The Bank of England is looking more urgently at options such as negative interest rates and buying riskier assets to prop up the country’s economy as it slides into a deep coronavirus slump, the BoE’s chief economist was quoted as saying.
The Telegraph newspaper said the economist, Andy Haldane, refused to rule out the possibility of taking interest rates below zero and buying lower-quality financial assets under the central bank’s bond-buying programme.
“The economy is weaker than a year ago and we are now at the effective lower bound, so in that sense it’s something we’ll need to look at – are looking at – with somewhat greater immediacy,” he said in an interview. “How could we not be?”
Top BoE officials have previously expressed objections to taking rates below zero – as the central banks of the euro zone and Japan have done – because it might hinder the ability of banks in Britain to lend and hurt rather than help the economy.
But with the BoE’s benchmark at an all-time low of 0.1% and Britain facing potentially its sharpest economic downturn in 300 years, talk of cutting rates to below zero has resurfaced.
Governor Andrew Bailey said on Thursday the BoE was not contemplating negative rates, but he declined to rule it out altogether.
“There will be many assets that will move as a result of this money creation. So what is an investor to do? Traditional hedges like gold have done well, and we expect investors to continue to seek refuge in this safe asset. One thing I have learned over time is the best thing to do is let market price action guide your decision-making and then try to understand the fundamentals as they become more evident and comprehensible,” he writes in a note with Lorenzo Giorgianni.
This book is comprised of a series of edited interviews with George Soros, and is broken up into 3 parts. The first part is about his investing. He talks about his family history, investment philosophies and theories, his early times as an analyst on Wall Street, and the Quantum Fund. He talk about how his theories were related to some of his real trades, specifically the Japanese stock market, the Mexican market, and the British Pound.
The second section deals with his views on (and participation in) politics. He talks about philanthropy, the geopolitics of Europe, diplomacy, and open societies. The third section of the book deals with philosophy and talks about some of his personal writings.
This book was fun for me to read since it was about hedge funds back when hedge funds were pure – before they were contaminated by Wall Street. Since this book is about Soros the person, and not Soros the investor, a significant portion of the book is devoted to politics and philosophy, and not investing. Although these topics are not out of place, most people will be less interested in this stuff since they are more interested in his investments.
Since Soros talks about his theories (specifically his theory of reflexivity), this book could be considered a more philosophical version of Alchemy of Finance. Hence, this book will appeal to traders/investors looking to ponder their personal investing philosophies. Although Soros tries too hard at times to make every statement sound profound, the timeless philosophical topics he brings up lends the book substantial (as well as lasting) value. This is due to the fact that a majority of traders will always lose money. When novice traders are unable to achieve success, it is best for them to step back and ask fundamental questions, like “why do I trade?”. But most don’t do this, and this book can help with that.
Consequently, the most important lesson that can be extracted from Soros’s market philosophies is that it is important to HAVE market philosophies. When I wrote my “How to Become a Trader” checklist, I said that one of the first things you should do is to write down your philosophies about the markets. This catches some prospective traders off guard since it is something that they’ve never thought about.
I have some questions regarding eurodollars and attempted to answer them myself: Why is GE quoted as interest rates, but de facto acts like a commodity ? Why were GE quotes up (rates on eurodollar deposits down) during the 2008/2020 crises. There was lots of cash demand.
– GE futures prices DO show de facto demand for cash (any fx cash offshore demand)
– GE is priced as rate to par of deposits
– GE reacts to or anticipates FED rates, as FED reacts to cash demand
– the rate of the deposits are not directly driven by supply and demand of global cash, but are driven by “external”/ non-eurodollar-mkt interest rates
– GE quotes can not be understand by the internal supply and demand of the eurodollar mkt conclusion: even GE-quotes are interest rates, GE-quotes act de facto like commodity prices, e.g. currently show huge cash demand.
Does you agree with my answers?
