The US$ shortage has been a theme around here for most of 2013. To this point, it has been largely hidden in the shadows and vagaries of modern global finance, only hinted at through secondary and tertiary indications. Even then, like the gold selloff, the dollar shortage was ambiguous and cunning. From repo warnings and the dire state of collateral [...]
We have been following the potential inflection in housing data for nearly five months now, long before taper talk ever began. I still believe that the rapid rise in prices was both the initial cause for the turn in housing construction and the primary reason for talking taper in the first place. Where permits and construction data began to wobble [...]
This week’s retail sales report has been used over and over as “evidence” for the second half bounce that every economist and policymaker is expecting (and proclaiming without reservation). Without fail, there is no context accompanying the month-to-month focus on pseudo-precision designed into existence by statistical modeling. The trend continues to be, as it has been for over a year [...]
The JC Penney bond curve finally got the message this week that the company is in serious jeopardy, teetering close to collapse. The stock has been trending lower since February 2012, having lost some 70% from that peak (an amazing feat considering the sheer amount of asset inflation since then). The bond market, usually where trouble is first detected, has [...]
The curious case of the jobs survey dichotomy continues. While the mainstream focus on the Establishment Survey’s “steady growth” trend provides cover for the FOMC to contemplate scaling back their interventions (and thus the frothy/bubbly foundation), it is fully alone in its interpretation of the jobs situation. The Household Survey has diverged both in quantity and, more importantly, quality. Now [...]
So Q2 GDP wasn’t a complete disaster; that was left for Q1. Even at 1.7% (intangibles and imputations everywhere) the string of GDP fragility is deafening, particularly in the face of the combined psychology of QE 3 & 4. Since Q2 2012 was revised significantly higher, I can no longer officially proclaim that GDP growth has been at or under [...]
I have plotted a chart of the S&P 500 (taken from the research of Robert Shiller) for a particular period in time. It shows the sometimes tenuous relationship between stock prices and underlying earnings. Prices and earnings largely behave as you would expect in the first half of the chart above – prices anticipating changes in the earnings environment (economy) [...]
The potency of QE is theoretically driven by how it is expected to influence economic agents’ perceptions of inflation. The concept of negative real interest rates after hitting the zero lower bound of nominal interest rates (ZIRP) is believed to nudge the behavior of participants in the economy to spend and borrow more as saving becomes relatively more expensive and [...]
From Fed Governor Sarah Bloom Raskin's recent speech titled Beyond Capital: The Case for a Harmonized Response to Asset Bubbles: Here is one way a bubble might start. And, to approximate current economic conditions, we'll assume an environment of interest rates that have been low, and continue to be low, for a long time. To start, retail investors may become dissatisfied [...]
Real estate markets continued the blistering pace of new home sales in June, according to Census Bureau estimates. Year-over-year, seasonally adjusted growth was 38.1% to an annual rate of 497,000; the highest level since May 2008. On an unadjusted basis, there were 48,000 new homes sold in the US in June, up 41% Y/Y. In the wider historical context, the [...]
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