The ISM Manufacturing Index declined slightly for March 2017, pulling back by 0.5 points after registering a multi-year high in February. The difference between the index and troubling auto sales, for example, is another reminder of what is truly a large disparity between economic statistics and sentiment. The ISM version of a PMI is considered more reliable because it asks [...]
There is gold in Asia, at least gold of the intellectual variety for anyone who wishes to see it. The Chinese offer us perhaps the purest view of monetary conditions globally, where RMB money markets are by design tied directly to “dollar” behavior. It is, in my view, enormously helpful to obsess over China’s monetary system so as to be [...]
Chinese officials reported that exports fell 6.1% in December, following a downward revised 1.5% decline in November that was originally reported as a 0.1% gain. While the media talks about disappointment after it appeared Chinese exports might have been finally breaking out, and therefore global growth, December’s result simply continues the same pattern repeating over and over again. Over the [...]
Household net worth in the United States surpassed $90 trillion for the first time in Q3 2016, according to the latest estimates from the Federal Reserve’s Financial Accounts of the United States (Z1). That’s up sharply from $67.9 trillion now estimated (with revisions) for Q3 2012 when QE3 was introduced. Despite a massive gain of just about a third, Nominal [...]
In the summer of 2013, the mainstream media was already convinced that Japan’s QE amplification, the true shock and awe “money printing”, was not just working it was doing so convincingly. The yen was down sharply against the dollar, feeding what looked like a surging export sector. Even though QQE was barely a few months old, it was talked about [...]
By experience of different kinds and settings of balance sheet expansion in the United States, Europe, and Japan, we can only conclude that monetary policy with these intentions has no effect, direct or otherwise, on inflation in each of these jurisdictions. The varied forms and exact nature of central bank execution allows us a broad and nearly comprehensive examination of [...]
Offering the longest track record of balance sheet policy, the Bank of Japan should have been a cautionary tale for the central banks that have since followed. Unfortunately, ideology at the center of monetary policy in all jurisdictions leaves no room for objective interpretation such as this. Economists and policymakers (redundant) believe QE works, full stop. When it doesn’t, such [...]
The ECB’s experimentation with balance sheet expansion, both as a matter of bank “reserves” and overall balance sheet size, encompasses at least two distinct episodes. The first began in earnest in May 2010 with the initial concerns being limited to Greece and eventually PIIGS nations, finally exploding in later 2011 as a full-blown crisis (and far more than euros, it [...]
Yesterday’s publication of PCE and Personal Income also included the monthly update for the PCE Deflator, the Federal Reserve’s stated preference for measuring inflation in the economy. The June 2016 figures for the deflator were also negative in terms of both short and longer term perspectives. The year-over-year change in the index was just 0.88%, down slightly from 0.94% in [...]
In advance of today’s GDP release, it was expected that the Q2 estimate would be around 2.6% (it was only 1.2%). The major reason for the anticipated rebound was “strong” consumers, a theme that has been a part of the dominant economic narrative since 2014 introduced the phantom “best jobs market in decades.” No matter what happens in the economy, [...]
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