If there is one thing Economists understand very well, it’s mathematics. This is practically all they do, and all that means much to their discipline. If there’s one thing Economists don’t seem either competent with or interested in, it’s the economy. The math is supposed to match the other’s reality, yet rarely does.There are times, however, when simple calculation is [...]
The benchmark 10-year US Treasury has obtained some bids. Not long ago the certain harbinger of bond rout doom, the long end maybe has joined the rest of the world in its global pause if somewhat later than it had begun elsewhere (including, importantly, its own TIPS real yield backyard). Even nearer-in inflation expectations have rounded off at their current [...]
The Bureau of Labor Statistics (BLS) estimates that in the month of March 2021 somewhere around 916,000 payrolls were added back to the economy. I have to disclaim the figure simply because the statistics used to create it aren’t really all that precise; piecing together data from a survey of 145,000 business establishments, a fraction of the economy’s total, the [...]
The sound of economic sizzle finally within earshot, though perhaps nearly a year too late. PMI’s for the month of March 2021 were of the sort which should have come about in May and June 2020. The “V”-shaped recovery was much talked about at that earlier time, though in PMI terms (as well as regular “hard” data) the numbers fell [...]
At the very least, you have to recognize the correlation. If you aren’t willing to consider causation, in part, there’s troubling coincidence in every place around the world between huge government deficits and less growth (therefore the constant inflation "puzzle"). You can argue that the former causes the latter, and that’s absolutely a valid case; when things get rough, neo-Keynesians [...]
Eurodollar futures are derivative, cash-settled contracts linked to 3-month LIBOR (forget about SOFR and the official hatred of this offshore dollar rate regime). Though that rate acts independently especially at the worst times (thus, the hate), it is heavily influenced by the front-end monetary alternatives set by the Federal Reserve’s monetary policy (IOER, RRP). Because of this, LIBOR kind of [...]
There is, or at least can be, value in treating economic variables in the way econometrics does for the purposes of understanding generalized behavior. The problem for Economists, these statisticians, is that they’ve turned stylized lessons drawn from regression analysis into literal rules defining their worldview. By 1957, Milton Friedman had already been busy publicizing just those. Positive Economics was [...]
In theory, it goes like this: QE or any sort of large-scale asset purchase (LSAP) undertaken by a central bank is needed during times of trouble in order to reduce interest rates in general. Buying bonds seems like it would lower yields, and lower yields mean more accommodative credit, therefore a boost to the real economy.So simple, straightforward, and intuitive, [...]
The Federal Reserve has allowed itself an image of a marshmallow when it comes to the banking system it is (one-third) charged with regulating. First and foremost, along with the two other (redundant) triplets, the OCC and FDIC, the US central bank is not a central bank at all; it is near exclusively a domestic bank regulator. And while “macroprudential” [...]
Well, that will get everyone’s attention, at least for now. Should something happen to the crude oil rocketship, there goes inflation. A day after the FOMC releases substantial upward revisions to inflation rates its models now project for this year, the NYMEX pits jump all over them with oil’s worst day since just after last April’s negative price turmoil. Before [...]
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