In Europe, the ECB’s minutes for its April 2019 meeting claimed: Financial market developments, which were typically more forward looking, were more upbeat. In the US, the Federal Reserve’s minutes for its April 2019 meeting claimed: Participants noted that even if global economic and financial conditions continued to improve, a patient approach would likely remain warranted, especially in an environment [...]
It is sometimes amazing what happens when you add just a little perspective. In some cases, it doesn’t require much at all to do so. One little addendum can upend the entire message, leading you off into entirely different interpretations. The implications can be enormous. To see what I mean, let’s begin with the basics. Below is what the public [...]
Nervous people tend not to sit still. The term nervous energy means just that. When you’re worried about something, your mind is telling you to use up the resources your body is providing to search for a fix to whatever it is that’s bothering you. Mitigation at the very least. It really is a simple thing sometimes. In the UST [...]
Understand what the word “transitory” truly means in this context. It is no different than Ben Bernanke saying, essentially, subprime is contained. To the Fed Chairman in early 2007, this one little corner of the mortgage market in an otherwise booming economy was a transitory blip that booming economy would easily withstand. Just eight days before Bernanke would testify confidently [...]
By far, the biggest problem in Economics is that it has no sense of itself. There are no self-correction mechanisms embedded within the discipline to make it disciplined. Without having any objective goals from which to measure, the goal is itself. Nobel Prize winning economist Ronald Coase talked about this deficiency in his Nobel Lecture: This neglect of other aspects [...]
We all know the shorthand. The Federal Reserve influences if not controls economic activity by raising and lowering the federal funds apparatus. Reducing the monetary policy targets is stimulus because everyone loves lower interest costs. Raising them therefore has the opposite effect. More direct and visible consequences are supposed to be observed first in the interest rate sensitive sectors of [...]
Two on the same day, likely not coincidence. The next stage of “dovishness” may be upon us. It won’t be rate cuts; those won’t happen until all other excuses have been exhausted first. Jay Powell’s confused gang won’t give in until kicking and screaming there’s really nothing else left. The Fed “pause” isn’t working. To up the ante a bit, [...]
The Federal Reserve has been maintaining statistics on American industry for nearly as long as there has been a Federal Reserve. The first entry in the data series on Industrial Production is for the month of January ’19. Not 2019 but 1919. With over a hundred years of relatively consistent data, matching up very well with overall trends in the [...]
It’s a tell-tale sign of someone who doesn’t know what they are talking about. In the realm of global currency systems, anyone who brings up China’s massive stockpile of US Treasury assets inevitably they assign all the power to the Chinese. Xi could destroy Trump if he wanted, bringing down the US in a righteous fit of trade war anger. [...]
JP Morgan’s CEO Jamie Dimon climbed back up on the bond bear. It was one year ago, May 7, 2018, when he went on BloombergTV and caused a substantial market stir when he said 4%. No one would want to buy UST’s what with inflation raging and the Federal Reserve forced into an overly aggressive stance by virtue of the [...]
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