Tag Archive: Federal Reserve/Monetary Policy

China Data: Something New, or Just The Latest Scheduled Acceleration?

2019-12-18

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2019-12-18

China Retail Sales, 2010-2019
The Chinese government was serious about imposing pollution controls on its vast stock of automobiles. The largest market in the world for cars and trucks, the net result of China’s “miracle” years of eurodollar-financed modernization, for the Chinese people living in its huge cities the non-economic costs are, unlike the air, immediately clear each and every day.

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A Repo Deluge…of Necessary Data

2019-12-18

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2019-12-18

US Depository Institutions, 2008-2019
Just in time for more discussions about repo, the Federal Reserve delivers. Not in terms of the repo market, mind you, despite what you hear bandied about in the financial media the Fed doesn’t actually go there. Its repo operations are more RINO’s – repo in name only. No, what the US central bank actually contributes is more helpful data.

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If The Best Case For Consumer Christmas Is That It Started Off In The Wrong Month…

2019-12-17

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2019-12-17

US Retail Sales Stagnation, 1992-2012
Gone are the days when Black Friday dominated the retail calendar. While it used to be a somewhat fun way to kick off the holiday shopping season, it had morphed into something else entirely in later years. Scenes of angry shoppers smashing each other over the few big deals stores would truly offer, internet clips of crying children watching in horror as their parents transformed their local Walmart into Thunderdome.

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Lagarde Channels Past Self As To Japan Going Global

2019-12-14

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2019-12-14

Europe Industrial Production, 1993-2019
As France’s Finance Minister, Christine Lagarde objected strenuously to Ben Bernanke’s second act. Hinted at in August 2010, QE2 was finally unleashed in November to global condemnation. Where “trade wars” fill media pages today, “currency wars” did back then. The Americans were undertaking beggar-thy-neighbor policies to unfairly weaken the dollar.

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The FOMC Channels China’s Xi As To Japan Going Global

2019-12-13

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2019-12-13

Economic Projections FOMC, 2013-2016
The massive dollar eruption in the middle of 2014 altered everything. We’ve talked quite a lot about what Euro$ #3 did to China; it sent that economy into a dive from which it wouldn’t escape. And in doing so convinced the Chinese leadership to give growth one more try before changing the game entirely once stimulus inevitably failed.

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If Trade Wars Couldn’t, Might Pig Wars Change Xi’s Mind?

2019-12-12

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2019-12-12

China Price Stability, 1996-2019
Forget about trade wars, or even the eurodollar’s ever-present squeeze on China’s monetary system. For the Communist Chinese government, its first priority has been changed by unforeseen circumstances. At the worst possible time, food prices are skyrocketing. A country’s population will sit still for a great many injustices. From economic decay to corruption and rising authoritarianism, the line between back alley grumbling and open rebellion is...

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Disposable (Employment) Figures

2019-12-11

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2019-12-11

Establishment Survey; Blowout Payrolls, 2014-2019
If last month’s payroll report was declared to be strong at +128k, then what would that make this month’s +266k? Epic? Heroic? The superlatives are flying around today, as you should expect. This Payroll Friday actually fits the times. It wasn’t great, they never really are nowadays (when you adjust for population and participation), but it was a good one nonetheless.

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The BIS Misses An Opportunity To Get Consistent With The Facts

2019-12-11

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2019-12-11

Net lending through repos and federal funds by size group
Much has been made about the repo market since mid-September. Much continues to be made about it. The question is why. It is now near the middle of December and repo looks dicey despite repo operations and a not-QE small-scale asset purchase intended to increase the level of bank reserves. Always the focus on “funds” which may be available. It was John Adams who took on the task of defending several British soldiers on trial for the Boston...

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You Will Never Bring It Back Up If You Have No Idea Why It Falls Down And Stays Down

2019-12-10

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2019-12-10

Friedman's Plucking Model of Trend-cycle Analysis
It wasn’t actually Keynes who coined the term “pump priming”, though he became famous largely for advocating for it. Instead, it was Herbert Hoover, of all people, who began using it to describe (or try to) his Reconstruction Finance Corporation. Hardly the do-nothing Roosevelt accused Hoover of being, as President, FDR’s predecessor was the most aggressive in American history to that point, economically speaking.

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European Economy: A Time Recession

2019-12-08

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2019-12-08

European Economy, 2016-2019
Eurostat confirmed earlier today that Europe has so far avoided recession. At least, it hasn’t experienced what Economists call a cyclical peak. During the third quarter of 2019, Real GDP expanded by a thoroughly unimpressive +0.235% (Q/Q). This was a slight acceleration from a revised +0.185% the quarter before.

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Fails Swarms Are Just One Part

2019-12-08

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2019-12-08

US Treasury, 2010-2019
There it was sticking out like a sore thumb right in the middle of what should have been the glory year. Everything seemed to be going just right for once, success so close you could almost feel it. Well, “they” could. The year was 2014 and the unemployment rate in the US was tumbling, the result of the “best jobs market in decades.” Real GDP in that year’s two middle quarters was pretty near 5% in both.

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All Signs Of More Slack

2019-12-07

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2019-12-07

PCE Chain-type Price Index, 2009-2019
The evidence continues to pile up for increasing slack in the US economy. While that doesn’t necessarily mean there is a recession looming, it sure doesn’t help in that regard. Besides, more slack after ten years of it is the real story. The Federal Reserve’s favorite inflation measure in October 2019 stood at 1.31%, matching February for the lowest in several years.

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More Signals Of The Downturn, Globally Synchronized

2019-12-07

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2019-12-07

US Imports of Goods, NSA 1989-2019
For US importers, October is their month. And it makes perfect sense how it would be. With the Christmas season about to kick into full swing each and every November, the time for retailers to stock up in hearty anticipation is in the weeks beforehand. The goods, a good many future Christmas presents, find themselves in transit from all over the world during the month of October.

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Consistent Trade War Inconsistency Hides The Consistent Trend

2019-12-05

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2019-12-05

Private Non Residential Construction Spending, 2011-2019
You can see the pattern, a weathervane of sorts in its own right. Not for how the economy is actually going, mind you, more along the lines of how it is being perceived from the high-level perspective. The green light for “trade wars” in the first place was what Janet Yellen and Jay Powell had said about the economy.

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The Risen (euro)Dollar

2019-12-05

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2019-12-05

India Real GDP, 1997-2019
Back in April, while she was quietly jockeying to make sure her name was placed at the top of the list to succeed Mario Draghi at the ECB, Christine Lagarde detoured into the topic of central bank independence. At a joint press conference held with the Governor of the Reserve Bank of South Africa, Lesetja Kganyago, as the Managing Director of the IMF Lagarde was asked specifically about President Trump’s habit of tweeting disdain in the direction...

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Nothing Good From A Chinese Industrial Recession

2019-11-30

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2019-11-30

China Industry, 2001-2019
October 2017 continues to show up as the most crucial month across a wide range of global economic data. In the mainstream telling, it should have been a very good thing, a hugely positive inflection. That was the time of true inflation hysteria around the globe, though it was always presented as a rationally-determined base case rather than the unsupported madness it really was.

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The Big One, The Smoking Gun

2019-11-29

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2019-11-29

Potential Real GDP, 2005-2019
It wasn’t just the unemployment rate which was one of the key reasons why Economists and central bankers (redundant) felt confident enough to inspire 2017’s inflation hysteria. There was actually another piece to it, a bigger piece potentially complimentary and corroborative bit of conjecture. I write “conjecture” because despite how all this is presented in the media there’s very little precision to any of it.

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China’s Financial Stability: A Squeeze and a Strangle

2019-11-27

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2019-11-27

PBOC Balance Sheet, 2006-2019
I do get a big kick out of the way Communists over in China announce how they are dealing with their enormous problems especially as they may be getting worse. Each month, for example, the country’s National Bureau of Statistics (NBS) will publish figures on retail sales or industrial production at record lows but in the opening paragraphs the text will be full of praise for how the economy is being handled.

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Seriously, Good Luck Dethroning the (euro)Dollar

2019-11-24

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2019-11-24

US TIC, 1996-2018
Scarcely a week will go by without some grand prediction of the dollar being dethroned. Set aside how if anything is to be deposed it would have to be the eurodollar, these stories typically follow the same formulaic approach: Country X is moving away from dollar reserves, “diversifying” its holdings because of the geopolitics of Y.

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More (Badly Needed) Curve Comparisons

2019-11-23

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2019-11-23

US Treasury Yield Curve, 2000-2001
Even though it was a stunning turn of events, the move was widely celebrated. The Federal Reserve’s Open Market Committee, the FOMC, hadn’t been scheduled to meet until the end of that month. And yet, Alan Greenspan didn’t want to wait. The “maestro”, still at the height of his reputation, was being pressured to live up to it.

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