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Productivity Circularity

By |2016-08-09T13:23:46-04:00August 9th, 2016|Economy, Federal Reserve/Monetary Policy, Markets|

On June 6, Janet Yellen spoke to the World Affairs Council of Philadelphia in what were highly scrutinized comments. The occasion was just a weekend in between the May payroll report that clearly unnerved her and the rest of the FOMC. Prior to that BLS publication, it was believed that a rate hike in June was all but set. Afterward, [...]

LMCI Turns Positive?

By |2016-08-08T18:41:09-04:00August 8th, 2016|Economy, Federal Reserve/Monetary Policy, Markets|

The Federal Reserve carefully notes that its Labor Market Conditions Index (LMCI) is subject to revisions in as much as its entire history almost every month. That is the nature of the project trying to tie together 19 separate data points into a coherent yet comprehensive whole. Part of the inherent recurrence of revisions, however, is simply the pace of [...]

The Chinese Counterpoint To Payroll Friday

By |2016-08-08T12:16:42-04:00August 8th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Under traditional “rules”, devaluing of a currency is supposed to bring about a measurable, even obvious increase in the export sector of the country undertaking the manipulation. The Japanese have been notorious for believing in the paradigm, and not just in the past four years under QQE and the whispers of it. Some people still believe that China is merely [...]

Chart of The Week; They Really Don’t Know What They Are Doing Version

By |2016-08-05T18:43:52-04:00August 5th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Given it is payroll Friday, it has to be a chart related to the futility of focusing on the headline number. There is any number of ways with which to accomplish this, but it serves well to highlight the relationship already presented in my view of this specific view of the payroll report. Economists often claim that the participation problem [...]

The Far More Meaningful Counterpoint To Payroll Friday

By |2016-08-05T18:31:36-04:00August 5th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

In early 2005, the US Senate began debating a bill seeking to impose a broad 27.5% tariff on Chinese exports to the United States. Congress was emotionally moved by the supposed problem of pegging the yuan to the dollar, then at about 8.28 CNY for every USD. In reality, the problem wasn’t so much dollars as “dollars”, meaning that because [...]

Payrolls: Trying To Find Meaning In The Meaningless

By |2016-08-05T12:23:52-04:00August 5th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The BLS released yet another perfect payroll report for July. It hit on all the major themes, putting further distance to the shocking May number. All the right people have been reassured by all the right parts. U.S. employment rose at a solid clip in July and wages rebounded after a surprise stall in the prior month, signs of an [...]

Summer Now Too In Factory Orders

By |2016-08-04T18:02:13-04:00August 4th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Factory orders declined rather sharply in June, offering more evidence that the (economic) summer might be upon us. It was not a surprise given that the flash durable goods estimate also for June already indicated as much, since durable goods provide a significant basis for factory orders. The unadjusted series showed a decline of 5.6%, the worst by far since [...]

Money And Inflation; In Evidence

By |2016-08-03T18:38:19-04:00August 3rd, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

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 [...]

Money And Inflation; Japanese Evidence

By |2016-08-03T18:39:28-04:00August 3rd, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

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 [...]

Money And Inflation; European Evidence

By |2016-08-03T18:40:13-04:00August 3rd, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

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 [...]

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