Tag Archive: Federal Reserve

US: Reflation Check

2017-10-05

by

2017-10-05

US Recovery, 1925 - 1945
There is a difference between reflation and recovery. The terms are similar and relate to the same things, but in many ways the latter requires first the former.  To get to recovery, the economy must reflate if in contraction it was beaten down in money as well as cyclical forces. In the Great Crash of 1929 and after, reflation was required because of the wholesale devastation of the money supply. 

Read More »

FX Daily, October 04: Consolidative Tone in FX Continues

2017-10-04

by

2017-10-04

The US dollar has a softer tone today, and it was that way even for the European PMI. The greenback eased further after the upside momentum faded yesterday. The heavier tone in Asia seemed spurred by a hedge fund manager's call that Minneapolis Fed President, and among the most dovish members of the FOMC, Kashkari would be the next Fed chair.

Read More »

Evolving Thoughts on Inflation

2017-09-30

by

2017-09-30

In early 2005, Greenspan said that the fact that long-term rates were lower despite the Fed's campaign to raise short-term rates was a "conundrum." Many rushed to offer the Fed Chair an explanation of the conundrum, which given past cycles may not have been such an enigma in the first place.

Read More »

Why The Fed’s Balance Sheet Reduction Is As Irrelevant As Its Expansion

2017-09-27

by

2017-09-27

Japan Monetary Base, Jan 2013 - 2017, US Versus Canada Real GDP, 2007 - 2017
The FOMC is widely expected to vote in favor of reducing the system’s balance sheet this week. The possibility has been called historic and momentous, though it may be for reasons that aren’t very kind to these central bankers. Having started to swell almost ten years ago, it’s a big deal only in that after so much time here they still are having these kinds of discussions.

Read More »

Bi-Weekly Economic Review: As Good As It Gets

2017-09-26

by

2017-09-26

The incoming economic data hasn’t changed its tone all that much in the last several years. The US economy is growing but more slowly than it once did and we hope it does again. It is frustrating for economic bulls and bears, never fully satisfying either. Probably more important is the frustration of the average American, a dissatisfaction with the status quo that permeates the national debate. The housing bubble papered over the annoying lack of...

Read More »

Fed’s Asset Bubbles Now At The Mercy Of The Rest Of The World’s Central Bankers

2017-09-23

by

2017-09-23

Value of SNB US Stock Holdings
"Like watching paint dry," is how The Fed describes the beginning of the end of its experiment with massively inflating its balance sheet to save the world. As former fund manager Richard Breslow notes, however, Yellen's decision today means the risk-suppression boot is on the other foot (or feet) of The SNB, The ECB, and The BoJ; as he writes, "have no fear, The SNB knows what it's doing."

Read More »

The CPI Comes Home

2017-09-22

by

2017-09-22

US Consumer Price Index, Jan 2016 - Aug 2017
There seems to be an intense if at times acrimonious debate raging inside the Federal Reserve right now. The differences go down to its very core philosophies. Just over a week ago, Vice Chairman Stanley Fischer abruptly resigned from the Board of Governors even though many believed he was a possible candidate to replace Chairman Yellen at the end of her term next year. His letter of resignation only cited “personal reasons.”

Read More »

The JOLTS of Drugs

2017-09-17

by

2017-09-17

US Overdose Deaths Involving Opioids, 2000 - 2015
Princeton University economist Alan Krueger recently published and presented his paper for Brookings on the opioid crisis and its genesis. Having been declared a national emergency, there are as many economic as well as health issues related to the tragedy. Economists especially those at the Federal Reserve are keen to see this drug abuse as socio-demographic in nature so as to be absolved from failing in their primary task should it be found...

Read More »

US Export/Import: ‘Something’ Is Still Out There

2017-09-13

by

2017-09-13

US Real Personal Income, Jan 2010 - Jul 2017
In January 2016, just as the wave of “global turmoil” was cresting on domestic as well as foreign shores, retired Federal Reserve Chairman Ben Bernanke was giving a series of lectures for the IMF. His topic wasn’t really the so-called taper tantrum of 2013 but it really was. Even ideologically blinded economists like Bernanke could see how one might have followed the other; the roots of 2016 in 2013.

Read More »

FX Weekly Preview: Three Central Banks Dominate the Week Ahead

2017-09-04

by

2017-09-04

Following strong Q2 GDP figures, risk is that Bank of Canada's rate hike anticipated for October is brought forward. ECB's guidance to that it will have to extend its purchases into next year will continue to evolve. Among Fed officials speaking ahead of the blackout period, Brainard and Dudley's comments are the most important.

Read More »

Currency Risk That Isn’t About Exchange Values (Eurodollar University)

2017-08-31

by

2017-08-31

Eurodollar University
This week the Bureau of Economic Analysis will release updated estimates for Q2 GDP as well as Personal Consumption Expenditures (PCE) and Personal Incomes for July. Accompanying those latter two accounts is the currently preferred inflation standard for the US economy. The PCE Deflator finally hit 2% and in two consecutive months, after revisions, earlier this year.

Read More »

Two Overlooked Takeaways from Draghi at Jackson Hole

2017-08-30

by

2017-08-30

The consensus narrative from the Jackson Hole Symposium was the Yellen and Draghi used their speeches to argue against dismantling financial regulation and the drift toward protectionism. Many cast this as a push against US President Trump, but this may be too narrow understanding.

Read More »

How will Yellen Address Fostering a Dynamic Global Economy?

2017-08-25

by

2017-08-25

Yellen has identified two challenges regarding the US labor market, the opioid epidemic and women participation in the labor force. The topic of the Jackson Hole gathering lends itself more to a discussion of these issues than the nuances of monetary policy. Dynamic world growth needs a dynamic US economy, and that requires more serious thinking about these socio-economic and political issues.

Read More »

The Secret History Of The Banking Crisis

Accounts of the financial crisis leave out the story of the secretive deals between banks that kept the show on the road. How long can the system be propped up for? It is a decade since the first tremors of what would become the Great Financial Crisis began to convulse global markets. Across the world from China and South Korea, to Ukraine, Greece, Brexit Britain and Trump’s America it has shaken our economy, our society and latterly our politics.

Read More »

Real GDP: The Staggering Costs

2017-08-12

by

2017-08-12

How do we measure what has been lost over the last ten years? There is no single way to calculate it, let alone a correct solution. There are so many sides to an economy that choosing one risks overstating that facet at the expense of another. It’s somewhat of an impossible task already given the staggering dimensions.

Read More »

SNB Balance Sheet, Markets and Economy: As Good As It Gets?

2017-08-10

by

2017-08-10

Markets and Economy 1972 - 2017
Late 2014/early 2015 will perhaps be the closest to a real recovery from the Great “Recession” we shall see in this cycle.  Q1 2015 marked the peak year over year growth rate of GDP in this recovery at 3.76%. That rate compares quite unfavorably with even the feeble post dot com crash recovery high of 4.41% in Q1 2004.

Read More »

FX Weekly Preview: Moving Toward September

2017-08-07

by

2017-08-07

The technical and fundamental case for the euro has weakened. Rate differentials have begun moving back in the US favor. France's Macron and Japan's Abe have sunk in the polls lower than Trump.

Read More »

Global Stocks Rise On “Growth Optimism”, Ignore Political Turmoil; Dollar, Oil Creep Higher

2017-07-31

by

2017-07-31

Stoxx Europe, Aug 2016 - 2017
S&P futures rose 0.1% on the last trading day of the month, trailing European and Asian markets boosted by China’s July Mfg. PMI, which despite declining from from 51.7 to 51.4, and missing expecations  of 51.5, saw the construction index rise to its highest level since December 13, sending Chinese iron ore futures surging and … Continue reading »

Read More »

FOMC Sticks to Script: Balance Sheet Unwind to Begin “Relatively Soon” and USD Retreats

2017-07-29

by

2017-07-29

Little new in FOMC statement. Seems consistent with a Sept announcement to begin reducing the balance sheet in Oct. USD sold off as if reflecting sentiment held in bay until the statement was out of the way.

Read More »

FX Daily, July 26: Quiet Fed Day without Yellen

2017-07-26

by

2017-07-26

By definition, the Federal Reserve Open Market Committee meeting is the highlight of the day. Without a press conference, and following last month's rate hike, there is practically no chance of a new policy initiative either on the balance sheet or the Fed funds target.

Read More »