Another OT- Pretty funny headline.. listen up!!
Taleb Says ‘Every Single Human Being’ Should Short Treasuries
By Michael Patterson
Feb. 4 (Bloomberg) -- Betting on declines in U.S. Treasury bonds is a “no brainer,” said Nassim Nicholas Taleb, author of “The Black Swan.”
“Every single human being should have that trade,” Taleb said at a conference in Moscow.
Last Updated: February 4, 2010 07:56 EST
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Something to keep an eye on..
Bank of England Pauses 200 Billion-Pound Bond Plan (Update3)
By Svenja O’Donnell
Feb. 4 (Bloomberg) -- The Bank of England paused its 200 billion-pound ($317 billion) bond-purchase plan and left open the option to buy more as officials gauge the health of the U.K.’s recovery.
The Monetary Policy Committee, led by Governor Mervyn King, decided not to expand the asset-buying program for the first time since it began in March last year, as predicted by all but one of 51 economists in a Bloomberg News survey. The bank also kept the benchmark interest rate at a record low of 0.5 percent.
Bank of England policy makers are juggling the threat of an economic relapse against the risk of faster inflation and doubts about the next government’s commitment to cutting the U.K.’s record budget deficit. The decision probably marks the Bank of England’s final policy shift before the general election, which may take place on May 6.
“It makes sense for them to leave the door open, particularly given the uncertainty in the U.K. about the fiscal position and the election,” David Tinsley, an economist at National Australia Bank in London and a former central bank official, said in a telephone interview. “There’s a reasonably significant risk of a double dip in the U.K. and so it would be unwise on the part of the committee to rule out coming back.”
The yield on the 10-year government bond rose 2 basis points to 3.93 percent on the day. The pound rose as much as 0.4 percent and traded at $1.5868 as of 12:53 p.m. in London.
BOE Statement
The bank said in a statement the bond purchases it has already made and the low level of the benchmark rate “would continue to impart a substantial monetary stimulus to the economy for some time to come.” Policy makers said they “will continue to monitor the appropriate scale of the asset purchase program and further purchases would be made should the outlook warrant them.”
“I don’t think they’ll do any more quantitative easing, that’s probably it,” George Buckley, chief U.K. economist at Deutsche Bank AG in London said in a telephone interview. “There’s of course a risk of a double dip, they acknowledge that and I suspect that’s why they’re leaving the door open.”
The European Central Bank kept its rate at 1 percent, as predicted by a survey of economists. President Jean-Claude Trichet will hold a press conference at 2:30 p.m. in Frankfurt. The Federal Reserve kept its pledge to hold interest rates near zero for an “extended period” on Jan. 27, while Australia’s central bank unexpectedly paused raising rates on Feb. 2.
Global Debate
The Bank of England’s decision comes as officials around the world debate when to withdraw emergency measures introduced to fight the financial crisis. International Monetary Fund Managing Director Dominique Strauss-Kahn said Jan. 30 that ending them too soon will limit their room for action should the economy relapse.
At the same time, central bankers are trimming back some measures. The Federal Reserve on Jan. 27 restated its intention to cease buying mortgage-backed securities in March and the ECB has stopped lending banks unlimited funds for 12 months.
Britain’s economy grew 0.1 percent in the fourth quarter as service industries and manufacturing expanded just enough to end the longest recession on record. Autonomy Corp., the U.K.’s second-biggest software maker, yesterday forecast the start of economic recovery after revenue rose to a record last year.
That has aided Prime Minister Gordon Brown in his fight to win the general election, which is most likely to take place on May 6, according to briefing documents by the ruling Labour Party. The Conservatives’ lead over Labour narrowed to 7 percentage points, a monthly ComRes Ltd. poll for the Independent newspaper showed on Feb. 2.
Recovery Pace
Recent data suggests the pace of the recovery is uneven. Service-industry growth faltered in January, while manufacturing activity expanded at the fastest pace in 15 years, surveys by the Chartered Institute of Purchasing and Supply showed this week. House prices rose 0.6 percent in January, Lloyds Banking Group Plc’s Halifax division said today.
Policy makers are also watching for signs of increasing consumer-price pressures. The inflation rate jumped in December by the most since records began in 1997 to 2.9 percent. King said last month that it may accelerate further, and officials expect the rate to dip again later in the year.
“The inflation numbers have been stronger than expected,” Philip Shaw, chief economist at Investec Securities in London, said in a telephone interview before the decision. “The recovery will gain some momentum but there is still a degree of uncertainty out there.”
Budget Deficit
The ballooning budget deficit also clouds the economic outlook for officials. Chancellor of the Exchequer Alistair Darling said on Jan. 26 that the government will take steps to trim the 15.7 billion-pound deficit once the recovery gains traction. Conservative leader David Cameron has pledged to start budget cuts immediately after the election.
“Credit conditions are likely to remain restrictive, while the need to strengthen public and private sector finances will also weigh on spending,” the Bank of England said in the statement.
Policy makers say the effects of the Bank of England’s bond purchases so far have helped push down gilt yields, though money supply is showing signs of faltering.
The average for the 10-year gilt yield for the past 12 months was 3.65 percent, which compares with a 4.39 percent average over the past five years. M4, the broadest measure of money supply, dropped 1.1 percent in December, the most since records began in 1982.
‘Wait-and-See’
While bond purchases have not yet managed to boost the money supply, policy makers are now likely to wait for their actions to feed through in the broader economy before taking further decisions, said Alan Clarke, an economist at BNP Paribas SA in London.
“It’s wait-and-see mode, as they want to observe the effect of what they’ve done so far,” Clarke said in a telephone interview before the decision. “I don’t see a rate hike coming any time soon, not this year and probably not in 2011. We won’t see tightening in monetary policy when we will get the mother of all hikes in fiscal policy.” |
