If it was quiet late last week with China dark for its Mid-Autumn festival, the return from holiday shattered the calm and further amplified what is already a significant problem. The activity in CNH markets continues to astound, but I still think it is domestic liquidity that is more significant. Unsecured offshore (CNH) lending (HIBOR) has all but dried up [...]
The University of Michigan released its September update for their surveys of consumers. The overall index of consumer “sentiment” was unchanged from August at 89.8, and up just 3% from last September. This “confidence” index peaked in January 2015 at 98.1 and has been sideways to lower ever since. Most of the internals were practically unchanged throughout, leading Chief Economist [...]
For the fifteenth consecutive month dating back to November 2014, the US CPI remained less than 1.5%. While this was supposed to be the year where “transitory” effects of oil prices as well as “other” factors dissipated, only in January has the full CPI been above 1.1%. Much like the PCE Deflator, the Fed’s preferred inflation gauge, there is no [...]
If anyone might wonder why yesterday and today seem far less noteworthy and less perhaps dangerous, the Chinese are once again on holiday. The Mid-Autumn festival began yesterday and extends today. The last money market trading, then, was early Thursday morning with offshore CNH coming back down if only slightly. What commentary there is in relation to CNH continues to [...]
It follows that if we find production dropping into a two-year slump, sales are likely the cause. Retail sales continue to be just as stuck as the rest of the economy, an economic limbo between growth and recession with far more of recession than growth. After suffering one of the worst months in July, retail sales bounced back in August [...]
Industrial production in the United States fell by 1.1% year-over-year in August, a slightly larger decline than the -0.6% estimated for each of the two months prior. August’s negative was the twelfth consecutive, marking a full year in slow but unusually persistent contraction at such a slope. The seasonally-adjusted peak was reached in November 2014, meaning that for almost two [...]
For some reason Alan Greenspan’s opinions are still taken seriously. No one single person has done more to damage the economic long run that his Keynesian training told him would never matter. We are living in that increasingly desolate long run, and yet somehow to the media to some nontrivial extent beyond it he has maintained credibility. What is most [...]
In many ways it is surprising the bond selloff hasn’t been bigger. After all, the recovery narrative of the unemployment rate has had almost everything going for it since February, at least in terms of perceptions playing into expectations. There was the usual spring rebound in economic data that aided in the “worst is past” argument, while oil prices and [...]
Treasury bill rates have been trading notably higher of late, with the 3-month bill equivalent yield as much as 37 bps this week. Though it was the highest rate since November 2008, a true reading of bill history shows that it is not a matter of Fedearl Reserve policy “normalization.” Trading in bills, especially the 3-month, makes indications of risk [...]
There is validity in (not “to”) the myth of central banking, one that has important and very serious implications right down the smallest and most immediate terms. The first task of every central bank was currency elasticity, which simply meant the bank would endeavor to supply (at penalty rates, according to Bagehot, such that banks do not fund themselves on [...]
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