201707.20
7
3

No Flip Flop in Europe

Well, that clears that up. In case you missed it, back on June 27 Mario Draghi triggered the latest declared BOND ROUT!!! with what was characterized as a very upbeat economic assessment for Europe. And if things are moving forward there, they just have to be everywhere else. It came off as “hawkish” in the…

201707.18 4

Questions

Why is inflation ex-food and energy considered core? Isn’t food and gas about as core as it gets for most people? Why do economists think it is important to stabilize the price of luxuries but not the price of needs? As a society shouldn’t we prefer a monetary policy that stabilizes food, energy and shelter…

201707.14
1
5

Fool Risk Realized

Legendary football coach Bill Parcells once said, “you are what your record says you are.” It was a pearl of wisdom plucked from wherever Yogi Berra used to wander, made into a brutal truth delivered cunningly as a blatant tautology. We’ve all heard of how sports teams are “good on paper” or “better than their…

201707.10
Off
4

No Luck China, Either

Former IMF chief economist Ken Rogoff warned today on CNBC that he was concerned about China. Specifically, he worried that country might “export a recession” to the rest of Asia if not the rest of the world. I’m not sure if he has been paying attention or not, but the Chinese economy since 2012 has…

201707.07 8

The Hidden State of Money

Correctly interpreting the bond market is more than just how and when to invest your money in UST’s. Not that it isn’t useful in such a money management capacity, but interest rates starting at the risk-free tell us a lot about what is wholly unseen. There is simply no way to directly observe inside an…

201707.07
Off
3

Payroll Report; The State of Slowing Or Not Slowing

The payroll report for June 2017 was the first “good” one in some time. There are now a few indications that the “reflation” in the economy may be finally having positive effects on the labor market. The headline Establishment Survey gain was relatively solid at 222k, though it was above 200k for just the fourth…

201707.03
Off
2

Some Global Odd & Ends

When it comes to central bank experimentation, Japan is always at the forefront. If something new is being done, Bank of Japan is where it happens. In May for the first time in human history, that central bank’s balance sheet passed the half quadrillion mark. It should be unsettling where a trillion is a rounding…

201707.03
5
2

No Monster At The ZLB, Just Supply

Before Chuck Yeager broke the sound barrier in his experimental Bell X-1 aircraft, it was long thought by many to be an extremely difficult challenge if not impossible altogether. Many test pilots spoke of a monster that lay beyond the speed of sound, one ready to destroy any human machine attempting to go faster. In…

201706.27 1

It’s Not The Downside, Where’s The Upside?

The IMF like so many others appears to have been caught up in “reflation.” Its models had in its April 2017 WEO outlook upgraded US growth prospects for the first time in a long time. In their final 2016 WEO, the institute projected US real GDP growth of 2.20% for calendar year 2017, and then…

201706.21
1
1

Brazil’s Reasons

Brazil is another one of those topics which doesn’t seem to merit much scrutiny apart from morbid curiosity. Like swap spreads or Japanese bank currency redistribution tendencies, it is sometimes hard to see the connection for US-based or just generically DM investors. Unless you set out to buy an emerging market ETF heavily weighted in…