Throughout time, various monetary theories sparked the imaginations of economists and split the community into fervent supporters or adversaries. The Ricardian, Austrian, or Keynesian models are only one of the several that shaped economic history. During the coronavirus pandemic this 2020, one of the most interesting monetary theories throughout history has become evident  – the Modern Monetary Theory or MMT. Modern Monetary Theory in the 21st Century The Modern Monetary Theory, is a macroeconomic theory…

A popular topic among economists and investors alike is when will  normal life resume? More precisely, how long will the recession affect the global economy? If we look at how the European consumers chose to deal with their savings, the answer is that people hold back on their consumption. Fear and uncertainty about the future are stronger than any incentive to go out and spend. Huge Surge of European Saving In Europe, there’s been a…

Gold is more than a commodity for investors looking to hedge the risk in a portfolio. Viewed as a safe-haven in times of crisis, its role in a portfolio is to balance the fall in equities or other risk-associated market moves. The price of gold broke higher since the middle of 2019. After six years of consolidation, it moved above $1300 and did not look back till the current $1700, with threats of breaking the…

April 2020 brought one of the most extraordinary events in financial history – the price of oil fell to negative $37 before bouncing back to zero. With economies in shut down mode, holders of May delivery futures contracts were willing to pay up to $40 for avoiding the physical delivery of crude oil. The drop in the oil price continues to create victims, especially in the US shale industry. The recent Russia-Saudi Arabia disagreement on…

More than 38 million Americans have filed for unemployment over the last nine weeks. This is a huge increase when compared with what we call now the Great Financial Crisis (GFC) of 2008-2009. In the week ending May 16, the seasonally adjusted initial claims fell to almost two-and-a-half million, decreasing 250,000 from the previous week’s revised number. The Labor Market is Taking a Big Hit The good news is that the initial claims for unemployment…

After low readings in April, the Manufacturing Business Outlook Survey in the United States rose in May. All key indicators such as new orders, shipment, employment, and general activity recovered from the April’s 40-year low. Compiled by the Federal Reserve Bank of Philadelphia, the data offers a glimpse into the manufacturing activity in the Third Federal Reserve District – which is a manufacturing intensive one. It represents a bellwether for the entire manufacturing industry across…

Investors around the world have a mandate – to search the highest yield with the lowest risk possible. Opportunities exist everywhere, as some markets outperform others, depending on a variety of economic, geopolitical, and other fundamental factors. Throughout history, one thing has remained consistent as the driver of risk, more precisely, the reason why investors shift their portfolio’s allocations from one asset to another. That is the interest rate level. A study which compiled interest…

During periods of economic growth, societies often have to deal with higher oil prices. As economic expansion leads to high demand for all types of businesses (e.g., construction, travel, etc.), the price of oil tends to rise besides consideration related to its own supply and demand levels.  Nowadays, due to the coronavirus economic shock, one cannot ignore the irony of wishing for oil prices to recover to normal levels. Beyond the Negative Shock In April…