The orthodox notion of monetary policy, following its Keynesian root, is that spending for the sake of spending will lead to a healthy economy. It does not matter, to this philosophy, how or why that spending takes place; only that it does. If, for example, the Federal Reserve can “stimulate” the interest rate sensitive sectors of the economy, like automobiles, [...]
It is worth furthering the point raised by San Francisco Fed President John Williams. Just as when QE2 ended it wasn’t the end of QE in America, the belated end of QE3 and QE4 also may be just a temporary interruption. Mr. Williams gave essentially two criteria, though I added a few more from my own observations: "If inflation isn't [...]
With a grim reality setting in for at least a temporary interruption to the euphoria, that background of a QE-less world takes hold. Without any real recovery to show for all the manipulations and intrusions, a global reality, there are none but stock prices (aside from a few confused PMI’s) to record on the “benefits” side of the ledger. The [...]
There was some pretty bad news out of Germany last night. The nations’ Economy Ministry cut its growth forecast for 2014 by a third (from an unsatisfying 1.8% to a worrisome 1.2%), which is more than a little coming this late in the year. In addition, the closely watched ZEW survey (I don’t watch it, but “markets” are fixated) fell [...]
Going back to the yearlong period (more like fourteen months) where inflation breakevens fell into the apparent nothingness of being almost wholly range-bound, I surmised that the artificial placidity had to do with the inability of market participants to let go of their normally all-consuming faith in Fed optimism. On the one side, economists, particularly the central bankers all over [...]
The reason I spend so much time on Japan is that it is the purest “laboratory” conditions available in which to determine, hopefully for all time, the (un)viability of monetarism. The orthodox monetary practitioners that unleashed the yen torrent were not last year equivocating in their predictions and forecasts. Abenomics and QQE would work without fail, they said; the only [...]
Continuing on with the theme of orthodox interpretation vs. context, in order to determine not just the relative position of the economy but how that relates to “markets” vis-à-vis bubbles, the current estimates of personal income and spending fit well within those rough confines as I have described them. The orthodox interpretation sees the changing growth rates in 2014 as [...]
There was a bit of a stir caused by Dutch logistics firm, TNT Express. The company has been expressing caution, if not downright pessimism about its prospects due to economic considerations. Today, it lowered its targets for growth, with the stock taking a beating in so doing. However, it is the manner of that downgrade that should be seriously considered, [...]
There is an interesting dichotomy taking shape in credit markets, including those around the globe (that will be a separate post). Some of this, I think, relates to what FOMC member Richard Fisher related today about concerns over asset bubbles. I think the Economic Times of India summed him up the best: Already there are signs of financial excess in [...]
Another month, another instance where supposed “tight” supply and high home prices fail to register any significant change in home construction. Construction figures for August bear little resemblance to the idea that anything other than monetary interference is responsible for the mini-bubble in activity. Further, August represents another month’s worth of confirmation, despite any and all volatility in the data [...]
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