Author: George Yacik

Does QE Really Work?

Posted on by George Yacik

George Yacik - INO.com Contributor - Fed & Interest Rates


Perhaps you didn't hear about it, or if you did you dismissed it because of who said it, but I found some comments by Greece's finance minister over the weekend about the European Central Bank's quantitative easing bond buying program very insightful – and in synch with my own thoughts.

Speaking at the Ambrosetti Forum in Italy over the weekend, Yanis Vardoulakis warned that the ECB's purchases of sovereign bonds, which started last week, will create an unsustainable stock market bubble that is unlikely to boost private-sector investments in the euro zone.

"QE is all around us, and a great deal of optimism hangs on it," Varoufakis said in his speech, "Presenting an Agenda for Europe. "At the risk of sounding like a party pooper, let me say that I find it hard to imagine how the broadening of the monetary base in our fragmented, and fragmenting, monetary union will transform itself into a substantial increase in private investment in productive activity." Continue reading "Does QE Really Work?" →

Sometimes You Get No Respect

Posted on by George Yacik

George Yacik - INO.com Contributor - Fed & Interest Rates


Ocwen Financial Corp. just can’t catch a break.

A recent research report says it does a better job than its competitors of modifying mortgages for struggling homeowners to enable them to stay in their homes. At the same time, some of its bondholders are complaining it does too many modifications at their expense. All along, the company has been the focus of state and federal regulators and consumer groups for supposedly abusing the subprime borrowers it services.

Which is it? Can all of this be true? Continue reading "Sometimes You Get No Respect" →

Are We In A Boom Or A Bust?

Posted on by George Yacik

George Yacik - INO.com Contributor - Fed & Interest Rates


This is the world we live in today: Stocks are priced as if the global economy is booming, while the bond market is priced as if we’re in a worldwide depression.

Nowhere is this truer than in Europe, where stocks are at or near record highs while yields on sovereign bonds are at record lows, below zero in many cases.

Of course, we’re neither in a boom or a bust. While we’re closer to the former in the U.S., we’re a lot closer to the latter in Europe. The bond market in Europe is telling us that the euro zone economy’s in the tank, which is much closer to reality, while the stock market there is now trading at a seven-year high. Continue reading "Are We In A Boom Or A Bust?" →

The Next Financial Crisis(es)

Posted on by George Yacik

George Yacik - INO.com Contributor - Fed & Interest Rates


The next U.S. consumer loan crisis might not be the student lending business after all, although that might happen, too.

No, the next loan crisis might just be another residential mortgage crisis.

Of course, the student loan business isn’t getting any better. The New York Fed said recently that 11.3% of student loans were delinquent in the last three months of 2014, up from 11.1% from the previous quarter. (By way of comparison, the delinquency rate on credit card loans was 7.3%, down from 7.5%.) Continue reading "The Next Financial Crisis(es)" →

So What Did Yellen Actually Say?

Posted on by George Yacik

George Yacik - INO.com Contributor - Fed & Interest Rates


My educated interpretation of what Janet Yellen told the Senate Banking Committee on Tuesday boils down to this: The Fed is going to raise interest rates when it is going to raise rates and not one day earlier.

In other words, I don't have any idea, and it's likely she doesn't either. But it's probably not likely to happen in the immediate future, maybe not even this year.

Whether that's a mistake or not is a different matter (I think it is). But it was clear – or rather unclear – that the Fed has no intention of doing anything about raising short-term rates above near-zero anytime soon.

Analysts and pontificators, of course, did their best to put their own spin on what she said (kind of like what I'm doing now). In typical Fed Chair-speak, Yellen provided a bunch of "we might do this – but then again we might not" comments that could mean just about anything. Continue reading "So What Did Yellen Actually Say?" →