Adding to the FOMC’s general inflation confusion about money and economy, all the major factors it is supposed to be competent about, policymakers are also having trouble figuring out why as they raise rates overall financial conditions haven’t actually tightened. According to one view, the easing of financial conditions meant that the economic effects of the Committee’s actions in gradually [...]
The markets actually turned before the Fed minutes were released, but once in the public (assuming they weren’t leaked again) the anti-“reflation” direction was amplified. Bonds have rallied as have eurodollar futures (near Friday’s recent high), JPY dropped (so you know gold was up, too), and even stocks shifted. As usual, it is being characterized as a “dovish” statement which [...]
The Asian flu of the late 1990’s might have been more accurately described as the Asian dollar flu. It was the first major global test of the mature eurodollar system, and it was a severe disruption in the global economy. It doesn’t register as much here in the United States because of the dot-com bubble and the popular imagination about [...]
The mainstream media is about to be presented with another (small) gift. In its quest to discredit populism, the condition of inflation has become paramount for largely the right reasons (accidents do happen). In the context of the macro economy of 2017, inflation isn’t really about consumer prices except as a broad gauge of hidden monetary conditions. Therefore, if inflation [...]
I suspect President Trump has been told that markets don’t like radical changes. If there is one thing that any elected official is afraid of, it’s the internet flooded with reports of grave financial instability. We need only go back a year to find otherwise confident authorities suddenly reassessing their whole outlook. On the campaign trail, candidate Trump was very [...]
Ten years ago yesterday, Bear Stearns sent a letter to shareholders of two specific hedge funds that it sponsored. Whenever anyone brings up the name now, you immediately know where this is going. That wasn’t the case in 2007, however. Whatever the world may think of Bear in hindsight, a decade ago it was a highly reputable firm. These two [...]
It would be preferable, of course, if what Janet Yellen said in any setting made little noise whatsoever. We aren’t nearly there yet, but are moving in that direction. Her testimony today before Congress in the Fed’s semi-annual Humphrey-Hawkins kabuki relic might actually help in that matter. If economists like Yellen were caught so unprepared for what happened after 2014 [...]
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 [...]
In the earliest days of the Federal Reserve, it was common practice for the various branch administrations to hold direct communications not just with the banks in those respective districts but also individual firms. The reasoning was sound enough, given that in the 1910’s and 1920’s there weren’t yet the kind of economic statistics that today litter the media landscape. [...]
For once, it does seem like the FOMC was asking of its members the right question. They spent years incredulous over the lack of effect due to whatever of the multiple QE’s without changing expectations. No matter how little evidence for their initial let alone ongoing success, they would always, always keep up the “recovery is coming” narrative. In many [...]
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