201501.30
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Actual Instability

The idea of economic instability is not just academic conjecture, as there is a great deal of evidence to support this kind of fragility. And it is fragile in the sense as Nassim Taleb describes, namely that what looks to be stable and growing on the surface is “somehow” susceptible to the slightest provocation; such…

201501.30
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Breakdown In GDP

GDP as an econometric measure is designed to be most favorable toward growth. It accumulates all forms of spending, in dollar terms, treating them exactly the same regardless of source or destination. That is consistent with orthodox theory which holds onto the concept of “aggregate demand”, meaning that all demand is supposedly interchangeable. Thus whatever…

201501.30
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Research Charts: ECB and Commodities

From strategic research partner MRB…with Alhambra’s added commentary. QE is primarily a signaling device to demonstrate policymakers’ commitment to fostering the recovery and sustaining a cohesive monetary union. The policy is implicitly designed to reduce the equity risk premium. We expect a gradual re-rating of euro area equities. A cheaper euro, itself associated with QE,…

201501.29
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‘Robust’ Economy Failed Housing Market At The End of 2014

Another “unexpected” decline in home data has raised even bigger questions about the idea that the real estate market is settling into some steady and slow growth period. That has been the revised hope after the MBS disaster in late 2013. The middle of 2014 saw a renewed not-quite-enthusiasm for real estate which led to…

201501.29
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Diverging Denmark

The Danish central bank, Danmarks Nationalbank, reduced its deposit rate floor by 15 bps to -0.5%. In what looks like a preemptive move aimed at potential destabilization ahead, so far they have managed to keep the krone from following in the franc’s destructiveness (short run). I think it is more than credibility at this point,…

201501.28
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Credit Calm Instead of Hope

Looking through all the various indications of the “dollar” world, there is seemingly to this moment a great deal of calm. This is in sharp contrast to December where bearishness and tightening were not just evident but dangerously so (across almost every part of the global financial system). But those two observations are not necessarily…

201501.28
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Funding Markets Just Called The FOMC’s Bluff

Janet Yellen and her colleagues would like to welcome you, not unlike Tim Geithner’s 2010 expedition in this area, to the recovery. They have removed pretty much all language that would make you think there was anything like lingering destructiveness or erosion. In doing so, they make it very plain that they want you to…

201501.27
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Global Means Global; ‘Dollar’ Means Trouble

In addition, and very much related, to durable and capital goods disappointment, some major bellwether earnings have weighed on jubilation over the “robust” economy. Caterpillar in particular was troubling, but as the lineup of excuses expands, the idea of “decoupling” is now even more pronounced. So, in addition to the energy sector dragging down earnings,…

201501.27
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There Is Some Marginal Use in New Home Sales Figures

The level of new home sales seemed to take another run at the 500k seasonally-adjusted annual rate in December. This would be the third time in 2014 that the pace of sales reached a new high point for this cycle, but the prior two were subsequently revised much lower. In fact, revisions have made it…

201501.27
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Was Credit Right?

There may be something to December after all. It was credit markets that shifted downward (bearish yield curves and credit spreads) dramatically around the end of November and the first few days of December. Given the persistence of large players moving credit and funding markets, this may not be all that hard to fathom with…