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No one is paid to front run the apocalypse: James Saft

August 14, 2017 By James Saft (Reuters) – That fund managers are rewarded for hugging the benchmarks they track is a big reason behind the otherwise puzzlingly mild reaction of financial markets to rising tensions and threats between nuclear powers the United States and North Korea. No one, and I mean this in the nicest, most humane way, no one is paid to help clients avoid the kind of massive stock market downdraft we’d see if the two went to war. Besides being, like the rest of us, badly positioned…

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Looser bank regulation will do shareholders no favors: James Saft

August 5, 2017 By James Saft (Reuters) – The Trump administration’s vision of a rollback in banking regulation isn’t just dubious medicine for the economy, it will do shareholders no favors. That’s because unleashing banks will likely bring on future rounds of boom and bust on Wall Street, creating the kind of volatile, low-quality earnings shareholders dislike and punish with lower valuations. Treasury Secretary Steven Mnuchin in June released a regulatory reform blueprint which would exempt many banks from some stress tests of their ability to withstand economic and market…

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Chance of Fed hitting ‘terminal rate’ looking terminal: James Saft

June 15, 2017 By James Saft (Reuters) – The main thing terminal about the Federal Reserve’s ‘terminal’ interest rate projections are the chances of rates actually making it that high in the foreseeable future. As expected, the Fed hiked on Wednesday by 25 basis points to 1.0-1.25 percent, but did so against an inflation and consumer backdrop which casts grave doubt that it will actually be able to reach the 3 percent ‘terminal’ rate it sees as a future baseline. Arguing that recent shortfalls in inflation were “transitory,” the Fed…

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If Trump erodes democracy, stocks will suffer: James Saft

May 10, 2017 By James Saft (Reuters) – Donald Trump’s firing of FBI Director James Comey caused barely a ripple on the glassy surface of equity markets, but more than 100 years of market and social data show that might be a mistake. Or perhaps just premature: the long-term correlation between the future returns of financial markets and indicators of a healthy democracy and society are strong, according to a recent study. “We have documented that, over a five- or 10-year time scale, there has historically been, on average, a consistent…

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When shareholders join the populist revolt: James Saft

March 27, 2017 By James Saft (Reuters) – Some day, perhaps soon, the populist revolt will spread to another group badly served in recent decades: shareholders. Workers are not the only ones to have done poorly in the last 30 years; shareholders too have suffered, especially those who buy their shares rather than have them granted as executive compensation. The upswell in populism which swept Donald Trump to power has thus far been good news for entrenched corporate interests, proposing only tax cuts and foreign cash repatriation holidays kindly to…

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“Bull market in politics” could mean bear market in risk assets: James Saft

March 8, 2017 By James Saft (Reuters) – (James Saft is a Reuters columnist. The opinions expressed are his own.) A new era in politics has been a windfall for investors, but the odds are against that being the end of the story. The S&P 500 has rallied nearly 14 percent since just before Donald Trump was elected president, a political earthquake, as investors, perhaps rightly, focus not on policy volatility but anticipated tax and regulation cuts and government spending. That may persist, but Trump’s particular brand of politics, which…

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