The ECB’s experimentation with balance sheet expansion, both as a matter of bank “reserves” and overall balance sheet size, encompasses at least two distinct episodes. The first began in earnest in May 2010 with the initial concerns being limited to Greece and eventually PIIGS nations, finally exploding in later 2011 as a full-blown crisis (and far more than euros, it [...]
Yesterday’s publication of PCE and Personal Income also included the monthly update for the PCE Deflator, the Federal Reserve’s stated preference for measuring inflation in the economy. The June 2016 figures for the deflator were also negative in terms of both short and longer term perspectives. The year-over-year change in the index was just 0.88%, down slightly from 0.94% in [...]
Last Friday the Statistics Bureau of the Japanese Ministry of Internal Affairs and Communication reported some more bad news for Prime Minister Abe and really Bank of Japan chief Kuroda. Month-over-month, the consumer price index was down again, leaving it 0.48% less in June 2016 than June 2015. This was the third consecutive month of increasingly negative year-over-year CPI estimates. [...]
Construction spending had been increasing steadily since the start of 2011. Factoring both the size of the decline due to the housing bust and the timing of the turnaround in sales and prices, the mere fact that construction activity had been recovering was not really economically significant. As with most economic sectors, positive growth even to a substantial degree did [...]
As usual, everyone is focused on the wrong part of the FOMC statement. There is already a lot being made about the one sentence inserted as “hawkish” sentiment that puts the economy, supposedly, back on its fruitful, “full employment” track. In a clear sigh of relief undoubtedly in relation to the scary May payroll report, the July 2016 FOMC statement [...]
Domestic oil inventory rose in the latest week, updates from the US EIA show. That build broke a streak of nine consecutive weekly draws dating back to mid-May. It is not unusual for oil inventory to rise and fall in various weeks, but given the mechanics of oil prices of late there is an atypical edge and attention to any [...]
On February 6, 2008, oil prices (WTI) dropped to $87.16, the lowest price since the prior October. Oil had been rising as the market misunderstood and dramatically mispriced what was going on; buying on the idea of monetary policy accommodation in growing intensity, while at the same time not factoring the hidden monetary destruction that was far greater. It was [...]
Last July, the US Treasury Department finally issued its official report detailing its account of what happened on October 15, 2014. The statement was co-authored by staff at the Board of Governors of the Federal Reserve System, FRBNY, the SEC, and CFTC, as if the government were going overboard trying to prove its word the end of the matter. As [...]
There is a core fallacy at the heart of monetary policy (actually there are many, but I'll keep it to just this single instance for the sake of brevity), one that was exposed by Milton Friedman himself, though indirectly and quite accidentally related to how he proposed an alternate scenario for the Great Depression. His view was that the Fed by [...]
It isn’t just that oil prices are falling, that is only one dimension of the full oil spectrum concentrating in the spot market. The more interesting and important information is contained within the whole WTI futures curve. As “dollar” funding pressure has built up since the front month peak on June 8, it has steepened the curve into deeper contango; [...]
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