When Alan Greenspan raised rates more than a decade ago, he just commanded that they be raised and the markets dutifully obeyed. The myth was unchallenged that the Fed could, if it wished, flood the market with bank reserves to reduce rates or contrarily starve it of reserves to raise them. The events of 2007-09 were essentially direct defiance to [...]
Factory orders rose 1.1% year-over-year in August, the first increase since February. Like February, however, it isn’t clear if the gain is due to actual organic growth or seasonal factors. The seasonally-adjusted series for factory orders fell 1.6%, the difference likely attributed to July. Orders rose by a considerable amount in that month on a seasonally-adjusted basis even though unadjusted [...]
The “rising dollar” has been much less disruptive since February 11. In terms of the real economy, since “rising dollar” is a euphemism for “dollar” shortage we would expect trade and especially international trade to be most affected by it where “dollars” are the primary global currency. A pause in “dollar” disruption, at least outwardly as direct disorder, should allow [...]
When we talk about or estimate long run growth rates, we intend to encompass entire cycles. In other words, whatever the long run average of real GDP growth, for instance, it takes into account both recession and recovery to harmonize into what would be a constant trend or potential. From that view, we would expect that while growth would be [...]
Since rumors of a much lower DOJ settlement went viral last week, Deutsche Bank stock has rebounded. From a low of $11.48 last Friday, the stock was trading today above $13. This isn’t, of course, indicative of an end to all woes for the German bank, merely the latest is a long line of temporary reprieves. The problem for Deutsche [...]
Auto sales continue along with their “plateau”, being estimated at 17.8 million (SAAR) units sold in September. Ford was once again the big loser, with sales down 8.1% year-over-year; GM down 0.6%; Fiat Chrysler -0.9%; and VW -7.8%. Toyota and Nissan managed gains, +1.5% and +4.9%, respectively. Car sales were down almost 19% while pickups and light truck sales fell [...]
In the summer of 2013, the mainstream media was already convinced that Japan’s QE amplification, the true shock and awe “money printing”, was not just working it was doing so convincingly. The yen was down sharply against the dollar, feeding what looked like a surging export sector. Even though QQE was barely a few months old, it was talked about [...]
In economics, there is a great deal of thought and debate surrounding first and second order effects. In short, a first order effect is something that is directly caused by some change, while a second order effect is caused by the first order effect. In many instances it is the second order effects that countermand any of the first, rendering [...]
From the orthodox binary view, PMI’s aren’t making any sense. Convention currently dictates that the economy must be growing, and where not moving unambiguously toward recession. Translating those expectations into these sentiment surveys means that under expectations for the former PMI’s should be not just above 50 but increasingly so, while the recessionary condition should measure nothing above 50 and [...]
In December 2000, the Financial Post orchestrated what it billed as a great debate, a clash of titans pitting two giants of economics against each other in a series of eight questions. Dubbed the Nobel Money Duel, on the one side was Robert Mundell, a Nobel Laureate often credited as the “father of the euro.” On the other was Milton [...]
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