201711.15
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Can’t Hide From The CPI

On the vital matter of missing symmetry, consumer price indices across the world keep suggesting there remains none. Recoveries were called “V” shaped for a reason. Any economy knocked down would be as intense in getting back up, normal cyclical forces creating momentum for that to (only) happen. In the context of the past three…

201711.15
4
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Symmetry Matters, Or The (Small) Progress of Stating The Obvious

Chicago Fed President Charles Evans is this year a voting FOMC member. Normally, that might not make much difference but in times like this where dissension is building beneath the surface of even the typically stoic central bank, this time it might. Apparently we can count Evans among the list dissatisfied with the current state…

201709.28
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4

Reflation Check

There is a difference between reflation and recovery.  The terms are similar and relate to the same things, but in many ways the latter requires first the former.  To get to recovery, the economy must reflate if in contraction it was beaten down in money as well as cyclical forces. In the Great Crash of…

201709.18
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If They Wish To Replace LIBOR With Repo, They Should Already Start Thinking About Repo’s Replacement

Sometimes you just have to laugh. A lot has been made on the inside of LIBOR’s assumed demise. The suite of interest rates is not being discontinued really, merely relegated to the backbench. As usual, the rationale for doing so is perfectly sound: As noted by the Financial Stability Board’s Market Participants Group, there are…

201709.14
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The CPI Comes Home

There seems to be an intense if at times acrimonious debate raging inside the Federal Reserve right now. The differences go down to its very core philosophies. Just over a week ago, Vice Chairman Stanley Fischer abruptly resigned from the Board of Governors even though many believed he was a possible candidate to replace Chairman…

201709.01
2
2

2017 Is Two-Thirds Done And Still No Payroll Pickup

The payroll report for August 2017 thoroughly disappointed. The monthly change for the headline Establishment Survey was just +156k. The BLS also revised lower the headline estimate in each of the previous two months, estimating for July a gain of only +189k. The 6-month average, which matters more given the noisiness of the statistic, is…

201708.30
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A Small Place To Start

Alice M. Rivlin was Vice Chairman of the Federal Reserve during its absolute apex. Nominated to that position in 1996, she stayed as number two to Alan Greenspan until 1999. During those years the central bank, and its central bankers, would become greatly admired for what was widely perceived as pure technocratic skill. The extended…

201708.23
1
6

That’s Odd, I’ve Seen That Curve History Somewhere Before

Orthodox monetary theory tells us that central banks matter, a lot. Monetary policy is supposed to be the difference in everything from economy to currency. If one central is doing one thing and another central bank something different, it is presumed the only necessary information to infer what markets and therefore economies might do in…

201708.22
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Eurodollar Futures, The Verdict (Eurodollar University)

The American banking system had been primarily a domestic one throughout its early development. Despite, or because of, the rapid growth in the later 19th century, banking was orientated almost entirely inward to finance the needs of that growth. But as a growing national as well as industrial power, the US adopted several measures early…

201708.17
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The Fed Tries To Tighten By Rates, But The System Instead Tightens By Repo

The Fed voted for the first federal funds increase in almost a decade on December 15, 2015. It was the official end of ZIRP, and though taking so many additional years to happen, to many it marked the start of recovery. The yield on the 2-year Treasury Note was 98 bps that day. A lot…