201712.15
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After Failed ‘Reflation’ For 2017’s Economy, What Might Be In Store For 2018?

The Federal Reserve’s Empire State Manufacturing Index fell slightly in its December 2017 estimate. At +18, that’s down from 19.4 in November and a high of +30.2 in October. It’s also nowhere near the low for the year, a -1.0 recorded back in May. This particular PMI is potentially noteworthy for what appears to be…

201712.15
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The Economy Likes Its IP Less Lumpy

Industrial Production rose 3.4% year-over-year in November 2017, the highest growth rate in exactly three years. The increase was boosted by the aftermath of Harvey and Irma, leaving more doubt than optimism for where US industry is in 2017. For one thing, of that 3.4% growth rate, more than two-thirds was attributable to just two months….

201712.15 4

Chart of the Week: …ummmm

Back in early October, I noted that repo fails had jumped above $250 billion (combined “to receive” and “to deliver”) for three weeks straight. That wasn’t an auspicious result, as sustained collateral problems like that don’t correlate to happy things. It all began the week of September 5, in what seemed like a minor one-day…

201712.14
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Inside and Outside, Market and Models Actually Agree On A Final Failing Grade For Yellen

It was another pretty embarrassing day for the Federal Reserve and its policymaking body the FOMC. The latter voted, as expected, to raise the federal funds corridor (or double floor, if you can’t get over IOER fail) by another 25 bps. The long end of the Treasury bond market, however, was bid pushing yields down…

201712.14
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Chinese Are Not Tightening, Though They Would Be Thrilled If You Thought That

The PBOC has two seemingly competing objectives that in reality are one and the same. Overnight, China’s central bank raised two of its money rates. The rate it charges mostly the biggest banks for access to the Medium-term Lending Facility (MLF) was increased by 5 bps to 3.25%. In addition, its reverse repo interest settings…

201712.14
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1

Retail Sales Bounce (Way) Too Much

Retail sales had a good month of November, or at least what counts as decent over the last five and a half years. Total retail sales (unadjusted) rose 6.35% last month, up from 4.9% (revised higher) in October. It was the highest rate of growth since the 29-day month of February 2016. For retailers, what…

201712.13
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Two Very Different Monetary Cases, And Their One Common Theme

When we look back at the period known as the Great Inflation there is a tendency, I believe, to truncate the episode only to the most well-known parts. What many people remember are things like gas lines, where oil problems and embargoes left Americans at several points in the seventies too often stuck for trying…

201712.12
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Moving Toward The Right Way To Get Off The Wrong Track

Of the few economists honest about the economy, there has been a struggle to come up with an explanation for persisting economic struggles. That has led to a plethora of labels applied to the last decade. Brad Delong, for example, once called it the Lesser Depression. Larry Summers has revived Alan Hansen’s Secular Stagnation. I…

201712.12
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The Story of Shipping Is Our Economic Story

There was a lot of talk about the supposed oil supply glut around early 2015, for good reasons that only partially related to the supply of oil. That wasn’t the only industry impacted by what was really going on, meaning the falling demand side to the world economy. Shipping companies have faced a supply glut…

201712.12
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You Really Have To Pick The Right Variable First

Ronald Coase was one of the few economists who was easy to admire. There are and have been a few out there, and it was Coase by and large leading the critique of the increasingly detached state of economics (really Economics). In his 1991 Nobel Prize acceptance speech, he was as usual blunt in his…