Tag Archive: Federal Reserve/Monetary Policy

Less Than Nothing

As I so often write, we still talk about 2008 because we aren’t yet done with 2008. It doesn’t seem possible to be stuck in a time warp of such immense proportions, but such are the mistakes of the last decade carrying with them just these kinds of enormous costs.

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Commodity and Oil Prices: Staying Suck

The rebound in commodity prices is not difficult to understand, perhaps even sympathize with. With everything so depressed early last year, if it turned out to be no big deal in the end then there was a killing to be made. That’s what markets are supposed to do, entice those with liquidity to buy when there is blood in the streets. And if those speculators turn out to be wrong, then we are all much the wiser for their pain.

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Trying To Reconcile Accounts; China

Chinese economic data for April 2017 has been uniformly disappointing. External trade numbers resembled too much commodity prices, leaving an emphasis on them rather than actual economic forces. The latest figures for the Big 3, Industrial Production, Retail Sales, and Fixed Asset Investment, unfortunately also remained true to the pattern.

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Reasonable Retail (Therefore Consumer) Expectations

Retail sales estimates are not adjusted for inflation, but even so whenever they get down toward the 3% growth level you can be sure there is serious economic trouble. The 6-month average for overall retail sales dropped below 3% in March 2001, the month that marked the start of the official dot-com recession (though that is not the official name for the cyclical peak, it probably should be).

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Hopefully Not Another Three Years

The stock market has its earnings season, the regular quarterly reports of all the companies that have publicly traded stocks. In economic accounts, there is something similar though it only happens once a year. It is benchmark revision season, and it has been brought to a few important accounts already. Given that this is a backward looking exercise, that this season is likely to produce more downward revisions shouldn’t be surprising.

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China Inflation Now, Too

We can add China to the list of locations where the near euphoria about inflation rates is rapidly falling apart. This is an important blow, as the Chinese economy has been counted on to lead the world out of this slump if through nothing other than its own sheer recklessness. “Stimulus” was all the rage one year ago, and for a time it seemed to be producing all the right effects. This was “reflation”, after all.

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Lackluster Trade, China April Edition

China’s trade statistics for April 2017 uniformly disappointed. They only did so, however, because expectations are being calibrated as if the current economy is actually different. It is instead merely swinging between bouts of contraction and low-grade growth, but so low-grade it really doesn’t qualify as growth.

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Inflation Is Oil, But Inflation Is Much More Than Consumer Prices

The average annual change in the WTI benchmark price was in April about 25%. That was still a sizable increase year-over-year, and just marginally less than March’s average of 33%. For calculated inflation rates, it represents the last of the base effects that have to this point made it appear as if economic improvement was possibly serious.

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Lackluster Trade

US imports rose 9% year-over-year (NSA) in March 2017, after being flat in February and up 12% in January. For the quarter overall, imports rose 7.3%, a rate that is slightly more than the 2013-14 comparison. The difference, however, is simply the price of oil.

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The Wrong People Have An Innate Tendency To Stand Out

I don’t think Milton Friedman would have made much of chess player. For all I know he might have been a grand master or something close to that rank, but as much as his work is admirable it invites too the whole range of opposite emotion. He was the champion libertarian of the free market who rescued economics from the ravages of New Deal socialism, but in doing so he simply created the avenue for where Economics of that kind could be transposed...

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Noose Or Ratchet

losing the book on Q4 2016 balance sheet capacity is to review essentially forex volumes. The eurodollar system over the last ten years has turned far more in this direction in addition to it becoming more Asian/Japanese. In fact, the two really go hand in hand given the native situation of Japanese banks.

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Auto Pressure Ramps Up

The Los Angeles Times today asked the question only the mainstream would ask. “Wages are growing and surveys show consumer confidence is high. So why are motor vehicle sales taking a hit?” Indeed, the results reported earlier by the auto sector were the kind of sobering figures that might make any optimist wonder.

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China: Blatant Similarities

Declines in several of the world’s PMI’s in April have furthered doubts about the global “reflation.” But while many disappointed, some sharply, it isn’t just this one month that has sown them. In China, for example, both the manufacturing and non-manufacturing sentiment indices declined to 6-month lows.

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Clickbait: Bernanke Terrifies Stock Investors, Again

If you are a stock investor, you should be terrified. The most disconcerting words have been uttered by the one person capable of changing the whole dynamic. After spending so many years trying to recreate the magic of the “maestro”, Ben Bernanke in retirement is still at it.

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Defining Labor Economics

Economics is a pretty simple framework of understanding, at least in the small “e” sense. The big problem with Economics, capital “E”, is that the study is dedicated to other things beyond the economy. In the 21st century, it has become almost exclusive to those extraneous errands. It has morphed into a discipline dedicated to statistical regression of what relates to what, and the mathematical equations assigned to give those relationships some...

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‘Dollar’ ‘Improvement’

According to the headline TIC statistics, foreign central banks have in the past six months sold the fewest UST’s since the 6-month period ended November 2015. That may indicate an easing of “dollar” pressure in the private markets due to “reflation” sentiment.

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PBoC: Mechanical Tightening PBoC is China Central Bank

The mainstream narrative as it relates to Chinese money is “tightening.” Having survived the economic downturn last year, we are to believe that the PBOC is once again on bubble duty. They raised their reverse repo rates, considered to be their policy benchmarks, three times up to mid-March.

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To The Asian ‘Dollar’, And Then What?

The Bretton Woods system was intentionally set up to funnel monetary convertibility through official channels. The primary characteristic of any true gold standard is that any person who wishes can change paper claims into hard money. It was as much true in any one country as between those bound by the same legal framework (property).

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Money In America

In 1830, France was once more swept up in revolution, only this time at the end of it was installed one king to replace another. Louis-Phillipe became, in fact, France’s last king as a result of that July Revolution. The country was trying to make sense of its imperial past with the growing democratic sentiments of the 19th century.

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New Patterns of Disturbance

Having finally established that the economy of the “rising dollar” was appreciably worse than first estimated, we can turn our attention back toward figuring out what that means for the near future and beyond. According to the latest estimates for Industrial Production, growth has returned but in the same weird asymmetric sort of way that is actually common for the past decade. Year-over-year IP expanded by 1.5% in March 2017, the highest growth...

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