Ever since the widespread adoption of the rules, so to speak, of Positive Economics the discipline has been trading intuitive sense for mathematics. The equations of econometrics are, for Economists, more “real” than reality. To get to those statistical regressions it requires a whole lot of subjectivity. It doesn’t seem that way at first, or that it could be this [...]
Even on a six-month cumulative basis, it is rare to find a negative number. These are reserved for the big ones, the market-shaking events that either perform an inflection or confirm one as it reaches pretty hard depths. The world being the way that it is, you just don’t see the whole forced into outright selling (on net) US$ assets. [...]
More important than the US GDP number, more substantial than the February jobs report, what will linger for longer in the public consciousness is China’s trade data. It seems as if the big drop in exports has garnered the most immediate attention, I suspect that won’t be the case moving forward. There are more important trends being captured where the [...]
China’s central bank was given more independence to conduct monetary policies in late 2003. It had been operating under Order No. 46 of the President of the People’s Republic of China issued in March 1995, which led the 3rd Session of the Eighth National People’s Congress (China’s de facto legislature) to create and adopt the Law of the People's Republic [...]
The TIC data for December 2018 starts out well enough, exactly the way it should. The headline says foreigners sold a record amount of US$ assets in that month. Anyone paying attention during it would be the opposite of shocked. Everyone sold anything they could in December. It follows from the idea of dollar shortage. However, then you start asking [...]
While oil prices rebounded in January 2019 around the world, outside of crude commodities continued to struggle. According to the World Bank’s Pink Sheet, base metal prices fell another 1.8% on average from December. On an annual basis, these commodities as a group are about 16% below where they were in January 2018. The last time they had fallen by [...]
US inflation in January 2019 was, according to the CPI, the lowest in years. At just 1.55% year-over-year, the index hadn’t suggested this level since September 2016 right at the outset of what would become Reflation #3. Having hyped expectations over that interim, US policymakers now have to face the repercussions of unwinding the hysteria. Live by oil, now die [...]
The payroll report wasn’t actually the first. The Treasury Department filed its Treasury International Capital (TIC) update yesterday, about two weeks late due to the federal government shutdown. However, since nobody follows it and the figures relate to a lot that’s beyond the US economy it doesn’t count in the mainstream view. That’s a shame because TIC will tell you [...]
In theory, it is always so simple. For China, it was intended that RRR cuts are stimulus. By allowing banks to use more of the reserves they’ve built up over the years it is meant to add to overall interbank liquidity. From there, banks flush with RMB supported by robust RMB money markets will lend and undertake more direct economic [...]
Central bankers will often tell you exactly what you want to know, at least when it comes to their intentions. You can first begin by reading Milton Friedman and Anna Schwartz’s 1963 monetary bible A Monetary History. It’s all in there. From it, central banks all over the world have devised technical schemes intended to hold fast to the old [...]
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