Jay Powell has had his mind changed for him. Why? Not even a year ago he was downplaying things like federal funds. The rise in that one anachronistic rate was inconsistent with a healthy financial system poised for the good times that come with serious economic acceleration. Quite the opposite, actually. To dismiss the obvious contrary signal, in very place [...]
During the first quarter of 2008, as Bear Stearns teetered on the edge of illiquidity, foreign holders of US$ financial assets contributed $9.3 trillion to US credit markets. According to the Fed’s Z1, the Financial Accounts of the United States, it tells us that’s the amount they held in possession from outside the American geographical boundary. Considering at the same [...]
Everyone went dovish after what happened in December. Convention assumes that central bankers take their cues from the NYSE. I don’t think that’s what shook everyone up, though. Curves, ladies and gentlemen. The bond market revolted and the stock market showed serious signs of catching its contagion. Since the mainstream had been expecting a booming economy, because that is what [...]
If there is one thing Ben Bernanke got right, it was this. In 2009 during the worst of the worst monetary crisis in four generations, the Federal Reserve’s Chairman was asked in front of Congress if we all should be worried about zombies. Senator Bob Corker wasn’t talking about the literal undead, rather a scenario much like Japan where the [...]
The Federal Reserve published its latest update for Z1, the Financial Accounts of the United States (formerly Flow of Funds). That means we can update our valuation metrics for a good piece of the US stock market. Tobin’s Q starts with the premise that the value of any company is in many ways dictated by its accounting net worth. We [...]
The Bureau of Economic Analysis (BEA) revised upward fourth quarter 2017 Real GDP. The second estimate had been revised lower to 2.50458% (continuously compounded annual rate of change) from the advanced estimate. The third and final calculation raises the quarterly increase to 2.84707%. None of the changes are substantial. Accompanying these revisions are the BEA’s first assessments for Corporate Profits [...]
The Federal Reserve updated the Financial Accounts of the United States (Z1) yesterday, meaning there is quite a lot of new data for the second quarter of 2017. It also means more than just that update, as each quarterly addition is often accompanied by revisions to past estimates. There were some substantial downward revisions to things like Corporate Net Worth, [...]
Primary dealer holdings of UST securities have been on the rise again. This sort of warehouse activity is drastically misunderstood, exemplified best when last year around this time surging dealer inventory was blamed on those banks’ purported inability to sell off their holdings. It was an absolutely absurd idea for several reasons, but most prominently the overwhelming demand at the [...]
It is surely one of the primary reasons why many if not most people have so much trouble accepting the trouble the economy is in. With record high stock prices leading to record levels of household net worth, it seems utterly inconsistent to claim those facts against a US economic depression. Weakness might be more easily believed as some overseas [...]
Although he didn’t state it specifically in his November 2010 Washington Post op-ed formally justifying QE2, it was very clear that then-Fed Chairman Ben Bernanke intended it to work through lending and especially the bank channel. Though he doesn’t explain, nor has any official ever, why a second one was needed given that the first was “quantitatively” determined, Bernanke was [...]
Stay In Touch