The Economist Hyman Minsky (1919-1996) coined the phrase “Stability leads to instability.”
His theories were generally disregarded by policy-makers throughout his life, partly because he shied from mathematical modeling – de rigueur at the time.
After the financial crisis, many traditional economists – with their myriad models - were lost. Minsky’s Financial Instability Hypothesis gave context and a roadmap. His theories suggested that too much private debt – leverage – sparked the sudden collapse in asset prices.
He also foresaw the role central banks could play in mitigating the causes and effects of such crises.
Post-2008, we take it for granted the Fed should use rates to help moderate market excess. Whether its up to the job is another question.
Weekly Update through May 4, 2018 The S&P 500 lost -21bps, even as the Dow Jones declined -19bps, the Russell 2000 gained 62bps and the Nasdaq added 1.29%.
As for US bonds, they added 2bps.
Globally, the MSCI World Index lost -25bps and the Barclays Global Aggregate Bond Index lost -62bps.
The Euro Stoxx 50 added 1.44% in local-currency (Euro) and lost -14bps in USD. Meanwhile, the Topix declined -32bps in local-currency (Yen) and -1.02% in USD.
Month-end Update through end-April 2018 In April, the S&P 500 added 38bps, the Dow Jones gained 34bps, the Russell 2000 added 86bps and the Nasdaq added 8bps.
As for US bonds, they declined -74bps.
Globally, the MSCI World Index added 1.26% and the Barclays Global Aggregate Bond Index declined -1.44%.
In April, the Euro Stoxx 50 added 5.84% in local-currency (Euro) and 4.49% in USD. Meanwhile, the Topix added 4.31% in local-currency (Yen) and 1.78% in USD.
