Tag Archive: inflation

What Happens When Central Banks Buy Stocks (ETFs)? Well, We Already Know

2020-03-13

by

2020-03-13

Japan Machine Tool Orders, 2010-2020
Can we please dispense with all notions that monetary policy works? Specifically balance sheet expansion via any scale asset purchase programs. Nowhere has that been more apparent than Japan. Go back and reread all the promised benefits from BoJ’s Big Bang QQE that were confidently written in 2013. The biggest bazooka ever conceived has fallen short in every conceivable way.

Read More »

Schaetze To That

2020-02-26

by

2020-02-26

Inflation Europe, 2007-2020
When Mario Draghi sat down for his scheduled press conference on April 4, 2012, it was a key moment and he knew it. The ECB had finished up the second of its “massive” LTRO auctions only weeks before. Draghi was still relatively new to the job, having taken over for Jean-Claude Trichet the prior November amidst substantial turmoil.

Read More »

FX Daily, February 13: Surprise? China Undercounts Afflictions and Fatalities, Curbs Risk Taking

2020-02-13

by

2020-02-13

Overview: There is one overriding driver today, and that is the incorporation of CAT scan diagnoses of the virus in Hubei, ground-zero. This follows the arrival of WHO officials into China a couple days ago. Not only have the cases jumped, but so did the number of deaths. It plays on fears that China's figures are not reliable. But it is not just China.

Read More »

Inflation, But Only At The Morgue

2020-01-18

by

2020-01-18

Mortality Rates Divided by age group, 1999-2017
Why is everyone so angry? How can socialism possibly be on such a rise, particularly among younger people around the world? Why are Americans suddenly dying off? According to one study, two-thirds of millennials are convinced they are doing worse when compared to their parents’ generation. Sixty-two percent say they are living paycheck to paycheck, with no savings and no way to get any (though they also tend to “overspend” when compared to other...

Read More »

FX Weekly Preview: High-Frequency Data may Underscore Four Thematic Points

2020-01-06

by

2020-01-06

Full liquidity returns to the markets gradually in the coming days, and the week ahead culminates with the US December employment report.  The highlights include the service and composite PMI readings,  and December eurozone and China's CPI.  The UK reports December PMIs,  November GDP, and industrial output figures.

Read More »

The End of an Epoch, Report 8 Dec

2019-12-10

by

2019-12-10

“There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

Read More »

All Signs Of More Slack

2019-12-07

by

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.

Read More »

Money and Prices Are a Dynamic System, Report 1 Dec

2019-12-03

by

2019-12-03

Gold and Silver Prices
The basic idea behind the Quantity Theory of Money could be stated as: too much money supply is chasing too little goods supply, so prices rise. We have debunked this from several angles. For example, we can use a technique that every first year student in physics is expected to know. Dimensional analysis looks at the units on both sides of an equation.

Read More »

Raising Rates to Fight Inflation, Report 24 Nov

2019-11-26

by

2019-11-26

Physics students study mechanical systems in which pulleys are massless and frictionless. Economics students study monetary systems in which rising prices are everywhere and always caused by rising quantity of currency. There is a similarity between this pair of assumptions. Both are facile. They oversimplify reality, and if one is not careful they can lead to spectacularly wrong conclusions.

Read More »

China’s Dollar Problem Puts the Sync In Globally Synchronized Downturn

2019-10-18

by

2019-10-18

China Exports, 2006-2019
Because the prevailing theory behind the global slowdown is “trade wars”, most if not all attention is focused on China. While the correct target, everyone is coming it at from the wrong direction. The world awaits a crash in Chinese exports engineered by US tariffs. It’s not happening, at least according to China’s official statistics.

Read More »

CPI Changes On Energy: The Inflation Check

2019-10-13

by

2019-10-13

CPI Changes on Energy, 1995-2019
After constantly running through what the FOMC gets (very) wrong, let’s give them some credit for what they got right. Though this will end up as a backhanded compliment, still. After having spent all of 2018 forecasting accelerating inflation indices, from around New Year’s Day forward policymakers notably changed their tune.

Read More »

Monthly Macro Monitor: Doom & Gloom, Good Grief

2019-10-12

by

2019-10-12

Economic Growth & Investment, October 2019
When I first got in this business oh so many years ago, my mentor told me that I shouldn’t waste my time worrying about the things everyone else was worrying about. As I’ve related in these missives before, he called those things “well worried”. His point was that once everyone was aware of something it was priced into the market and not worth your time.

Read More »

Big Trouble In QE Paradise

2019-10-07

by

2019-10-07

Germany 10-year Bund Yield, 2014-2016
Maybe it was a sign of things to come, a warning how it wasn’t going to go as planned. Then again, when it comes to something like quantitative easing there really is no plan. Other than to make it sound like there is one, that’s really the whole idea. Not what it really is and what it actually does, to make it appear like there’s substance to it.

Read More »

Why The Japanese Are Suddenly Messing With YCC

2019-10-06

by

2019-10-06

Japan JGB Curve Spreads, 1985-2019
While the world’s attention was fixated on US$ repo for once, the Bank of Japan held a policy meeting and turned in an even more “dovish” performance. Likely the global central bank plan had been to combine the Fed’s second rate cut with what amounted to a simultaneous Japanese pledge for more “stimulus” in October. Both of those followed closely an ECB which got itself back in the QE business once more.

Read More »

Big Difference Which Kind of Hedge It Truly Is

2019-09-03

by

2019-09-03

PCE Deflator, January 20 15 - July 2019
It isn’t inflation which is driving gold higher, at least not the current levels of inflation. According to the latest update from the Bureau of Economic Analysis, the Federal Reserve’s preferred inflation calculation, the PCE Deflator, continues to significantly undershoot. Monetary policy explicitly calls for that rate to be consistent around 2%, an outcome policymakers keep saying they expect but one that never happens.

Read More »

THE FED’S CAPITULATION: WHAT IT MEANS FOR GOLD INVESTORS

2019-08-27

by

2019-08-27

Fed's Capitulation - Claudio Grass
After the Federal Reserve’s monetary policy U-turn earlier this year and the central bank’s decision to cut interest rates for the first time in a decade, mainstream investors and analysts believe that holding rates lower and for longer will help keep stock markets afloat and the economic expansion alive.

Read More »

“More of the same” at the ECB increases gold’s appeal

2019-08-22

by

2019-08-22

“The intellectual leaders of the peoples have produced and propagated the fallacies which are on the point of destroying liberty and Western civilization.” Ludwig von Mises, Planned Chaos. It took multiple meetings and over 50 hours of official negotiations for EU leaders to reach an agreement on the appointments for the top jobs of the EU and the ECB, but in mid-July the results finally came in.

Read More »

The Path Clear For More Rate Cuts, If You Like That Sort of Thing

2019-08-15

by

2019-08-15

U.S. Gasoline Stocks, 2012-2019
If you like rate cuts and think they are powerful tools to help manage a soft patch, then there was good news in two international oil reports over the last week. The US Energy Information Administration (EIA) cut its forecast for global demand growth for the seventh straight month. On Friday, the International Energy Agency (IEA) downgraded its estimates for the third time in four months.

Read More »

I Know Usury When I See It, Report 4 Aug

2019-08-05

by

2019-08-05

Gold and Silver Price
“I know it, when I see it.” This phrase was first used by U.S. Supreme Court Justice Potter Stewart, in a case of obscenity. Instead of defining it—we would think that this would be a requirement for a law, which is of course backed by threat of imprisonment—he resorted to what might be called Begging Common Sense. It’s just common sense, it’s easy-peasy, there’s no need to define the term…

Read More »

When Verizons Multiply, Macro In Inflation

2019-06-16

by

2019-06-16

CPI Changes On Energy, 1995-2019
Inflation always brings out an emotional response. Far be it for me to defend Economists, but their concept is at least valid – if not always executed convincingly insofar as being measurable. An inflation index can be as meaningful as averaging the telephone numbers in a phone book (for anyone who remembers what those things were).

Read More »