user bar first menu

Boeckh Investment Letter

Investment and economic commentary by J.Anthony Boeckh and Robert Boeckh


September 05, 2013

In our August letter we pointed out that the turnaround in global economic growth would continue to reduce central bank enthusiasm for QE (bond purchases) and lead to sustained upward pressure on bond rates. To date, central banks are holding the line on short rates, keeping them near zero. It is only a matter of time before that ends. Rising short rates will add to the upward push on bond yields. Under “normal” circumstances, this pressure would be seen as a regular late cycle occurrence. However, the financial world is currently a long way from normal...

August 16, 2013

The global economy continues to have a better feel to it, a trend in evidence for the past month or two. Once again, financial markets have forecast this strengthening. The better tempo of business in the strongest areas (Germany, the U.S.

July 26, 2013

The liquidity-fuelled bull market remains intact. Fears of the Fed making a premature exit from quantitative easing, which caused the sell-off in mid-June have proven misplaced. In his July 17th testimony to Congress, Ben Bernanke said, “With unemployment still high and declining only gradually, and with inflation running below the Committee’s longer-run objective, a highly accommodative monetary policy will remain appropriate for the foreseeable future.”

July 04, 2013

In the next six months we will start to get a much better idea of the extent to which the post-crash recovery in the economy, profits, stocks and the suppression of interest rates is artificial. In spite of the relative calm in world financial markets as of late, there are some obvious black clouds and it is important not to become too complacent...

June 10, 2013

Despite Bernanke’s recent talk of trimming the Fed’s current $85bn/month QE program, it is likely that ultra-loose monetary policy will remain in place well into 2014. Economic indicators continue to provide a mixed picture, but the bottom line is that unemployment and housing are making very slow recoveries, and these are two areas of primary concern for the Fed...

May 22, 2013

The “fundamentals” behind the U.S. bull market remain intact and the long-term trend is up. However, two points need to be made. First, we put the word “fundamentals” in quotation marks to acknowledge that there are some very big problems that remain to be dealt with in the longer run.

April 05, 2013

Global monetary expansion has been unprecedented. Chart 1 shows the average interest rate of the U.S., U.K., eurozone and Japan along with the U.S. $9 trillion added to these central banks’ balance sheets since 2007. As we have often said, this is an experiment with eventual consequences. From a cyclical perspective, monetary reflation has yet to gain much traction in the real economy and, therefore, more should be expected, perhaps much more. The Bank of Japan, for example, just announced that they intend to double the money supply over the next two years. Credit continues to contract in many countries and sectors and economies are once again softening in most parts of the world. This is a reflection of the fact that the long-term debt supercycle still has a long way to go before it is significantly unwound.

March 19, 2013

Macro Themes : The outlook for global growth is improving, but still weak enough to warrant ongoing central bank monetary expansion and interest rate suppression. The ECB will have to respond to catastrophic eurozone unemployment and growing social unrest by stepping up asset purchases this year, after a hiatus in the past few months...

February 28, 2013

The gold price is obviously influenced by many factors. We touch on some of these in this update.

February 21, 2013

Corporate profits and margins have continued to remain high despite the difficult macro-economic environment of the past five years. In this report we examine the sustainability of elevated corporate profits. Recently, reported U.S. earnings have been mixed, with some large companies surprising on the downside due to a combination of rising costs and weaker than expected sales, giving rise to concerns that the trend of total profits may be heading lower.