Thoughts From the Frontline, March 2006

When Will the Fed Stop?

March 31, 2006

This week the US Federal Reserve raised interest rates once again, for the 15th straight time. As everyone knows by now, the press release at the end of the meeting suggests that they will raise rates at the next meeting. But after that? Like children in the back seat of the car on a long trip, the markets keep asking "Are we there yet?" We look at that answer and more as we ponder what goes on in a central banker's mind.

First, let's look at the actual FOMC statement. I think, given...

The Bottomless Well

March 24, 2006

Today we begin what will be an intermittent series on oil and energy. Each and every year there is a need for more and more energy of all kinds. The one thing we can say with confidence is that energy demand and usage in the next 20 years is going to increase dramatically as more than half the world aspires to middle class (and more!) life styles, which will put huge demands on our energy resources. Will oil production slow down and then peak in the future? Quick answer: yes. Will we run...

The Wind Beneath the Economy’s Wings

March 17, 2006

"The U.S. outlook is all about the property market, which has been the wind beneath consumers' wings this decade." Paul McCulley, Managing Director, Pimco

The world seems to be breaking down into two camps: those who, like McCulley, think housing is critical to the growth of consumer spending and believe the housing market may be in for some rough weather, although the forecasts vary greatly from a mild frost to blizzard conditions. On the other side there are those who think the...

Smoot-Hawley Lives

March 10, 2006

This week we look into my worry closet and ponder whether the Dubai port debacle is a one-off thing or does it signal a rise in protectionism. The recent polls suggest I will upset about 90% of you, but I look at the deal from the very negative economic impact it could have on this country. We then briefly look at the potential for more Fed rate increases and at a disturbing Federal Reserve Bank report on US wealth.

But first, a brief paragraph on a new feature of the letter. We have...

Central Banker’s of the World, Unite!

March 3, 2006

"Central Bankers of the World, Unite!" That at least seems to be the theme from the central banker's playbook. The US Federal Reserve, The European Central Bank and now even the Bank of Japan all seem to be in a mood to tighten the global money supply. What does this mean? We explore that thought and look at the US saving rate (or lack thereof), foreclosure rates and more.

But first, I want to once again mention that I along with my partners Altegris Investments will be hosting our...