David Orrell
Summary via publisher (Icon Books)
Money has many apparently magical properties. It can be created out of the void – and vanish without so much as a puff of smoke. It can flash through space. It can grow without limit. And it can blow up without warning. David Orrell argues that the emerging discipline of quantum economics, of which he is at the forefront, is the key to shattering the illusions that prevent us from understanding money’s true nature. In this colourful tour of the history, philosophy and mathematics of money, Orrell demonstrates how everything makes much more sense when we replace our classical economic models with ones based on quantum probability – and reveals the explosive reality of what is left once the illusions are stripped away.
Research Review | 11 February 2022 | Financial Crises
Financial Cycles – Early Warning Indicators of Banking Crises?
Sally Chen (Bank for Int’l Settlements) and Katsiaryna Svirydzenka (IMF)
April 2021
Can the upturns and downturns in financial variables serve as early warning indicators of banking crises? Using data from 59 advanced and emerging economies, we show that financial overheating can be detected in real time. Equity prices and output gap are the best leading indicators in advanced markets; in emerging markets, these are equity and property prices and credit gap. Moreover, aggregating this information flags financial crisis many years before the crisis. Lastly, we find that the length of financial cycles is of medium-term frequency, calling into question the longer frequency widely used in the estimation of countercyclical capital buffers.
Macro Briefing: 11 February 2022
* Biden advises US citizens to immediately leave Ukraine as Russia threat lurks
* Canadian trucker protests disrupt US auto factories
* Jobless claims in US fell again last week, sliding for third straight week
* Fed funds futures pricing in high odds of a 50-basis-point rate hike in March
* US consumer inflation rose faster than expected in Jan, reaching 40-year high
* 10-year Treasury yield tops 2.0% for first time since July 2019:
Is Recession The Only Cure For Inflation?
As the Federal Reserve prepares to start raising interest rates, history lurks in the background amid an inflation surge that’s remained more persistent than expected.
Macro Briefing: 10 February 2022
* Fed’s Mester says each policy meeting ‘in play’ for rate hikes this year
* Russia says it will begin 10 days of military exercises with neighbor Belarus
* White House rolls out $5 billion plan to fund electric vehicle chargers
* Did US payrolls really increase in January? Maybe not
* Supply-chain issues take a toll on the renewable energy industry
* Disney’s earnings rebound amid growth in streaming service and theme parks
* US 10yr-2yr Treasury yield spread slips to smallest gap in well over a year:
As The Fed Prepares To Raise Rates, Beware The Feedback Loop
The playing field is riddled with imperfect information in real time, long response lags, unclear relationships between economic and financial variables, and a hefty dose of uncertainty linked to behavioral risk. Throw in a high degree of geopolitical risk at the moment vis-a-vis the Ukraine crisis for good measure. Modeling how all this interacts in the months ahead for purposes of setting monetary policy is like trying to grasp all the possible moves in a game of chess.
Macro Briefing: 9 February 2022
* Germany’s chancellor says Russia would pay ‘very high price’ for Ukraine invasion
* Russia raises doubts about Ukraine crisis de-escalation efforts
* Supply chain disruptions to ease in 2H:2022, predicts shipping giant Maersk
* Ottawa’s protests inspire similar demonstrations beyond Canada’s borders
* US reports record trade deficit for 2021
* Nissan will end nearly all new gasoline engine development amid shift to electric
* Savers not expected to benefit from Fed rate hikes in near term
* Small US business owners say inflation is most important business problem
* US 10yr Treasury yield rises to 1.96%, highest since mid-2019:
Inflation Surge Continues To Defy Forecasts Of Peaking
Early on in the current run of accelerating inflation there were forecasts that the increase was “transitory.” Then the outlook shifted to estimates that the peak would top out but last longer than previously expected. Now the question is whether inflation’s run higher is on track to continue?
Macro Briefing: 8 February 2022
* Putin hints at possible thaw in Ukraine tensions after meeting France’s Macron
* Biden: Germany’s gas line from Russia won’t operate if Putin invades Ukraine
* Goldman’s head of commodities research says “We’re out of everything”
* Demand rising for dividend stocks amid outlook for slower growth, rising rates
* Hedging on US stocks at highest level in nearly two years
* Oil giant BP reports highest earnings in 8 years as commodity prices surge
* Meta is considering shutting down Facebook and Instagram in Europe
* Baltic Dry Index, a leading economic indicator, is close to lowest level in a year:
Emerging Markets Led Last Week’s Rebound In Global Stocks
Shares in emerging markets rallied for the first time in three weeks, posting the best weekly performance for the major asset classes through Friday’s close (Feb. 7), based on a set of ETFs.