GDP estimates for Q2 2015 have been rising in June, largely due to updates on consumer and household spending. The first, the Quarterly Services Survey (QSS) showed a somewhat higher spending pattern for financial services (the largest component), which pushed Q2 GDP forecasts (according to the Atlanta Fed’s GDPNow tool) to +1.4%. Last week, the strictly seasonally-adjusted “surge” in retail [...]
Part 1 is here, Orderly or Not (short version: not). Also noted yesterday, the Fed sees no risks of bubble trouble because they are looking at it all from the 2008 perspective. That is completely wrong-headed; if there is a “next one” it will have nothing to do with subprime mortgages, or even mortgages and real estate. By March 2007, [...]
I generally remain noncommittal about giving specific predictions about the future because there is simply no way toward predilection. We can think about probabilities as a guide for analysis, particularly in setting investment guidelines, but to offer targets for factors like GDP or some stock index is pointless. Even now, with all that is taking place of economic unraveling, there [...]
To preserve any idea that the US is not heading into recession, the FOMC is now wholly reliant on statistical processes within the BEA’s use of the Census Bureau’s updated ARIMA-X13 modeling system. It is amazing to see this policy body that once proclaimed, unequivocally and forcefully, that it could perform the monetary equivalent of sorcery and alchemy reduced to [...]
When categorizing intuition about the real economy, it is often regarded as a combination of both structural and now cyclical problems. There was, as yet, no true recovery owing largely to factors that continue to linger beyond historical comparisons about what “should” have occurred in and after the Great Recession. Some economists refer to deleveraging especially of households as that [...]
The June 2003 FOMC meeting is one of those events that has only taken on increased relevance and significance with time. That gathering marked a major shift in monetary policy as it was, particularly with relation to the fomented housing bubble, as the FOMC was debating the zero lower bound. The discussion centered around the proposed monetary alignment that would [...]
It’s mostly accepted that what a central bank does is no more inconsistent with capitalism than what you and I do on a regular basis. There are various reasons for this self-inclusion which should be disqualified based on common sense alone, but monetary theory is, by intent, impenetrable beyond the few indoctrinated in its ritual mathematics. This isn’t to say [...]
The emphasis of QE in terms of “portfolio effects” and interest rate “stimulus” is to visit upon the entire curve what monetary policy has done in the past in only the shorter maturities. So the evolution of monetarism under activism and interest rate targeting is to bring the entire curve down whereas before it was content to intrude only in [...]
The FOMC has been talking, so we hear, about changing “forward guidance” to indicate a potential rate hike sooner rather than later. They had already changed the basis of “forward guidance” back in September which largely negated what forward guidance actually meant. The concept is only pliable in the manner in which monetary theory has to follow “rational expectations.” Whenever [...]
It seems everyone was short the franc (CHF) as a matter of taking monetarism at face value. In other words, it amounted to believing the central party line about the economy and normalcy despite the fact that markets have been increasingly pessimistic about it all and actively and aggressively betting against it. Goldman Sachs is just one of many: In [...]
Stay In Touch