201806.18
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Global Asset Allocation Update

The risk budget is unchanged this month. For the moderate risk investor the allocation to bonds and risk assets is evenly split. There are changes this month within the asset classes. How far are we from the end of this cycle? When will the next recession arrive and more importantly when will stocks and other…

201806.12
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What A Difference A Few Months Make, Highest Inflation in Six Years And Market Shrugs

What a difference a few months make. Perhaps given all that has happened since January people have regained some badly needed perspective. The core of inflation hysteria was the belief the economy was about to take off which would exacerbate underlying price pressures. That would necessitate more aggressive Federal Reserve reaction, corroborated by an epic…

201805.25
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Reframing Doves And Hawks

When the minutes of the March 2018 FOMC meeting were released on April 11, St. Louis Fed President James Bullard, a non-voting alternate member, immediately objected to one statement contained with them. According to Bullard’s version, the notation that “all participants” agreed further rate hikes were necessary was incorrect. He was and remains opposed to…

201805.23
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It’s Not The Minutes, It’s The Months and Years

It’s the kind of thing you’re supposed to overlook and not think too deeply about. Recall the basis of inflation hysteria: the economy was poised to take off and do so convincingly; that plus the ubiquitous LABOR SHORTAGE!!! meant that wages then inflation were going to break out higher; accelerating consumer prices were then to…

201805.03
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Someone Is On Drugs, Alright

For the second straight quarter, the Bureau of Labor Statistics (BLS) estimates US productivity growth was less than 1%. That’s not surprising given the weakening in output as measured by GDP, the data reported by the Bureau of Economic Analysis (BEA). Productivity is the bridge between the BLS’s labor numbers and the more general economic…

201801.29
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Globally Synchronized What?

In one of those rare turns, the term “globally synchronized growth” actually means what the words do. It is economic growth that for the first time in ten years has all the major economies of the world participating in it. It’s the kind of big idea that seems like a big thing we all should…

201801.22
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For All That Seems To Go Right, What’s Always Missing?

On April 29, 2011, the US benchmark oil price (WTI) surged above $113 per barrel. It wasn’t just American oil prices, either, as other benchmarks around the world were on a huge run. It was the highest for crude oil in three years, going back to the weeks immediately following Lehman. At that price, more…

201801.10
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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
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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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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…