If that wasn’t the most anticlimactic worst economic quarter in history. The numbers were just as bad as people were expecting – which is the point. It’s not like this economic collapse snuck up on anyone, nor did its scale and depth. We’ve all known from the very beginning what the deal was going to be. Headline real GDP fell [...]
For a brief few weeks, reopening euphoria gripped the bond market. Well, not the bond market exactly, it was limited to the commentary surrounding a minor back up in nominal yields. Really, not much. This culminated in the May 2020 payroll report which was released on June 5. That was the one which “surprised” everyone because, apparently, nobody pays attention [...]
To hear it told nowadays, you’d think that gold’s amazing run began when Jay Powell started cranking out bank reserves. Those telling the story equate those bank reserves to effective money printing, so it conforms to the conventional myth about gold’s relationship to the money supply (whatever that is). Throw in a federal government, every federal government, recklessly borrowing and [...]
Foreigners are dumping their Treasuries! The Fed is monetizing the debt! The federal government has gone insane! Mass fiscal hysteria!Yet, yields on these things are comfortably within sight of their record lows as prices have never been higher. Supply is very obviously off-the-charts, but so, too, must be demand. Every time we hear about “too many” Treasuries the market yet [...]
For awhile there, a few weeks anyway, the 30-year US Treasury long bond had become the star of the mainstream show. Showered with its 15 minutes of fame, everyone loved how, for once, it seemed to agree with Jay Powell and the preferred narrative about the effectiveness of his technocracy. The idiocy of this attention was exposed by just how [...]
So, you’re convinced that low rates are powerful stimulus. You believe, like any good standing Economist, that reduced interest costs can only lead to more credit across-the-board. That with more credit will emerge more economic activity and, better, activity of the inflationary variety. A recovery, in other words. Ceteris paribus. What happens, however, if you also believe you’ve been responsible [...]
I suppose you can admire their zeal and persistence, but then again what is a zealot without his or her zeal? The desperation by which to rescue the Fed’s money printing exercise is palpable. Stocks, sure, bonds, however, aren’t making it easy. Especially inflation expectations which are crucial to Jay Powell’s fairy tale.That whole flood. Over the last several days, [...]
If there’s been one small measure of progress, and a needed one, it has been the mainstream finally pushing commentary into the right category. Back in ’08, during the worst of GFC1 you’d hear it all described as “flight to safety.” That, however, didn’t correctly connote the real nature of what was behind the global economy’s dramatic wreckage. Flight to [...]
This is not a man who’s comfortable thrust into a position of leadership. Say what you want about Ben Bernanke, and there’s a lot that still needs to be said, he at least carried on with the arrogance through thick and thin (almost entirely the latter). Jay Powell sounds like a boxer who just realized the lightweight he thought he [...]
If a central bank controls the money supply, then it can, in theory, control inflation. And if it accomplishes this feat through the use of a short-term money rate, then what part of bond yields would lie beyond its power? None.That’s what bond yields are, after all, in theory the carrying forward of inflation expectations into the future built upon [...]
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