Effective June 10, 2014, the European Central Bank cut the interest rate it paid on its deposit account to less than zero. That instrument in forming the floor for what is a money market corridor in European policy, it was the world’s first major NIRP experiment. Europe’s economy had by GDP been growing again for three straight quarters by then [...]
New orders for durable goods, excluding transportation industries, rose 9.1% year-over-year (NSA) in January 2018. Shipments of the same were up 8.8%. These rates are in line with the acceleration that began in October 2017 coincident to the aftermath of hurricanes Harvey and Irma. In that way, they are somewhat misleading. The seasonally-adjusted data gives a better sense of the [...]
Economic Reports Economic Growth & Investment We pay particular attention to broad based indicators of growth. The Chicago Fed National Activity Index and the Conference Board's Leading Economic Indicators are examples. We watch them because we are mostly interested in identifying inflection points in the broad economy and aren't as interested in the details. Why? Because, while bear markets do [...]
The problem with prolonged stagnation is that the costs associated with it are not strictly economic in nature. There is, of course, the substantial loss in terms of opportunity cost or output that should have happened. But more than that, any society caught within the viselike grip of such malaise is a frail one subject to marginal erosion at the [...]
Imagine you live in a terrific neighborhood backed right up to a large wilderness. This heavily forested area has inside of it grown up a tremendous amount of underbrush. The local government, concerned for your property as well as those of your neighbors, starts making noises about taking care of the land before it dries out and a wildfire starts [...]
Warren Buffett is complicated guy. He’s made out to be like your grandfather, the kind old guy who gives you simple and effective investment advice to help you make your way in this complex world. His idea for never investing in a business you don’t understand is good advice. It’s just that he doesn’t actually practice it. Any substantial review [...]
New home sales were down sharply again in January 2018. For the second straight month, the level of purchase activity fell substantially despite what are otherwise always described as robust or even booming economic conditions. Like the sales of existing homes, the sales of newly constructed units should be both moving upward as well as being significantly more than stuck [...]
In October 2006, the Communist Party of China unveiled a landmark new policy aimed at easing social and societal unrest in the country. The Chinese leadership would strive for a “harmonious society”, reaching this goal no later than 2020. As one of the final works for 16th Party Congress convened in 2002, it would stand as the template for how [...]
If I had to pick a chart of the week, it has to be the one below even though it only applies because I created this week. It’s not really something that happened over the last five days, but it does tell us a lot about everything else in the background. Inflation being a money issue, in China that means [...]
There is far too much shorthand in the study of the economy and markets. We take so many things for granted, we never really stop to ask if its appropriate that we should. The desire for quick rules of thumb is understandable enough given a complex world. There is probably nothing more in it than the economy and markets. It [...]
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