By: R. Christopher Whalen

Bank Earnings & Volatility

In the October 2012 FOMC minutes, Fed governor and soon to be Chairman Jerome Powell opined that the Fed has a “short” position in volatility. Powell said:“[W]hen it is time for us to sell, or even to stop buying, the response could be quite strong; there is every reason to expect a strong response.

The Yellen Put

New York | The term “Greenspan Put” was coined after the stock market crash of 1987 and the subsequent bailout of Long Term Capital Management in 1998. The Fed under Chairman Alan Greenspan lowered interest rates following the fabled event of default and life continued.  The idea of the Greenspan Put was that lower interest rates would cure the market’s woes.

Goldman Sachs & the Volcker Rule

Austin | Last week we heard optimistic noises coming from some of the top executives in the world of mortgage finance at the Americatalyst 2017 event.  Falling interest rates have managed to get new applications for mortgage refinancing even with purchase loans for the first time in months, this as the 30-year mortgage has fallen back to pre-election levels.  We’re still calling for the 10-year Treasury to go to 2% yield or lower.The good news for Q3 ’17 earnings is that production volumes and

Fed Chairs & Credit Bubbles

New York | Fed Chair Janet Yellen’s defense of the benefits of regulation last week in Jackson Hole probably killed her chances for reappointment, but the more pressing reason to see Yellen return to the private sector is visible in the US real estate market.  Chair Yellen and her colleagues have created large bubbles in many assets classes from residential homes to commercial real estate to construction lending.  As in the 2000s, this latest bout of asset price inflation will not end well for