The Fed in its Beige Book as well as in the speeches of several of its officials has referenced a labor shortage for years now. On the one hand, that is understandable given the trajectory of the unemployment rate. All the way back in 2013, during the so-called taper tantrum, it was the rapid drop in that rate which triggered [...]
You find lots of tortured arguments about the state of the economy, largely because the premise starts with the boom and then seeks to find it. If it isn’t currently visible in the data, there is unusual and unearned confidence that the data will have to change in the near future (rather than the past three times we’ve been through [...]
One less mainstream piece of this inflation hysteria boom is the velocity of money. In case you haven’t yet heard, monetary velocity is rising. From that we are supposed to infer all the usual – wages, inflation, higher rates, and utter destruction in bonds if not the whole Western economic structure. The first part is technically true. Money velocity increased [...]
It’s always been easy to lose perspective. In the modern social media age, maybe it has become even easier. Conventional wisdom rarely seems to get challenged anymore, particularly given the assignment of “what everybody knows.” Big Data is, for example, predicated on a very good theory, the wisdom of crowds. It hasn’t yet lived up to its expectations because as [...]
No matter where one looks, there is extreme positioning in all the key markets. Each one is pulled further and further toward “reflation”, too, or in the case of the euro this “falling dollar” consistent with that idea. The world is betting big on it finally coming true, the “globally synchronized growth” to this point of pure myth. If there [...]
China’s shock “devaluation” was not the only one in 2015. It was the currency disruption that most people remember, even if years later they’re not sure exactly why. Paying attention to CNY makes sense, requiring no further explanation for why it might be given focus even from the otherwise unaware. In December 2015, while global liquidity conditions further deteriorated the [...]
The conventional interpretation of “reflation” in the second half of 2016 was that it was simply the opening act, the first step in the long-awaiting global recovery. That is what reflation technically means as distinct from recovery; something falls off, and to get back on track first there has to be acceleration to make up that lost difference. There was, [...]
It’s impossible to tell what drives the short run in anything, so anything we describe and attempt to ascribe moves to comes with a grain of salt. That said, there are clearly some things missing here. I’m not talking about big stuff like overrating the Fed’s predictive abilities and its resolve, ridiculous stock valuations, or anything of the like. Stocks [...]
In February 2013, the Chinese Golden Week fell late in the calendar. The year before, 2012, New Year was January 23rd, meaning that the entire Spring festival holiday was taken with the month of January. The following year, China’s New Year was placed on February 10, with the Golden Week taking up the entire middle month of February. For economic [...]
When the Federal Reserve last month updated its estimates for consumer credit, we thought it was concerning if consistent with the labor market that revolving credit jumped by $11.2 billion in November 2017. The increase continued a pattern of greater regular usage of largely credit cards in lieu of growing incomes which have pretty much stagnated for several years. Undo [...]
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