Balance Sheet Normalization Principles and Plans

The core inflation rate is low at 1.6% missing the target of 2% with federal fund rate hovering around 2.5%. Hopefully, as Mr. Powell discussed, low inflation number is temporary. The Fed balance sheet is down to $3.9T and has both Mortgage Backed Securities and Treasuries. The low inflation is worrisome since the US economy is in top gear. Unemployment at the lowest levels with one of the highest wage growth in recent years, low core inflation (excluding energy and food prices) smells trouble.

Inflation is of two types: the supply side and the demand side. Printing excess money did not yield in much inflation and we will have to wait and see the next quarter for the demand side effect to structure out. Monthly treasury securities reduction is down to $15B from $30B from this month. With low inflation, pruning security reduction makes sense although according to experts treasury security reduction did not cause liquidity crunch. FED is right in waiting for another quarter to understand the direction of inflation for a more decisive action.  

Attaching the link to the balance sheet normalization plan of the FED.

https://www.federalreserve.gov/newsevents/pressreleases/monetary20190320c.htm

Implementation Note Issued May 1, 2019

https://www.federalreserve.gov/newsevents/pressreleases/monetary20190501a1.htm

Joe Biden, 2020 and Pittsburgh

My man Joe Biden recently kick started his Presidential bid campaign for 2020 with his first rally at Pittsburgh. I am impressed by his presidential campaign and it looks a lot of thought process has gone behind it. Guess which city in the US has been prominently highlighted on my blog. Of course Pittsburgh.

Coming up a special feature on the infrastructure story in the US. This month there would be a lot of vibrancy here. So stay tuned.

I had mentioned about the duration of bonds in my earlier article since I had read a report highlighting the duration of some US sovereign bonds to be 7. (Citation Needed). Duration is nothing but price sensitivity of bonds to interest rates. More on this at a later date.

 

True Grit: Tinkesh and Fitness

Recently uploaded a video of my interview with Tinkesh on Twitter. I met Tinkesh at a gym in Pune and got impressed by his calm demeanor and true grit. In spite of adversity, he followed his childhood dream to become a fitness trainer through sheer determination. Tinkesh was electrocuted when he was a kid and lost both his legs and one arm. Over the course of his life, people helped him in his endeavor. A nonprofit, Aditya Mehta Foundation, sponsored his prosthesis for both limbs and Tinkesh successfully ran 10K and 5K long distance runs with Maj D. P. Singh “the Blade Runner” from India. Tinkesh follows a strict diet and strength training regime to keep fit. I spoke with him at my house in Pune, India.

 

Continue reading “True Grit: Tinkesh and Fitness”

Sri Lankan Terror Attack

I was planning to publish two videos to celebrate the essence of Easter before I got to know about terror attacks in Sri Lanka last evening. It shook me up and as a mark of respect for the victims, I have postponed both the articles for a bit. One article is a motivational interview of a physically challenged person and his success as a fitness trainer while another is about a French friend of mine and his artistic and versatile flair in music. (The video was shot while celebrating Easter in a café).

Pic Source: CNN Continue reading “Sri Lankan Terror Attack”

Coming Up: Stay Tuned…

A lot more coming up. A couple of Social Impact special features and an Easter special. I also plan a special feature under Jai Jawan Jai Kisan to commemorate one of the greatest statesman of all time, a leader par excellence and a superlative humanitarian Lal Bahadur Shastri, India’s Second Prime Minister.

Article on financial markets will start with a look at duration of a bond and its implication which understanding bond fundamentals with a peek at concepts like convexity and modified duration.

Thank you to someone of you for subscribing and keep going. Mention about this blog to everyone you know.

Recap and Pittsburgh’s Superlative Visual and Artistic Spectacle

Reloading videos on my new YouTube channel so great if you would like to subscribe to the channel. Leave you with one of the best videos I ever shot at Pittsburgh music festival. A superlative visual and artistic spectacle. This week is the month of recap. Going forward will post a few videos which were part of my articles earlier. Also, plan to write an article on equity and debt markets in my signature style.

For debt, we will talk about the concept of duration since it’s going to part of the article. The world today as we know is loaded with debt. And are US equities akin to a toast with butter at both sides taking words of James Bevan, an asset manager from Europe? We will have to wait and watch as Master Nish unravels the mystery.

Reloading videos on my new YouTube channel so great if you would like to subscribe to the channel. Leave you with one of the best videos I ever shot at Pittsburgh music festival. A superlative visual and artistic spectacle.

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