In the last update I wondered if growth expectations - and growth - were breaking out to the upside. 10 year Treasury yields were well over the 3% threshold that seemed so ominous and TIPS yields were nearing 1%, a level not seen since early 2011. It looked like we might finally move to a new higher level of growth. [...]
After being rumored and talked about for over a year, at the end of last year the tax cuts were finally delivered. The idea had captured much market attention during that often anxious period of political flirtation. Prices would rise or fall by turn based on whether or not it seemed a realistic possibility. Public Law #115-97 or An Act [...]
The yield on the 10 year Treasury note briefly surpassed the supposedly important 3% barrier and then....nothing. So, maybe, contrary to all the commentary that placed such importance on that level, it was just another line on a chart and the bond bear market fear mongering told us a lot about the commentators and not a lot about the market [...]
In 1967, the US Personal Savings Rate averaged just a little more than 12%. That was pretty consistent with consumer behavior observed throughout the decades before, and the one that followed. What that meant, in terms of economic theory, was that if you as a central bank intended to accelerate the economy via the manipulation of expectations you at least [...]
The current expansion is already one of the longest on record. With another quarter entering the BEA’s books, it has been 35 since the last declared recession. At +2.3% for the current one, there won’t be another considered anytime soon putting this economy within reach. Yet, out of those 35 quarters only 10 have contained Real GDP growth meeting or [...]
Retail sales rose (seasonally adjusted) in March 2018 for the first time in four months. Related to last year’s big hurricanes and the distortions they produced, retail sales had surged in the three months following their immediate aftermath and now appear to be mean reverting toward what looks like the same weak pre-storm baseline. Exactly how far (or fast) won’t [...]
The market volatility this year has been blamed on a lot of factors. The initial selloff was blamed on a hotter than expected wage number in the January employment report that supposedly sparked concerns about inflation - although a similar number this month wasn't mentioned as a cause of last Friday's selling. The unwinding of the short volatility trade exacerbated [...]
One of main elements of the true seasonal Q1 weakness, or what has been called residual seasonality, has been the embrace of revolving credit. The Federal Reserve’s statistics for consumer credit over the last two years has displayed a pronounced trend, especially at the end of last year. Americans had, it seemed, made heavy use of credit cards (and other [...]
We keep revisiting the concept of “residual seasonality” quite purposefully, even though on its face it is an absurd one. It is in every way emblematic of the current state of Economics and the commentary derived from it. Residual seasonality is the kind of delusion that has become commonplace, a coping mechanism for an economy that continues to be very [...]
If indeed this inflation hysteria has passed, its peak was surely late January. Even the stock market liquidations that showed up at that time were classified under that narrative. The economy was so good, it was bad; the Fed would be forced by rapid economic acceleration to speed themselves up before that acceleration got out of hand in uncontrolled consumer [...]
Stay In Touch