Having now passed the anniversary of the “rising dollar”, it is interesting to see the related and continued effects on the stock bubble(s). As should be obvious by now, stock buybacks, funded via corporate bonds and loosely categorized C&I loans, are responsible for the post-QE3 nearly uninterrupted rise. Repurchases are forming a separate “liquidity” conduit, indirect leverage if you will, [...]
Where money markets seem to be regularly unsettled, credit markets are quite the opposite. Those two polar interpretations may, in fact, be quite related as credit markets are not really supposed to be so placid. Yet, here we find them again lacking much determination in any one direction. Inflation breakevens which were steadily rising from January 15 to May 6 [...]
Last week, the CBO updated some of its calculations and methods for estimating the effects of “automatic stabilizers” on the deficit. These are Keynesian concepts whereby the government increases spending or redistribution (redundant) without discretion as the economy falls into the downside of a cycle. For the CBO’s purposes, the agency measures automatic stabilizers not on their effects, intended effects [...]
When the IMF released its semi-annual World Economic Outlook in April, it was still caught up in the GDP/Establishment Survey frenzy of late 2014. Despite the fact that Q1 GDP was certain to be negative by the time of publication, the IMF was wholly undeterred preferring instead to view the US as still the global engine and hope. They even [...]
If one were to measure the US economy by what it is, right now, there would be so little growth or activity as to question the actual cycle. In fact, about the only factor that seems to be out of recession is the expectation for the second half of the year (which is already trimmed from the “slump” sticking to [...]
While the payroll report commands almost all attention, the view from factory orders is simply much more significant. Even if we accept that payroll growth is steady at something greater than 200k per month, that is still at least two steps removed from actual economic activity as is intended from that same orthodox framework. Jobs are supposed to lead to [...]
Just a few weeks ago the Swedish central bank, Riksbank, was being lauded for its courage and action in finally embracing QE as the ECB had done. The deflation problem in Sweden had been, so it is asserted, seemingly intractable and thus forcing the monetary hand once more. Riksbank has never been shy about fine-tuning here and there, so it [...]
There have been, in the past year, two great inflections in wholesale finance. The first was in late June as the “dollar” began to rise, thus signaling a massive shift in balance sheet mechanics, the modern “money supply” that so confuses economists. That is why they at first enthusiastically embraced the “strong dollar” as that anachronistic interpretation seemed on the [...]
The home market may literally be testing the notion that interest rate manipulation has the net effect of pulling forward demand. Existing home sales, as tabulated by the National Association of Realtors, surged in May to a new six-year high. That sounds like terrific news about a rebound in the real estate market after quite a rough period dating back [...]
Recognizing the danger of overdoing it on Greece today, I think there is another important and complimentary factor that the uncertainty about default there is revealing. In addition to the economic re-awakening about how nothing much has really changed with Greece, including its fiscal impediments that endure despite its default three years ago, the financial theme that has provided such [...]
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