201604.29
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They Want It To Be About Inflation

There was more bad news for the FOMC over the past few days beside the once again near-zero GDP estimate. If the labor market were truly growing as is claimed, we should be finding “inflation” in a broad set of different economic views. From the standard inflation calculations to various estimates for wages or income,…

201604.29
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Bi-Weekly Economic Review

Economic Reports Scorecard Of the 19 reports released over the last two weeks for which we track a consensus estimate, only four were better than expected. And two of those were the two weekly jobless claims reports. The only other two better than expected reports were the Richmond Fed manufacturing survey and the personal income report….

201604.29
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Always About Income

The emphasis on the labor market has become ubiquitous but it is not being used in the manner with which it should be used. It is now permanently attached to words like “despite” or “in contrast” no matter which economic data point is being described. The Wall Street Journal provides a perfect example in writing…

201604.29
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Understanding the Basis Is The Most Pressing Task In The World

On December 27, 1990, changes to Regulation D went into effect with the maintenance period that began that day. Among those alterations was a reduction in the reserve requirement imposed upon what are officially called “eurocurrency liabilities.” Under the Monetary Control Act of 1980, which made reserve requirements universal to any US chartered federally insured…

201604.29
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Chart Of The Week: Silver Miners vs Gold Miners

You’d have to be living under a rock to not know that gold is surging this year. And gold miners are performing even better than the metal itself. In a sign that the rally in precious metals might be getting a little more speculative, silver has started to outperform gold. And silver miners are outpacing…

201604.28
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Ritual Weakness Is More About The Ritual Than The Weakness

The worst part of this stilted or stunted economy is that it isn’t nearly good enough to produce widespread prosperity (with very real questions as to whether it produces any prosperity at all). It has become self-reinforcing, however, to the point of circular logic. We (economists) are now so conditioned by the low, unstable growth…

201604.28
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Where Is (Was) The Overheating?

With no “unusual” snow or “residual seasonality”, the US economy once again grinds to a halt in Q1 only now with no more reasons to dismiss it. In what has become an annual ritual, GDP barely moves in the quarter immediately following the Christmas holiday. This time, however, it wasn’t just consumers holding back in…

201604.27
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Focused On The Wrong End of Oil

The front end of the oil price complex continues to get all the attention because it seems to further the more optimistic narrative. It is the back end, however, that is most significant. The nearer maturities of the futures curve reflect more the funding environment than the fundamental view of oil and the economy. The…

201604.27
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Slowing

The big news of the day had nothing to do with Janet Yellen, which was entirely appropriate given both her stance on the economy and anything she could possibly, realistically do about it (nothing). Apple reported results that were shocking in many ways, though not necessarily unexpectedly so. Last quarter, CEO Tim Cook had warned…

201604.27
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Sentiment vs. Liquidity

On January 16, 2009, the FOMC gathered telephonically for an emergency conference call to discuss a deal that had been struck between Bank of America and the FDIC, Federal Reserve, and US Treasury Department. There was enormous concern, quite well-founded, that had nothing been done the news of that day might have led to a…

201604.26
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The Strict Limits Of US QE

In addition to the worrisome durable goods report (in the respect that it just continues the same contraction part of the slowdown), consumer confidence slipped suggesting that the rebound in stocks and prices of other risky assets are not striking a direct correlation. There may be a delayed effect, with “confidence” or sentiment in April…

201604.26
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Where It All Went Wrong

With the housing recovery, it is perhaps because it has been much more visible and earnest that the disparity is more easily appreciated and understood. Prices have surged in some places as much as the housing mania portion of the great bubble of the 2000’s, yet that has taken place despite levels of overall activity…