According to the recent release of the Federal Reserve’s projected forecasts, that’s it. It wasn’t one and done like Chairman Powell had initially indicated, this “midcycle adjustment” hits two. And that is it, at least if you believe the current calculations spit out by the Fed’s models. It goes along with Powell’s blunt statement he made at the press conference [...]
Yesterday, Eurostat confirmed that German GDP in Q2 2019 had contracted. Also issuing benchmark revisions, the European government agency found that GDP growth had been slightly better than previously thought at the top of Reflation #3. The last two quarters of 2017 saw the biggest upward revisions. But if Europe’s “boom” really was a little closer to having been a [...]
After trading overnight in Asia, Japan’s government bond market is within a hair’s breadth of setting new record lows. The 10-year JGB is within a basis point and a fraction of one while the 5-year JGB has only 2 bps to reach. It otherwise seems at odds with the mainstream narrative at least where Japan’s economy is concerned. Record lows [...]
The entire basis for what the Fed is now calling a “mid-cycle” adjustment rests upon a specific view of the labor market. There was weakness in consumer spending, there remains weakness in business investment, but none of these cross currents or headwinds are going to matter. Americans are experiencing robust employment conditions which when these reassert themselves will cycle the [...]
The Economics textbook says that when faced with a downturn, the central bank turns to easing and the central government starts borrowing and spending. This combined “stimulus” approach will fill in the troughs without shaving off the peaks; at least according to neo-Keynesian doctrine. The point is to raise what these Economists call aggregate demand. If everyday folks don’t want [...]
What if Germany’s economy falls into recession? Unlike, say, Argentina, you can’t so easily dismiss German struggles as an exclusive product of German factors. One of the most orderly and efficient systems in Europe and all the world, when Germany begins to struggle it raises immediate questions about everywhere else. This was the scenario increasingly considered over the second half [...]
The benchmark 10-year US Treasury yield closed below 2% for the first time since Donald Trump was elected President. Having flirted with that level several times over the past week, today the most-watched interest rate on the planet finally breached this one startling round number. And it comes during a week which by every conventional account should have been hugely [...]
No Federal Reserve Chairman under its current configuration can say QE didn’t work. Those words will never pass the lips of whoever it may be occupying that position. The world’s bond markets, however, are trying very hard to make this resistance as uncomfortable as possible. The one thing central bankers here along with everywhere else LSAP's were unleashed could try [...]
Early last month, the Bureau of Labor Statistics (BLS) reported that the unemployment rate in the United States had fallen to just 3.6%. It was the lowest in half a century, seemingly an amazing feat for the most puzzling boom ever conceived. Everyone says it is going gangbusters, but is everyone saying so simply because everyone says so? This one [...]
In May 2018, the European Parliament found that it was incredibly popular. Commissioning what it calls the Eurobarameter survey, the EU’s governing body said that two-thirds of Europeans inside the bloc believed that membership had benefited their own countries. It was the highest showing since 1983. Voters in May 2019 don’t appear to have agreed with last year’s survey. For [...]
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