The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Tuesday, November 30, 2010

Did the market mis-price QE2?

My mate Ricardian Ambivalence, who would do well to consult an editor (or at least review what he has written), nevertheless makes a fascinating argument: if the market was pricing around USD$2 trillion worth of 'quantitative easing' in the US, and the Fed is now limited to just USD$600 billion worth (ie, 2/3 of the expected QE2 will not come to pass), there may be some further unwinding of the long bonds and other asset prices and short USD trades to come yet. That is, yields could continue to increase, asset prices may face ongoing headwinds, and the USD may appreciate further. Worth a squiz here.