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Donald Trump’s Recognition Of Jerusalem As The Capital Of Israel Will Shake The Middle East To The Core

This is one of the most historic things to happen in the Middle East in decades.  Just a few days ago I reported that Donald Trump would recognize Jerusalem as the capital of Israel “in December”, and now we are being told that Trump will make this announcement at 1 PM eastern time on Wednesday.  Administration officials are stressing that this move is a “recognition of reality”, because of course the seat of the Israeli government has been in the holy city for a very long time.  But without a doubt this announcement will shake the Middle East to the […]

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It Is Being Reported That Donald Trump May Recognize Jerusalem As The Capital Of Israel In December

Is President Trump about to recognize Jerusalem as the capital of Israel?   If so, this would be one of the most historic events to happen in the Middle East in a very long time.  Needless to say, the government of Israel would be absolutely thrilled by such a move, while the Palestinians and Israel’s neighbors would not be pleased at all.  In fact, some Palestinians have suggested that if the Trump administration actually moves the U.S. embassy to Jerusalem that it could spark widespread violence or even war. But Donald Trump promised that he would recognize Jerusalem as the capital […]

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The Capital Cycle

The following is an excerpt from our monthly Macro Intelligence Report (MIR). If you’re interested in learning more about the MIR, click here. If you’ve been following Macro Ops for a while, then you know the Bridgewater Debt Cycle model is the foundation for how we view larger market movements. The debt cycle drives the short-term business cycle (5-8 years) as well as the longer-term secular cycle (50-75 years). Here’s how it works: The central bank lowers interest rates, bringing down the cost of money This lower rate feeds into the rest of the economy, bringing down lending rates Borrowing becomes […]

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John Kerry Unveils His Plan For A Palestinian State Based Upon 1967 Borders With East Jerusalem As The Capital

Barack Obama stabbed Israel in the back on Friday, and now John Kerry has slapped Israel in the face just five days later.  In a shameful speech that lasted for 71 dreadful minutes, U.S. Secretary of State John Kerry laid out his plan for peace in the Middle East on Wednesday.  His six-part plan is being welcomed warmly by the Palestinians, but it has further infuriated the Israelis.  Kerry claims that his plan reflects the emerging global consensus as to what a “final solution” will look like, and now we will wait to see what the 70 nations that will […]

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Cocos and bank capital: a belated explainer

A few weeks ago, in a piece about Deutsche Bank’s recent difficulties, I commented about its use of so-called “coco bonds” – contingent convertible bonds. I had over-simplified my description, and was promptly taken to task for doing so by @creditmacro on Twitter. He provided me with a detailed explanation of what coco bonds are and how they work. This piece draws heavily on his input. All of the quotations are from him unless otherwise stated. His full write-up can be found in Related Reading at the foot of this post. I’m also indebted to Martien Lubberink for pointing me to […]

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Germany’s Sparkassen: banking on capital exports

My latest post at Forbes takes a close look at Germany’s much-praised Sparkassen and their odd relationship with other German banks. It’s not quite as it seems…. The German Sparkassen (public savings banks) are widely praised for their stability and their service to German savers and small businesses. They survived the 2008 crisis largely unscathed; the few failures were handled within the network, and depositors were compensated from a fully-funded deposit insurance scheme, with no public funds involved.  Other countries, especially those with more concentrated banking systems, look enviously at the Sparkassen. In October 2015, the Demos thinktank produced a report arguing […]

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Capital, liquidity and the countercyclical buffer, in plain English

The FT reports that due to “modest but rising credit growth”, the Bank of England’s Financial Policy Committee (FPC) considered raising banks’ countercyclical capital buffer. According to the FT’s Caroline Bingham: This measure requires lenders to build up capital in good times to draw down in more challenging times.  And she goes on to say this: The prospect of yet more capital that banks must set aside would come on top of capital rules on a European and global basis that lenders must implement. They complain that these ever-increasing buffers weigh on their profits and therefore lending ability. No, Caroline, […]

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Why We Have an Oversupply of Almost Everything (Oil, labor, capital, etc.)

The Wall Street Journal recently ran an article called, Glut of Capital and Labor Challenge Policy Makers: Global oversupply extends beyond commodities, elevating deflation risk. To me, this is a very serious issue, quite likely signaling that we are reaching what has been called Limits to Growth, a situation modeled in 1972 in a book by that name. What happens is that economic growth eventually runs into limits. Many people have assumed that these limits would be marked by high prices and excessive demand for goods. In my view, the issue is precisely the opposite one: Limits to growth are […]

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