When it comes to central bank experimentation, Japan is always at the forefront. If something new is being done, Bank of Japan is where it happens. In May for the first time in human history, that central bank’s balance sheet passed the half quadrillion mark. It should be unsettling where a trillion is a rounding error. And yet, despite what [...]
On his company’s earnings conference call back on Valentine’s Day, T-Mobile CEO John Legere was unusually feisty. Never known for shyness, Legere had reason behind his bluster. T-Mobile had practically built itself up on price, being left the bottom tier of the wireless space practically to itself. That all changed, however, as both Verizon and Sprint were set to escalate [...]
Today started out very badly for the FOMC. At 8:30am the Commerce Department reported “unexpectedly” weak retail sales while at the very same time the BLS published CPI statistics that were thoroughly predictable. Markets, at least credit and money markets, have gained a clearer idea what the Fed is actually doing and why. It’s not at all what the media [...]
One of the more troubling aspects of mainstream commentary in 2014 was its blandness. Statements were made with a purpose but also purposefully avoiding specifics. It was common to hear or read “the economy is improving” without being shown why or how in convincing fashion. After suffering a second bout of weakness in 2012 and 2013, unexpected of course, everyone [...]
The Federal Reserve Bank of New York has for the past almost four years conducted its own assessment of consumer expectations. Though there are several other well-known consumer surveys, FRBNY adding another could be helpful for corroborating them. Unfortunately for the Fed, it has. The latest update for May 2017 suggests a considerable decline in forward inflation expectations, particularly those [...]
The Federal Reserve defines price stability in terms of consumer prices rather than a stable currency. Up until 2012, any inflation target was implicit in monetary policy behavior rather than explicitly stated as an incorporated aspect. Everyone knew, of course, that the Fed had throughout the 1990’s sought a stable regime of around 2% growth in the PCE Deflator. Furthermore, [...]
The rebound in commodity prices is not difficult to understand, perhaps even sympathize with. With everything so depressed early last year, if it turned out to be no big deal in the end then there was a killing to be made. That’s what markets are supposed to do, entice those with liquidity to buy when there is blood in the [...]
The average annual change in the WTI benchmark price was in April about 25%. That was still a sizable increase year-over-year, and just marginally less than March’s average of 33%. For calculated inflation rates, it represents the last of the base effects that have to this point made it appear as if economic improvement was possibly serious. Combined with the [...]
We can add China to the list of locations where the near euphoria about inflation rates is rapidly falling apart. This is an important blow, as the Chinese economy has been counted on to lead the world out of this slump if through nothing other than its own sheer recklessness. “Stimulus” was all the rage one year ago, and for [...]
In February 2000, the FOMC quietly switched from the CPI to the PCE Deflator as its standard for inflation measurement. There were various technical reasons for doing so, including the CPI’s employment of a geometric mean basis (which was in 2015 finally altered to a Constant Elasticity of Substitution formula). But it was one phrase that in hindsight did the [...]
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