201802.09
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Inflation? Not Even Reflation

The conventional interpretation of “reflation” in the second half of 2016 was that it was simply the opening act, the first step in the long-awaiting global recovery. That is what reflation technically means as distinct from recovery; something falls off, and to get back on track first there has to be acceleration to make up…

201801.30
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You Know What They Say About Appearances

It used to be a big deal, the kind of move that would itself move markets all over the world. Very quietly, JPY has been trading higher over recent weeks and has reached a level of appreciation we haven’t seen since those rocky days in early September. Only then, a rising yen (falling dollar) was…

201712.15
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After Failed ‘Reflation’ For 2017’s Economy, What Might Be In Store For 2018?

The Federal Reserve’s Empire State Manufacturing Index fell slightly in its December 2017 estimate. At +18, that’s down from 19.4 in November and a high of +30.2 in October. It’s also nowhere near the low for the year, a -1.0 recorded back in May. This particular PMI is potentially noteworthy for what appears to be…

201712.04
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Three Years Ago QE, Last Year It Was China, Now It’s Taxes

China’s National Bureau of Statistics reported last week that the official manufacturing PMI for that country rose from 51.6 in October to 51.8 in November. Since “analysts” were expecting 51.4 (Reuters poll of Economists) it was taken as a positive sign. The same was largely true for the official non-manufacturing PMI, rising like its counterpart…

201710.17
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Broader Slowing In IP

Industrial Production rose 1.6% year-over-year in September 2017. That’s up from 1.2% growth in August, both months perhaps affected to some degree by hurricanes. The lack of growth and momentum, however, clearly predated the storms. The seasonally-adjusted index for IP peaked in April 2017, and has been lower ever since. This pattern, the disappointment this…

201709.12
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F-I-C-C Spells Money

How many little pieces of conventional wisdom never hold up to scrutiny? Things get repeated over and over until they are so common that no one ever stops and thinks about them. It isn’t really nefarious like the Big Lie, more just shorthand that may have made perfect sense at one time but has become…

201709.01
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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…

201708.28
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Deja Vu

According to orthodox theory, if interest rates are falling because of term premiums then that equates to stimulus. Term premiums are what economists have invented so as to undertake Fisherian decomposition of interest rates (so that they can try to understand the bond market; as you might guess it doesn’t work any better). It is,…

201708.23
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If 2014 Was Ultimately a Letdown, What Might 2017 Be?

Today’s topic du jour isn’t even a word but an abbreviated name. Whereas yesterday markets were somewhat spooked by a relatively obscure British firm, Provident, today they are again by still another. This time it’s WPP Plc, an advertising aggregation firm that owns a sizable portfolio of ad agencies located all around the world. Given…

201708.18
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Commitment of Traders: Crude Confounding Confusion

The price of oil can’t seem to climb out of the $40’s despite a lot going for it at the moment. Oil prices matter right now as much as three years ago when they signaled serious trouble ahead. For them to get above $50 and then continue on would indicate for a lot of important…