The Full Package

Nick Ferres Vantage Point Articles

The Bank of England has just delivered a 50 basis point rate cut today at an emergency meeting. Perhaps more importantly, the Bank has also announced targeted lending plans for small and medium sized enterprises. As one observer said, “a surprise rate cut at 7am is enough to make a gentleman choke on his kipper.” The additional point to note …

The End of Positive Convexity

Nick Ferres Vantage Point Articles

The decade since 2008 has been characterised by a regime that some observers such as Larry Summers have termed “secular stagnation” – the prevailing bias that low trend growth, low inflation and low interest rates are a permanent state. This belief was pervasive and self-reinforcing for policymakers’ and market participants. An additional and related feature of the regime was volatility …

Policy and its Limitations

Nick Ferres Vantage Point Articles

In light of the disappointing way price responded to the extraordinary monetary response from the world’s central banks, it is worth considering the limitations of policy. In a metaphorical sense, the Fed’s actions while necessary and welcome, were like bringing a knife to a gun fight. The Fed’s actions obviously lowered the risk free cost of capital to zero. It …

The Fed: Hero or Zero?

Nick Ferres Vantage Point Articles

The Federal Reserve has cut the Funds rate by 100 basis points to near zero this morning in Asia and has also pledged to buy at least $700 billion. In addition, it announced several other actions, including letting banks borrow from the discount window for as long as 90 days. The Fed also united with five other central banks to …