In its December 2015 policy statement, the one that raised the federal funds target corridor, the FOMC changed the language surrounding its inflation stance. They still projected the 2%, of course, but were now indicating that they were more certain than ever about it. In many ways they had to shift the wording because of the actions; the prior passage [...]
US oil prices (WTI) ended 2014 at $53.45 spot. Since the decline to that point was thought be a temporary deviation, the fact that WTI ended 2015 at $37.07 is inconceivable to that perspective. The reasons for that were the unemployment rate and GDP. Payroll expansion had just fired up into the “best jobs market in decades” while GDP was [...]
While we await a flood of data for December spending and retail activity to confirm what we already suspect by proxy, the updated figures for November going backwards in the production process stand as yet another warning. Retail sales figures were typically abysmal, as were private indications of spending. The Thompson Reuters Same Store Sales Index, a measure of actual [...]
Not long ago, I wrote that it was somewhat odd that more attention wasn’t being paid to sovereign wealth funds. This was only somewhat surprising given that oil prices were still thought “transitory” and thus the mainstream clearly felt there wasn’t anything deeper to be assembled from that. However, now that it has finally dawned that oil isn’t likely to [...]
When decrying the state of monetary policy that relies on essentially a “dead” money market, what does that actually mean? The FOMC, after all, is using the federal funds rate to “tighten”, ostensibly, even though there isn’t anybody there. They have developed other tools to go along with the federal funds rate, but all that does is highlight the central [...]
For an economy that is supposed to be on the verge of overheating, or at least moving decisively in that direction, there are an inordinate number of indications of a cyclical stall and termination rather than some beginning (or ripening). I’m not referring exclusively to economic indications, either, such as the Federal Reserve’s own industrial production figure that just showed [...]
Now that the FOMC has announced its intentions, it has to sit back and wait to see if it can actually do anything. This is the direct consequence of using the federal funds rate as the primary target, as it is a dead market that nobody really uses anymore. The only reason the Fed is still leaning on federal funds [...]
Now that the FOMC has done it, we get to hear about how it was surely the “right” time for it. Unlike September, conditions are supposedly an order of magnitude more settled. That has given the policymaking economists the green light to make sure they start the normalization process before “overheating” becomes the central concern. With August a fading memory, [...]
It is perhaps the perfect situational irony of this economic age, with the FOMC set to end its “emergency” policies by raising rates for the first time in a decade the very same day that the very same outfit, the Federal Reserve’s staff, just declared that the past cycle may have long since peaked. The monetary policy “exit” is a [...]
As the monetary world prepares for the monetary equivalent of D-Day, it bears reminiscing about the true lack of confidence that permeates away from the direct public front of the central bank. Yellen has declared that monetary policy will be “data dependent” but that isn’t truly the case. Any such data will be filtered into the Fed’s models, which are [...]
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