to Comment
  • Is The Fed Losing The Battle For A Sustainable Recovery? [View article]
    Hi Snoopy,

    re "What recovery". Isn't it amazing that four years into a cyclical bull market and many still consider the economy in a recession? This may technically be a recovery, but to most it just doesn't feel like it.
    Jun 5 01:32 PM | 4 Likes Like |Link to Comment
  • Is The Fed Losing The Battle For A Sustainable Recovery? [View article]
    Change -

    Either a loss of confidence or illiquidity can cause a market decline. In normal market cycles we often see an inverted yield curve prior to a recession. The inverted yield curve is symptomatic of a need for greater liquidity.

    In this case, I believe a loss of confidence will be the issue.
    Jun 5 01:30 PM | 4 Likes Like |Link to Comment
  • Is The Fed Losing The Battle For A Sustainable Recovery? [View article]
    Yes, that is a typo. :-(
    Jun 5 08:43 AM | Likes Like |Link to Comment
  • Is The Fed Losing The Battle For A Sustainable Recovery? [View article]
    Hi Newbeach861 -

    Deflation is a real possibility, but not assured. Remember, the Fed will do anything and everything they can to fight against it and they are more active and not unprepared as they were in 2007.
    Jun 5 08:42 AM | 1 Like Like |Link to Comment
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