201801.10
2
2

No, No, This 2% Is Different From All Those Others

The TIPS market corollary to interest rate case impatience is overhyping any round number that might in isolation appear to confirm the bias. To reiterate the mistaken assumption: if you believe that economic growth just happens, then given how much time has passed since that was true or apparent you have to believe each long…

201801.02
1
3

COT Blue: Nobody Buys a Dead Horse

FRBNY’s December 2017 Primary Dealer survey results aren’t yet published, so we will have to wait a few days for the collection of those banks’ economists to tell us what they think their own traders likely won’t do. It’s a mess in that situation, but one as old as the crisis. Nevertheless, Economists for some…

201711.28
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2

Inflation (Expectations) Corroborate Risk, Which Corroborates Inflation

On Thursday, the Bureau of Economic Analysis (BEA) will report on Personal Consumption and Personal Income (as well as the difference between those two, the Personal Savings Rate). Accompanying the economic figures will be the usual estimates for consumer prices, in this case the Federal Reserve’s preferred inflation gauge the PCE Deflator. There isn’t expected…

201711.27
3
4

Not At All The Same Thing

It is a common misperception that the Fed has in the past raised rates pushing the US economy into recession. The last time that was true was in 1979, when the Fed raised its Discount rate from 9.5% starting in June of that year to 13.0% the following March – right in the middle of…

201706.18 3

Bi-Weekly Economic Review: Has The Fed Heard Of Amazon?

The economic surprises keep piling up on the negative side of the ledger as the Fed persists in tightening policy or at least pretending that they are. If a rate changes in the wilderness can the market hear it? Outside of the stock market one would be hard pressed to find evidence of the effectiveness…

201706.12
1
2

American Expectations, Chinese Prices

The Federal Reserve Bank of New York has for the past almost four years conducted its own assessment of consumer expectations. Though there are several other well-known consumer surveys, FRBNY adding another could be helpful for corroborating them. Unfortunately for the Fed, it has. The latest update for May 2017 suggests a considerable decline in…

201706.06
3
0

Bi-Weekly Economic Review: The Return of Economic Ennui

The economic reports released since the last of these updates was generally not all that bad but the reports considered more important were disappointing. And it should be noted that economic reports lately have generally been worse than expected which, if you believe the market to be fairly efficient, is what really matters. The disappointing…

201705.30
2
3

Appropriately Rewriting History According To Price Stability

The Federal Reserve defines price stability in terms of consumer prices rather than a stable currency. Up until 2012, any inflation target was implicit in monetary policy behavior rather than explicitly stated as an incorporated aspect. Everyone knew, of course, that the Fed had throughout the 1990’s sought a stable regime of around 2% growth…

201705.22
1
0

Bi-Weekly Economic Review

The economic data releases since the last update were generally upbeat but markets are forward looking and the future apparently isn’t to their liking. Of course, it is hard to tell sometimes whether bonds, the dollar and stocks are responding to the real economy or the one people hope Donald Trump can deliver when he…

201705.12
2
3

Inflation Is Oil, But Inflation Is Much More Than Consumer Prices

The average annual change in the WTI benchmark price was in April about 25%. That was still a sizable increase year-over-year, and just marginally less than March’s average of 33%. For calculated inflation rates, it represents the last of the base effects that have to this point made it appear as if economic improvement was…