201606.24
0
0

Durable Goods Add To The Idea of Depression (Small ‘d’)

There wasn’t anything new or surprising in the advance durable goods report. Shipments (ex transportation) were flat and orders were up 1% year-over-year (NSA). Capital goods (non-defense, ex aircraft) shipments fell 3.4%, the tenth straight month of contraction, while new orders were down again (2.6%) for the sixteenth time out of the past nineteen months….

201606.24
1
0

Back To Our Regularly Scheduled Programming (UPDATED)

It was a nice diversion while it lasted, I suppose. From the moment of the unfortunate murder of the British MP, funding markets, in particular, had been furiously “selling dollars” to get back some of the pound that was falling as Brexit had gained momentum. Media commentary talks about it as if that were the…

201606.24
2
0

Secular Stagnation Is Eurodollar Stagnation

Last week, the St. Louis Fed published an article based on a speech that Dr. Larry Summers gave to the Homer Jones Memorial Lecture series back in April. The article included the full text of Summers’ speech and importantly the supporting material and evidence he used in his argument for “secular stagnation.” Included is one…

201606.23
4
0

What Current Interest Rates Really Mean

On June 14, the 10-year German bund yield traded briefly below zero for the first time. It was an inauspicious record but one that defines the contradictions at the center of all this economic and monetary controversy. On the one hand, that is what central banks tell us they are after especially with QE, to…

201606.22
3
0

The Full Measure of Slack

Near the start of her tenure, Janet Yellen in a speech given on April 16, 2014, at the Economic Club of New York declared monetary policy concerned with three big factors. The first was inflation and whether or not it was moving back to the 2% target, even though by then it had been almost…

201606.22
8
0

Waiting For Earnings To Correct? Q1 And Forward EPS Update

EPS estimates are always in the practice of falling over time, so that natural process should be considered when comparing across the movement of the calendar. That said, however, earnings continue to defy projections of a rebound. This is not to say that analysts aren’t expecting one, only that the expectation keeps pushing further out…

201606.21
3
0

Re-investigating The Simple Assumptions

In February 1999, the Bank of Japan announced that its call money rate would be zero “until deflationary concerns subside.” Other than a temporary shift in 2001 and 2006, deflationary concerns remain. How effective was monetary policy? That point has been partially answered by the introduction of QE over and over and over again. The…

201606.21
2
1

Always More

For decades the slander against Herbert Hoover went unchallenged. He was branded a “do nothing” in the 1932 campaign, a charge which looks sillier the more time passes. The proper slander of Hoover is that he was Roosevelt before FDR was, only in miniature. From this view we can appreciate the intentional change in perspective;…

201606.21
1
0

Greenspan to Yellen; Incoherence The Common Theme But Vastly Different Receptions

It is human nature to extrapolate in straight lines, to take what is as what should forever be. In economic statistics, tail risks continue to live outside the tails because the math can never get past that limitation. No matter how sophisticated the “jump diffusion” tendencies, no one can predict inflections. This is not to…

201606.20
0
0

‘Selling Dollars’ Again

With the sudden interjection of uncertainty halting the surge in Brexit odds since the unfortunate attack on British MP Jo Cox last week, the financial world has benefitted from the pound’s resurrection. Sterling has had a very good couple of days in this reversal, especially today. As it rises it adds the same as we…