Back in early July, Bloomberg published a rather curious article that sounded like it was written from within the People’s Bank of China - or any other global central bank for that matter. The most prominent correlation over the past year had been CNY and everything else; or, as I wrote earlier in the year, CNY down = bad. The [...]
In June 2015, Japan’s Cabinet Office, the section of the government charged with tabulating and publishing gross domestic product estimates, revised Q1 2015 GDP significantly higher to 3.9% from its preliminary 2.7% figure. Not only was that the second straight quarter of positive growth, the acceleration indicated seemed to confirm that the Japanese economy had finally shaken off the effects [...]
Under traditional “rules”, devaluing of a currency is supposed to bring about a measurable, even obvious increase in the export sector of the country undertaking the manipulation. The Japanese have been notorious for believing in the paradigm, and not just in the past four years under QQE and the whispers of it. Some people still believe that China is merely [...]
In early 2005, the US Senate began debating a bill seeking to impose a broad 27.5% tariff on Chinese exports to the United States. Congress was emotionally moved by the supposed problem of pegging the yuan to the dollar, then at about 8.28 CNY for every USD. In reality, the problem wasn’t so much dollars as “dollars”, meaning that because [...]
By experience of different kinds and settings of balance sheet expansion in the United States, Europe, and Japan, we can only conclude that monetary policy with these intentions has no effect, direct or otherwise, on inflation in each of these jurisdictions. The varied forms and exact nature of central bank execution allows us a broad and nearly comprehensive examination of [...]
Offering the longest track record of balance sheet policy, the Bank of Japan should have been a cautionary tale for the central banks that have since followed. Unfortunately, ideology at the center of monetary policy in all jurisdictions leaves no room for objective interpretation such as this. Economists and policymakers (redundant) believe QE works, full stop. When it doesn’t, such [...]
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. [...]
Oil prices are like an unfolding train wreck, as it is nearly impossible to look away now. Day after day, not only are spot prices down but the entire WTI curve is now moving lower in almost perfect unison. Prices have dropped six days in a row, more than $4, and at just above $41 seems a much different world [...]
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