The latest edition of our finance and property news digest with a distinctively Australian flavour.
Live Q&A With Tony Locantro: https://youtu.be/o7fBa5gRL00
Relax! The Crisis Is Over – The DFA Daily 6th June 2020
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– Lots of nonsense:
1) the yield curve is a “risk appetite gauge”. When it’s steepening then investors are becoming more cautious (= “Recession”). When the yield curve is flattening then investors are willing to take on more risk. That happened after Trump got elected. Then we saw rates rise but the yield curve flattened.
2) “Financial Repression” ??? The FED, RBA, RBNZ etc. FOLLOW the short term rate as set by Mr. Market. Steve Keen thinks the RBA is “brain dead”, but on this topic it’s the Great Mr. S. Keen that is “Brain Dead”. The RBA increased short term rates in 2009, 2010 and 2011 because the australian Mr. Market pushed rates higher.
3) Rising interest rates = Rising inflation ??? If that’s the case then why did (US) long term rates fall from the year 2000 up to mid 2008 when Price inflation went (much) higher (e.g. oil & CRB index) ? No, falling rates (between 1981 and 2020 ?) = inflationary. Rising rates (1950 – 1981) is DEFLATIONARY.