There is no bottom in sight yet for China. Despite five interest rate cuts and traditional interpretations of monetary “stimulus”, the economy continues to decelerate beyond mainline understanding. Industrial production was just 6.1% in August, marking the thirteenth consecutive month (counting January, which is combined with February due to China’s New Year) below 8%, while retail sales rose 10.8%. Fixed [...]
The IMF added its voice last week to the chorus of Keynesians calling for Janet Yellen to - to paraphrase Rocky Horror - can it, Janet. The "it" being, of course, a hike in interest rates. The IMF cited "substantial output gaps" and "below target inflation" to justify their call for monetary policy to remain "accommodative". I have no idea [...]
Research we follow is showing that the Fed is reaching a point where employment gaps have closed and output gaps are closing. By not raising rates soon, they risk falling behind the eight ball and over-stimulating the economy. Deviation from the Taylor Rule is large. Hosing Prices inflation indicate that rates are too low. [...]
Top News Headlines BIS Quarterly Report: China slowdown, strong and rising dollar threaten emerging markets. European migrant crisis continues; Germany tightens border security. Stocks rally 2% ahead of Fed meeting. Apple unveils new products Economic News Brazil's debt rating cut to junk. IMF adds its name to very long list of Keynesians begging Yellen to hold off on rate hikes. [...]
The wedge pattern that was formed by the S&P 500 Index ((IVV)) finally resolved itself with a big move downward. We might finally be in the midst of the long-talked about correction, but we will likely test support at the 2050 level beforehand. The index is down 3.33% YTD. The S&P 500 Value Index ((IVE)), which consists primarily of US large-cap [...]
When grounded in the framework of traditional banking, wholesale dynamics can be quite confusing to the point of being impenetrable. Nowhere is that more the case than the wholesale ideas of currency and what counts for establishing chains of traded liabilities. In the traditional banking/monetary framework, everything is reducible to money; all else are just derivative claims on it. The [...]
As doubts surrounding QE have grown, there has been a somewhat detectable if still small trend in central banker repentance. Alan Greenspan to an extent has embraced a more decentralized and market framework in his public comments even though he has yet, to my knowledge, actually repudiate his own work more directly. As noted a few days ago, former BoE [...]
After nearly coming in flat for June, wholesale sales fell almost 5% year-over-year in July. That is the second worst month of this “cycle”, bested only by May’s nearly 7% drop. The six-month average is now -3.2% which is uncomfortably close to the worst part of the dot-com recession which only averaged -4.0% at the low. Despite that sales environment, [...]
It seems as if the PBOC is doing a whole lot and getting very little from it. That is actually expected at least to anyone not caught up in the cult of QE and the like, as that is the very nature of central banks dating back to the original at the Bank of England. Even though the focus has [...]
In February 2010, Bank of England chief Mervyn King was very worried about the fragile nature of the British recovery as it fit within the more nebulous global hoard. There were emerging threats from an “unexpected” setback over a tiny little country on the Aegean, perhaps depressing Europe so soon out of the depths of the global Great Recession. Mervyn [...]
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