How does QE work? That’s actually a trick question given how all the evidence produced in examination of the various programs undertaken across the world under that label uniformly indicates that it doesn’t. On the contrary, the most studied and tested government efforts in history have yielded consistent results up and down the board.It's just that the public has never [...]
For the FOMC, there was no alternative. The CPI’s keep going higher while the unemployment rate continues lower. Those who are Economists and practice Economics’ brand of econometrics, these would be scary times ahead. Inflationary times unless someone puts a stop to them first. Not because of consumer prices today, but because officials are worried consumers are becoming normalized to [...]
The headlines last Friday were ominous: Inflation Hits Highest Level in Nearly 40 Years Inflation is Painfully High... Groceries and Christmas Presents Are Going To Cost More Inflation is Soaring.. America's Inflation Burst This morning on Face The Nation, Mohamed El-Erian, former Harvard endowment manager, former bond king apprentice, economist, and the man who seems to have a permanent presence [...]
The economic news recently has been better than expected and in most cases just pretty darn good. That isn't true on a global basis, as Europe continues to experience a pretty sluggish recovery from COVID. And China is busy shooting itself in the foot as Xi pursues the re-Maoing of Chinese society, damn the economic costs. But here in the [...]
Flatter. The yield curve continues to shrink in the important middle calendar spaces where growth and inflation expectations run the place. Treasuries have been doing this since around March, a peculiar (given monolithic mainstream reporting otherwise) eight-month reign of growing pessimism rather than inflationary confidence. Did the market foresee omicron more than half a year ago? No. That’s not really [...]
The bond market’s verdict has already been rendered. In fact, the judgment was made even before this year’s CPIs surged to the highest they’d been in a long time. The most consistently accurate and only historically validated source for sorting and signaling inflation, low yields aren’t just skeptical in being low they are unequivocal in remaining steadfastly ultra-low.For those who [...]
Representatives in Congress from both parties were understandably apoplectic. Amidst the world’s worst monetary chaos since the Great Collapse after October 1929, legislators had been told by everyone from central bankers to all the right Economists how laws needed to passed right away, no delay, which would give the Bush Administration authority to buy up the “toxic waste” each had [...]
Jay Powell and his group have been talking taper for months. The build up has been excruciating to some, if only because this central banker adjustment is supposed to mean something. Something especially big specially to bonds who just can’t thrive, everyone says, without the “monetization” of QE. With first less and then no Fed, who will buy them? Too [...]
Why always round numbers? Monetary policy targets in the post-Volcker era always change on even terms. Alan Greenspan had his quarter-point fed funds moves. Ben Bernanke faced with crisis would auction $25 billion via TAF. QE’s are done in even numbers, either total purchases or their monthly pace.This is a messy and dynamic environment, in which the economy operates out [...]
Bring on the tantrum. Forget this prevaricating, we should want and expect interest rates to get on with normalizing. It’s been a long time, verging to the insanity of a decade and a half already that keeps trending more downward through time. What’s the holdup? You can’t blame COVID at the tail end for a woeful string which actually dates [...]
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