The taper-folks at the FOMC might be somewhat indifferent to the latest employment report. While the headline bean-count of the number of jobs looked decent enough (for the lowered standards of this age), the stubbornness of the “official” unemployment rate will counter that. The problem of the labor force participation and what actually constitutes the labor force was fully evident [...]
To me the idea of taper is easily explained by two words: asset inflation. You may feel compelled to add a third, uncontrolled, but until more empirical evidence is garnered (price collapses) I will at present refuse the license. The cloak to this game has been “the improving economy”, as the former Fed doves tell it, the economy is now [...]
Clearly the Federal Reserve has taken seriously the consequences of QE and its relation to asset prices in so many markets. That itself represents a leap forward as perhaps the central planners in the Marriner Eccles building in Washington, DC, are beginning to understand that markets are not classroom exercises. In this bizarro world of unintended consequences, stocks actually are [...]
The FOMC picked up another dissenter in its St. Louis branch, but the real consequences of trying to talk down bubbling, frothy markets are beginning to show up. Like the JGB market, UST volatility is dramatically higher (Bank of America Merrill Lynch’s MOVE index jumped from a record low/complacent 48.87 in May to 84.75 in early June). Perhaps the most [...]
I had a conversation with Joe Calhoun yesterday regarding an uptick in construction activity in Miami and some other places in the Southeast. He mentioned that some of his contacts had in the past few months begun to see a huge increase in the number of bidsheets for construction work that was ready to break ground – some of it [...]
In trying to sound modest and even magnanimous, Ben Bernanke in November 2010 penned an oped in the Washington Post justifying the recently implemented QE 2. Toward the end of his piece he acknowledged that the Federal Reserve and monetary policy could not work miracles. But given that obsequious qualification, the Fed Chairman was very clear on what he expected: [...]
Economies either grow or they shrink, though shrinking is a misplaced word here. A real economic system is always moving forward, even during recession and dislocation. The word dislocation is used in modern economics where it probably does not belong, as well. The entire idea of a dislocation is antithetical to a real economy, being an abnormal separation (emphasis on [...]
Gold prices seem to have settled in around the $1,400 range recently. Whether or not that price is a psychological attractor for both buyers and sellers, there does seem to be some degree of market stability around that level currently. While it is impossible to say how long this illusion of stability will last, there seems to be a confluence [...]
I have been pounding the table for months about QE and its inverse relationship with vital banking liquidity. In engaging in Large Scale Asset Purchases (LSAP) central banks, particularly in the US and Japan, are playing a very dangerous game. Despite conventional “wisdom” that when a central bank engages in such a monetary easing program it must lead to an [...]
While our focus is usually trained on markets, volatility as a concept can apply to much more than asset inflation extremities. The Japanese bond and stock markets are conforming to the QE script, as US markets begin to correlate (across the JPY-USD). What’s really interesting, however, is that despite now four years into a "recovery" a lot of economic data [...]
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