Scarcely a day goes by without a flood of new articles in the financial media expressing shock and disbelief over Treasury yields. It’s not just that they are wrong, these say, it’s that they have to be wrong. What they are implying just isn’t compatible with the what “everyone” is expected to believe. Consumer sentiment is still high as are [...]
In Europe, the ECB’s minutes for its April 2019 meeting claimed: Financial market developments, which were typically more forward looking, were more upbeat. In the US, the Federal Reserve’s minutes for its April 2019 meeting claimed: Participants noted that even if global economic and financial conditions continued to improve, a patient approach would likely remain warranted, especially in an environment [...]
When central bankers use the word “financial” in an economic context, they mean exclusively stocks. Maybe that’s somewhat appropriate given how bonds are so often treated as monetary equivalents. Then again, if that is the case in the official view, how does anyone reconcile bonds with anything? Economy or money? The hard answer is that officials don’t really care about [...]
We have arrived at revisions season once again. It’s that time of year when many if not most (I don’t actually keep track) of economic accounts undergo heightened scrutiny. More data is collected from more comprehensive surveys using far larger samples. These are compared to the existing high frequency panels and changes are made as necessary. Sometimes these are substantial, [...]
It is sometimes amazing what happens when you add just a little perspective. In some cases, it doesn’t require much at all to do so. One little addendum can upend the entire message, leading you off into entirely different interpretations. The implications can be enormous. To see what I mean, let’s begin with the basics. Below is what the public [...]
Nervous people tend not to sit still. The term nervous energy means just that. When you’re worried about something, your mind is telling you to use up the resources your body is providing to search for a fix to whatever it is that’s bothering you. Mitigation at the very least. It really is a simple thing sometimes. In the UST [...]
The FOMC hates the bond market. Hates everything about it, especially how it tells these Economists they don’t know what they are doing. Monetary policy being little more than a vanity project, that’s not going to work for the people practicing it. OK, if you don’t like bonds then how about something else besides the stock market? Some independent corroboration [...]
Understand what the word “transitory” truly means in this context. It is no different than Ben Bernanke saying, essentially, subprime is contained. To the Fed Chairman in early 2007, this one little corner of the mortgage market in an otherwise booming economy was a transitory blip that booming economy would easily withstand. Just eight days before Bernanke would testify confidently [...]
Earlier this month, the People’s Bank of China (PBOC) reduced the percentage of liquid reserves some banks are required to hold. Effective May 15, the Chinese central bank estimated that the policy change would release about RMB 280 billion into the system. This RRR discount, however, was only applied to small and medium-sized banks. The reserve rate for large banks [...]
By far, the biggest problem in Economics is that it has no sense of itself. There are no self-correction mechanisms embedded within the discipline to make it disciplined. Without having any objective goals from which to measure, the goal is itself. Nobel Prize winning economist Ronald Coase talked about this deficiency in his Nobel Lecture: This neglect of other aspects [...]
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