The politics of oil are complicated, to say the least. There’s any number of important players, from OPEC to North American shale to sanctions. Relating to that last one, the US government has sought to impose serious restrictions upon the Iranian regime. Choking off a major piece of that country’s revenue, and source for dollars, has been a stated US [...]
There were rumors and whispers of a trade truce between China and the US. Wages domestically grew by the most since 2009, better than 3% last month. OPEC is going to be cutting oil production again. And most of all, for the mainstream narrative anyway, the Fed is about to go on a break. Why didn’t markets react positively to [...]
Now that the slowdown is being absorbed and even talked about openly, it will require a period of heavy CYA. This part is, or at least it has been at each of the past downturns, quite easy for its practitioners. It was all so “unexpected”, you see. Nobody could have seen it coming, therefore it just showed up out of [...]
When the FOMC published the minutes for its November policy meeting, they included an unusually lengthy discussion about federal funds (effective) and IOER. I have no doubt that policymakers would rather have skipped the topic altogether. Demonstrating how little they actually control matters, the plight of EFF has forced them into an almost detailed digression. One thing they wrote with [...]
As we watch Jay Powell’s case dissipate on NYMEX WTI right before our very eyes, we can count on his ideology to try to make it for him in the absence of actual data. Economists will not budge no matter how much stacks against them; nor how many times we have to repeat this very exercise. This will be the [...]
True to form, whoever holds the government it is for them the best economy ever. It doesn’t matter political parties or otherwise affiliations. The rhetoric has become so unhinged that in the US former President Obama is trying to take credit for current President Trump’s economic “miracle” – that doesn’t actually exist. In India, the Modi government is following the [...]
What do consumers know that Economists don’t? It’s a loaded question, of course, particularly in this day and age where Economists spend years perfecting the study of mathematics. In many ways, formal training is an impediment to analysis of the economy. There’s nothing wrong with learning about regressions, but it can and often does appear to take away from intuitive [...]
Cushing, OK, delivered what it could for the CPI. The contribution to the inflation rate from oil prices was again substantial in August 2018. The energy component of the index gained 10.3% year-over-year, compared to 11.9% in July. It was the fourth straight month of double digit gains. Yet, the CPI headline retreated a little further than expected. After reaching [...]
What is it that’s different in August? If there was some relative calm in global markets in June and July it certainly disappeared this month. The dollar shot higher and global liquidity indications began sinking again. Yields have fallen on safety (liquidity) instruments more apparently divorced from any other mainstream factors. One place to look for answers is Tokyo. I [...]
The risk budget is unchanged again this month. For the moderate risk investor, the allocation between bonds and risk assets is evenly split. The only change to the portfolio is the one I wrote about last week, an exchange of TIP for SHY. Interest rates are on the rise again, the 10-year Treasury yield punching through 3% again this morning. [...]
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