Economy

Different ‘Dollars’ To Different Places Are Really Just The Same ‘Dollar’ At Different Times

By |2016-12-29T09:52:52-05:00December 29th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

This is a repost; originally published on Dec. 22, 2016. On April 27, 2007, the People’s Bank of China announced that it was raising the statutory ratio for required reserves by 50 bps to 11%. The Chinese had allowed their currency exchange rate to moderately float almost two years earlier, which changed the way monetary policy would have to work. [...]

RHINO

By |2016-12-29T09:45:24-05:00December 29th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

This is a repost; originally published Dec. 22, 2016. The federal funds rate target is essentially nothing more than a communication tool. You don’t have to take my word for it, the same conclusion has been reached at the level of the FOMC itself. There was, in fact, some debate, though limited in scope, in 2013 and 2014 about changing [...]

Economists Canada Problem (Con’t)

By |2016-12-27T18:39:33-05:00December 27th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Canada’s economy remains the distinct enigma of the developed world, where the binary business cycle breakdown is perhaps most conspicuous. When oil prices first crashed to end 2014 and start 2015, even economists expected Canada’s economy to suffer, so exposed as it was and remains to the energy sector. But after two rough quarters to begin last year, that was [...]

Hope And Doubt

By |2016-12-27T17:24:39-05:00December 27th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

For the 55th consecutive month, the PCE Deflator came in under the 2% inflation target for the Federal Reserve’s inflation mandate. The Bureau of Economic Analysis reported last week that inflation in November 2016 actually decelerated slightly from its meandering pace set more by oil price base effects than $4.5 trillion on the Fed’s balance sheet. Year-over-year the PCE Deflator [...]

Flight of Durable Goods

By |2016-12-27T13:12:16-05:00December 27th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The Census Bureau reported last week that durable goods (ex transportation) shipments were up 2.4% in November year-over-year (NSA). It was the third time in the past ten months that shipments have risen, and the highest growth rate since December 2014. New orders for durable goods (ex transportation) were also up, +3.3%, the fourth time this year. Rather than suggest [...]

Chart(s) of the Week: ‘Lombard Street’ For A New Age

By |2016-12-21T17:33:47-05:00December 21st, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

At one point in time not all that long ago, basic economics (small “e”) ruled central banking. There was really no other choice, as out of necessity bred change and understanding. The English were perhaps first in that lead, as the Empire with greatest economic and financial reach. It is interesting what we take for granted today as if it [...]

Rate Hikes: It Won’t Ever Be More Than ‘Green Shoots’

By |2016-12-20T18:47:35-05:00December 20th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

When Ben Bernanke sat down with 60 Minutes for an interview in March 2009, it was then the first time in 20 years a sitting Federal Reserve Chairman had appeared on TV one on one. The timing was not coincidental, as right at that moment the whole world appeared to be falling apart. Nevermind that Bernanke had up to that [...]

I Suspect People Would Prefer ‘Reflation’ With Some Conviction

By |2016-12-20T17:15:00-05:00December 20th, 2016|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

For the most part the “reflation” narrative has focused on nominal interest rates. That, for once, actually makes some sense given interest rates are really at the center of all this. Stocks are whatever they are, but whether you figure the Federal Reserve and monetary policy or just the economic reflections of interest rates, the nominal world does seem to [...]

The Past Isn’t Quite Done With Us Yet

By |2016-12-19T18:43:58-05:00December 19th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Even if you believe that the economy we find today is irrelevant to one that will result from a range of better policies under a Trump administration, you still have a timing problem. I fully believe that “reflation” has to this point been about promise, and that mostly relates to what can “only” be different now that the age of [...]

Reflation And Speculators, The Phantoms of 2016

By |2016-12-19T17:21:53-05:00December 19th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

China’s big problem can be succinctly described as where Economics met economics. Capital “E” Economics pushed authorities to over-financialize China in response to the Great “Recession”, which China’s government was only too enthusiastic to do even though its monetary regime at the PBOC better understood what was at the time happening than any of the central bankers in the West [...]

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