Mar 252015
 
Bill Longbrake

Bill Longbrake

Economic activity in the U.S. has been somewhat softer over the last two months. Notwithstanding this the U.S. economy is performing reasonably well. Better data reports are likely as winter turns to spring. Nonetheless, there are serious disconnects in key economic phenomena. Employment growth is very strong, GDP growth is weak and productivity is negative. In this month’s letter, Bill Longbrake discusses the reasons for these disconnects and the long-run consequences of underinvestment. Other forces are stirring – the collapse in energy prices, the strong dollar, the plunging euro, and ultra-low interest rates – which eventually may pose significant challenges for the U.S. economy.  

Read the full letter here.

Mar 132015
 

The second round of bank stress tests and continued strength of the US dollar dominated the headlines over the past week. Four of the largest banks struggled to pass this part of the Fed’s test, which assess whether the banks have enough capital reserves to return money to shareholders. Regulators have steadily raised capital requirements for the largest banks in an attempt to make the financial system more resilient.

On May 11, the CFP and The Clearing House will be hosting an event on the Intended and Unintended Consequences of Financial Reform where we will discuss the trade off between economic growth and financial system stability.  Please visit the CFP’s website for the latest information on this event.

 Upcoming CFP Events

 

Banks Struggle to Pass Fed’s Stress Tests

Economists See Dollar Strenght, Global Weakness Restraining US Growth

Executives Lay Out Regulatory Vision for Venture Exchange

Bank regulation: ‘Basel IV’ Sparks Banker Fury

New York Fed Makeover Gets Mute Support From Fed Chiefs

A Split Over Protecting Investors

 

Note: the News & Policy Round-Up will be on hiatus next week with the University holiday.

Mar 062015
 

Wall Street braced for both Winter Storm Thor and the bank stress tests this past week. The Dodd-Frank act mandates these tests be performed annually to assess whether the nation’s largest banks can withstand a market shock or recession, and can affect payouts to shareholders. All 31 banks passed. Officials used this year’s results announcement to draw attention to the reorganization of banking regulatory power, shifting power away from the New York Fed to DC, something that has largely taken place behind the scenes over the past few years.

Fed Stress Tests Find Banks Adequately Capitalized

Treasury’s Lew Says No Simple Metric For Tougher Bank Rules

Washington Strips New York Fed Of Power

Institutions Pour Cash Into Bond ETFs

Feb 272015
 

Janet Yellen’s testimony to Congress, which turned into a defense of the Fed, its action on monetary policy and need for independence, was a key focus in financial markets this past week.   Senator Warren and House Republicans, both, took aim at Ms. Yellen and the Fed with respect to their ability to regulate Wall Street banks. Dodd-Frank has only added to the Fed’s oversight responsibilities, thus it’s unlikely this is the last we’ve heard about this issue.

Regulators continue to expand their reach broadly speaking in at attempt to enhance financial market stability, but there can unintended consequences, something the CFP and The Clearing House will explore at their May 11th conference in Washington, DC.  Visit the CFP’s website for the latest information on this and all CFP events.

 

Major Firms Are Saying The Stage Is Set For Another Crisis In The Bond Market

ECB Faces Struggle in Sourcing Enough Bonds for QE

Fed Flags Concerns About Mutual Funds, Exchange-Traded Funds

House Panel Wants Treasury Subjected to SEC Securities Regulations

House Republicans Intensify Attacks on Federal Reserve

Biggest Global Banks Shrink Under Pressure From Regulators

Banks Not Doing Enough To Overhaul Forex Markets

SEC mulls creation of venture exchanges

Congress urged to act on Fannie, Freddie reform as profit falls

A Boom in Private Equity’s Secondary Market

U.S. Regulators Revive Work on Incentive-Pay Rules

New Rules Spur a Humbling Overhaul of Wall St. Banks

Banks not doing enough to overhaul forex business, says watchdog

 

Note: Graduate student, Jinyu Huang, contributed to the compilation of this post.

 

Feb 262015
 
Bill Longbrake

Bill Longbrake

It would seem that everything is coming up roses, at least in the U.S.  Is this a goldilocks world?  In this month’s letter Bill Longbrake discusses global mega trends, secular stagnation and global monetary policies, the long-run implications of which appear to be at odds with the short-term goldilocks scenario. Bill concludes that it’s hard to say where all this leads but it probably won’t be what the consensus expects.

Read the full letter.