201711.22
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Durable Goods Only About Halfway To Real Reflation

Durable goods were boosted for a second month by the after-effects of Harvey and Irma. New orders excluding those from transportation industries rose 8.5% year-over-year in October 2017, a slight acceleration from the 6.5% average of the four previous months. Shipments of durable goods (ex transportation) also rose by 8% last month. Even with that…

201711.21
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Bi-Weekly Economic Review: A Whirlwind of Data

The economic data of the last two weeks was generally better than expected, the Citigroup Economic Surprise index near the highs of the year. Still, as I’ve warned repeatedly over the last few years, better than expected should not be confused with good. We go through mini-cycles all the time, the economy ebbing and flowing…

201711.21
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The Bond Market Does, In Fact, Use The Correct Start Date

First Bernanke, now Yellen. As I wrote earlier today, there is a growing tendency to revise economic history at least as it applies to official actions. Ben Bernanke defends QE from the perspective of 2009 forward, as if 2008 was all just someone else’s problem irrelevant to the world that came after. In effectively resigning…

201711.21
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(A)Typical At The Bottom

The National Association of Realtors (NAR) estimates sales of existing homes rose 2% in October 2017 from a downwardly revised September estimate. The trade group tries its best to put recent results in the best possible terms, claiming in its press release that at 5.48 million (SAAR) the number of resales is “their strongest pace…

201711.21
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Using the Correct Start Date Is Key

The former Federal Reserve Chairman doth protest too much, methinks. The answer to why Ben Bernanke is still defending QE is obvious. Had it worked, I mean really worked, he would be today universally hailed as the greatest monetary steward since Bagehot. Though he wrote a book trying to cast himself in that way, the…

201711.20
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EURODOLLAR UNIVERSITY: What Are Reserves To A Modern, Wholesale Money System?

It’s actually quite difficult to answer the question posed in the title, which in itself is a clue. What we know for sure is what does not count as reserves for a non-reservable currency system. It’s that contradiction that sets off the often graphic misconceptions. Quantitative easing has been described as printing money. That’s certainly…

201711.17
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Chart of the Week; Deconstructing and Applying BRL

Last week’s Chart of the Week kicks off this week’s, though it will have to wait for a series of explanations to get us from that one to this. A week ago, we noted the growing divergence between leveraged loan prices and WTI, two risk indicators that used to be pretty well correlated for obvious…

201711.17
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It’s Approaching A Record, But Not For Expansion

Home construction activity bounced back in October from several months of appreciable weakness. It may have been hurricane related where plans and projects delayed by the path of Harvey and Irma were finally cleared to resume. More likely, in my view, it was just the normal variation that the construction figures always have exhibited. Total…

201711.17
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A TIC Look At Qualitative Contraction

The latest update of the Treasury Department’s Treasury International Capital (TIC) estimates clarified a few things. To begin with, for the month of September the Chinese sold UST’s again for the first time in seven months. Between the end of January and the end of August, the Chinese had added $149.4 billion in UST holdings….

201711.16 2

Huge Crude Stakes

There is a titanic struggle going on right now in the oil market. On the one side of the futures market are the usual pace setters, the money managers. Last week, the latest COT data available, they went the most net long since March. If it continues, it will close in on the most positive…