Financial Bubbles | timiacono.com - Part 3

The Yellen Term at 18 Months

The body-less images at about the 30-second mark notwithstanding, this is a pretty good recap from the folks at Marketwatch of how the current and former Federal Reserve Chairs have fared during their first year-and-a-half on the job.

Interestingly, there’s the potential for the Presidential election cycle, Fed chairman cycle, and financial crisis cycle to line up again at the eight year mark. Recall that Bernanke was appointed in 2006 and had smooth sailing for a while, then the election cycled heated up in 2007, and then the wheels fell off of nearly everything in 2008.

Interregnums are particularly good times for financial crises…

Stocks, the Fed, Mr. Creosote, and a Mint

As the Federal Reserve brain trust gathers in Washington, Art Cashin talks about what a wacky year it’s been so far on Wall Street with what are, historically, the most volatile few months for equity markets yet to come.

I’m sure others have already pointed out how a rate hike this fall might be like “a thin mint” for Mr. Creosote in Monty Python’s classic The Meaning of Life, but, here are a couple of links just in case – Youtube, Wikipedia.

U.S. Housing Market Heating Up

After yesterday’s five-year high in existing home sales and fresh record high in median sales price, here’s a quick look at where home values are rising the quickest and where bidding wars are common via this WSJ story from a couple days ago.

California is sure running hot (Silicon Valley) and cold (Central Valley, a notable exception being Merced). Interestingly, Zillow puts the value of our California home about $20K higher than what we sold it for about 10 years ago (and we sold a couple years prior to the peak).

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10-Year Asset Class Performance

A pretty interesting graphic from this story at Business Insider on how various asset classes have done over the last ten years and so far in 2015.

You wouldn’t know it from its recent performance, but the yellow metal still looks pretty good going back a decade, even though it bottomed out about five years prior in what’s now referred to as “the Brown Bottom”, when the Tony Brown and the Bank of England loudly sold about half their remaining gold stock at prices that were at generational lows.

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Unsound Banking

Lots of banking news today, such as this Bloomberg story on Wall Street’s Wild West and word from Zero Hedge that auto loan rejection rates just hit record lows.

In this overview of contemporary banking, the problems are neatly summarized thusly, a point that may seem quite obvious but that, increasingly, seems to be forgotten now that U.S. home prices and stock prices appear to have reached a permanently high plateau:

The main problem with banks nowadays is that a lot of them have abandoned their traditional role as providers of long-term financial products in favor of short-term gains that carry much higher risks.

Also see:

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