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  • Thank you!

    Just a quick note of thanks to all of you who kept the iTulip Forums going with your contributions to the conversations here over the past several years while I pursued an ambitious project with my co-founder to create a new kind of exercise based on VR and a new sport vSports based on it. Without you there'd be no iTulip to re-start.

    It appears that my latest theory of the Fed's new dual mandate of macro-economy management and financial system stability via active asset price inflation will be put to the test soon. Watching Powell's latest speech it sounds to me like he's warming up the financial markets both for a pause in rate hikes and a justification for future active asset price inflation via LDAP: following the Great Recession the Fed is now in the financial system stability business. He focusses on preventative measures taken since the last crisis but by officially adding financial system stability to the Fed's mandate he's opened the door for the Fed to take action to prevent financial markets from crashing within that expanded policy framework. We'll find out soon enough.

  • #2
    Re: Thank you!

    The thank you goes both ways. It was, after all, your decision to create iTulip in the first place and then, to attract people, regardless of their background, who had the temerity to argue against the actions of the likes of the Federal Reserve and others that have created the FIRE, Finance, Insurance and Real Estate, economy, that has done so much damage over the past decades; and to leave it up and running to thus allow us to keep up a debate. So, thank you too EJ. Chris.

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    • #3
      Re: Thank you!

      Originally posted by EJ View Post
      he's warming up the financial markets both for a pause in rate hikes and a justification for future active asset price inflation via LDAP
      a dovish rate hike is widely expected soon. do you think they might slow down the rate of redemption on their bonds rolling off their balance sheet, or hold it at current level rather than increasing it?

      how do you think it might impact different asset classes if/when they announce LDAP? will investors sell off longer dated bonds if they feel the equity market has a put under it? will some front run selling more bonds to the fed? would the combo lead to increasing spreads between corporate bonds & treasuries?

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      • #4
        Re: Thank you!

        didn't the fed's role as regulator for the banking system ALREADY put them in charge of financial system stability? of course they famously have ignored this role since at least greenspan. i guess the difference is creating stability by regulating financial system players versus doing it by guaranteeing asset prices.

        but regs, of banks but also of other entities such as money market funds, pensions, etc, do appear to be used to force more purchases of treasury paper as issuance continues to skyrocket.

        we should start a pool on when the fed ceases qt, and when it resumes qe.

        ========
        corporate spreads are widening because balance sheets were gutted to fund share buybacks and thus increase earnings per share. add that to the fact that half the investment grade universe is rated bbb. a one level downgrade into junk territory will force many institutional holders, mutual funds, etc with investment grade mandates to sell huge volume into a no bid/very low bid market, which will imo hit the rest of the investment grade market as well, except for the very highest quality issues.
        Last edited by jk; 12-11-18, 10:28 AM.

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