201607.22 0

Depression And Confidence

Some people have impeccable timing. Even if by accident, there are occasions when what they say or write comes out in almost perfect sequence. At the end of August 2014, UC Berkeley economist J. Bradford DeLong wrote an article for Project Syndicate that argued in favor of proper categorization. The lack of recovery was so…

201607.22
0
0

The Narrative of Energy Inventories

While there is a direct relationship between the steepness of contango in the oil futures curve and the amount of crude siphoned from the market to storage, it is not an immediate one. When crude prices originally collapsed starting in late 2014, twisting the WTI curve from backwardation to so far permanent contango (of varying…

201607.22
1
0

Housing Construction Just Isn’t What It ‘Should’ Be

The June 2016 FOMC statement included an admission that the labor market might not have been quite as unassailable as had been thought dating back to 2014. That was likely the reason for the assumed change in stance, as even KC Fed President Esther George was unable to bring herself (LINK HERE) to vote against…

201607.21
6
0

The Bond Market Riddle Is Not A Riddle

In January 2011, FRBNY began surveying primary dealers in order to try to gain a better understanding of how normalizing policy after two large (in their terms) programs of quantitative easing might affect money and bond markets. The banks were asked a series of questions, an array that has evolved over time, mostly about expectations…

201607.20 0

Bring Back the ‘Fed Model’ For Stocks? Nope

A few days ago I examined the relationship between the stock market PE and CPI inflation. The reason was the sudden renewed emphasis on low inflation in the context of trying to justify increasingly outlying earnings multiples in stocks. Earnings fell sharply in 2015, but prices really didn’t; there was, at most, only more volatility…

201607.20
9
0

Examining The ‘Abundance of Strong Data’ From A Realistic Perspective

Back in January and even into February, the idea of recession seemed no longer so far-fetched. The FOMC and orthodox economists had been claiming since late 2014 that the only economic fate was “full employment” and the satisfying economic conditions that accompany it. Instead, the latter half of 2015 turned uncomfortably close to the “impossible”…

201607.20
1
1

Earnings Update: Let There Be Growth…Please

Anticipation for comparable year-over-year earnings growth is building…but not necessarily for the current earnings reporting season that is just beginning. The decline of approximately 6.7% in year-over-year EPS comparisons in the first quarter is expected to be the bottom of the four quarters of consecutive earnings declines for the S&P 500.  And, although earnings season…

201607.19
0
0

IBM Still Provokes More Than Morbid Curiosity

At this point, maybe it’s more like a train or car wreck whose shocking carnage compels you to keep staring at it. I still think there is, however, relevant information in IBM’s ongoing crash though I can’t deny the degree of fascination with it as almost theater. The company yesterday reported its 17th consecutive quarter…

201607.19
0
1

Baseline Tendencies

With no clear direction from any of the Asian influences, it isn’t surprising to see more listlessness in everything from stocks to bonds. The Dow was up, the NASDAQ down, and the S&P 500 somewhere in between. The 10-year UST that had looked primed for receding back into the 1.60’s (for yield) bounced back to…

201607.19
2
0

Nearly Two Years of Manufacturing Contraction, And No Progress In Inventory

Manufacturing sales were reported Friday to have declined 2.3% year-over-year in May, following a 4.7% contraction in April. Since sales in May 2015 were almost 6% less than May 2014, the manufacturing sector counts almost 8% less in revenue across two years of contraction. The worst part is, again, the time. In seasonally-adjusted terms, estimated…

201607.19 0

The Helicopter Has Already Been Tested And, Surprising Nobody But Economists, It Failed Spectacularly

Most of what passes for modern monetary policy is nothing more than one assumption piled upon another (and then another, and so on). Taken for granted for so long, rarely are these unproven precepts ever challenged to justify themselves to the minimal standard of internal consistency, let alone prove discrete validity by parts. The latest…

201607.18
1
0

Proposing A Contentious Non-Economic Reason For the Huge Jump In The Labor Force (UPDATED)

The most troubling aspect of the payroll reports month after month through the “best jobs market in decades” was how the counted labor force seemed so entirely apathetic to it. If jobs were suddenly plentiful, it would stand to reason that Americans and the deep pool of them sidelined since the Great Recession would be…