168.3 Economic Growth Scare: Are Markets Rightly Scared?———Ep 168.3 Summary———The nominal value of Chinese imports of iron ore, German exports and Japanese exports all look pretty, pretty good. But the unit volume is pretty, pretty awful. There are fewer units being utilized! This is an economic warning that is presently hidden behind hire prices (value = unit * price). ———Ep [...]
This wasn’t meant to be a running tally. In fact, that was my major point in yesterday’s curve inversion missive; the thing inverted, it stayed inverted for a second day but maybe won’t change much for some time moving forward. Boring and consistent, what matters most in this first stage is only that the inversion sticks rather than expecting big [...]
There were all kinds of good news in the August payroll report. The Bureau of Labor Statistics would publish an acceleration in headline numbers, just about every one of them. The Establishment Survey “surged”, wage growth registered its largest annual increase in nearly a decade, while one broad measure of slack, U-6, tumbled to its lowest point since the start [...]
168.2 Federal Reserve HAS NOT rigged the bond market ———Ep 168.2 Summary———The Federal Reserve, and other central banks, buy tremendous amounts of government securities and this should impact bond prices. Should, but doesn't. That's because there's an even more powerful force than the Fed, the bond market itself. We review the 2007-19 evidence. ———Ep 168.2 Topics——— 00:00 INTRO: Has the Federal [...]
So, the eurodollar curve has inverted. Bad news. Now what? While this is a major milestone in the monetary system’s decidedly anti-inflation/growth journey, it is hardly the end point of it. On the contrary, though it takes a lot of negative, deflationary potential to distort the curve in this way, we need to see if the market sticks with that [...]
168.1 Market says Powell's Second Term Already a Failure———Ep 168.1 Summary———Jay Powell has been nominated by President Biden to serve another term as the Federal Reserve chair. Though his nomination has not even been heard by the US Congress, another group of people has already passed judgement on the second term: the bond market (and they say it'll be a [...]
Stop me if you’ve heard this before: dollar up for reasons no one can explain; yield curve flattening dramatically resisting the BOND ROUT!!! everyone has said is inevitable; a very hawkish Fed increasingly certain about inflation risks; then, the eurodollar curve inverts which blasts Jay Powell’s dreamland in favor of the proper interpretation, deflation, of those first two. Twenty-eighteen, right? [...]
164.3 Economists Can't Define Money nor Observe Velocity———Ep 164.3 Summary———M1 and M2 once informed central bank decisions. But the monetary aggregates were so narrowly defined that they were, in effect, mere keyholes that offered policymakers an unsatisfactory, and often-enough misleading, peek into the great monetary hall. ———Ep 164.3 Topics——— 00:00 INTRO: How to define money? What is money velocity? The [...]
If markets seem a bit on edge, I guess omicron seems a good reason if for no other reason than we don’t know much about it. But even that reaction points toward something else. A truly robust economy has little to fear from such unknowns, even from what might be predictable overreaction across the entire public sphere.The knee-jerk negative sentiment [...]
Flatter. The yield curve continues to shrink in the important middle calendar spaces where growth and inflation expectations run the place. Treasuries have been doing this since around March, a peculiar (given monolithic mainstream reporting otherwise) eight-month reign of growing pessimism rather than inflationary confidence. Did the market foresee omicron more than half a year ago? No. That’s not really [...]
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