In 1967, the US Personal Savings Rate averaged just a little more than 12%. That was pretty consistent with consumer behavior observed throughout the decades before, and the one that followed. What that meant, in terms of economic theory, was that if you as a central bank intended to accelerate the economy via the manipulation of expectations you at least [...]
The current expansion is already one of the longest on record. With another quarter entering the BEA’s books, it has been 35 since the last declared recession. At +2.3% for the current one, there won’t be another considered anytime soon putting this economy within reach. Yet, out of those 35 quarters only 10 have contained Real GDP growth meeting or [...]
Why isn’t Ford’s news getting a bigger reaction? This was no small announcement, essentially a retooling of its entire business. The company will, in effect, no longer build and sell cars; at least not cars as we think of them. The Mustang, it appears, will be the lone survivor among that category, but the Taurus and even the Focus are [...]
If we are analyzing funding risks of late, which is a perfectly natural thing to do given where things stand, we shouldn’t only focus on the technical aspects. Sure, there is LIBOR-OIS and all that jazz in Hong Kong. But there are other quite simple components to consider, too. If there is a cycle to these upturns and downturns, each [...]
No one seems able to account for the rise in LIBOR-OIS. I think it’s a vain effort, and focuses on the wrong segments, but nonetheless there is considerable uncertainty which always casts suspicions into the shadows. That is important. A few weeks ago, all the big bank analysts were alight with their theories. They couldn’t agree, as noted in this [...]
Since the announced conditional cut in China’s RRR won’t begin to show up in various figures (particularly for the MLF) until next month, the updated PBOC balance sheet for March 2018 is somewhat anti-climactic. Not only is it too early for what may follow given the policy shift, there are the usual if not more than usual Golden Week distortions [...]
On April 6, the Trump administration announced a new round of sanctions imposed upon certain Russian officials, persons, and businesses. Treasury Secretary Steve Mnuchin announced their purported purpose in a letter: “The Russian government operates for the disproportionate benefit of oligarchs and government elites.” Russia’s currency, the ruble (RUB), fell sharply after the announcement as well as over the days [...]
How quickly things change in these markets. In the report two weeks ago, the markets reflected a pretty obvious slowing in the global economy. In the course of two weeks, what seemed obvious has been quickly reversed. The 10-year yield moved up a quick 20 basis points in just a week, a rise in nominal growth expectations that was mostly [...]
Before Mario Draghi took over the ECB, he was head of the Bank of Italy. In between, Draghi was also Chairman of something called the Financial Stability Forum (FSF). This latter organization was created in 1999 “to promote international financial stability through enhanced information exchange and international cooperation in financial supervision and surveillance.” Draghi was appointed to lead the effort [...]
The term itself gives it away. They called it quantitative easing for a specific reason. Both words mean to convey substantial concepts. The first part, quantitative, was used because it sounds deliberate, even scientific. It implies a program where great care and study was employed to come up with the exact right amount. It’s downright formulaic, where you intend that [...]
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