201806.05
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Bi-Weekly Economic Review: As Good As It Gets?

In the last update I wondered if growth expectations – and growth – were breaking out to the upside. 10 year Treasury yields were well over the 3% threshold that seemed so ominous and TIPS yields were nearing 1%, a level not seen since early 2011. It looked like we might finally move to a…

201712.19
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Is RINO Related To RHINO? Definitely

US homebuilders haven’t been this happy since the dot-com era. Not even the housing mania of the mid-2000’s had builders feeling this good about things. According to the National Association of Homebuilders (NAHB), the trade group that represents firms in the industry, their sentiment index registered a blistering 74 in December 2017. Predictably, that’s got…

201706.29
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The Mother Of All Bait’n Switches

In light of light inflation measurements, central bankers have no other choice but to step up their rhetoric. Mario Draghi took the mantle earlier this week and has been joined at various points by others. The message they are sending is one that is purposefully muddied. There isn’t left to them any other choice. There…

201705.23
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Suddenly Impatient Sentiment

Two more manufacturing surveys suggest sharp deceleration in momentum, or, more specifically, the momentum of sentiment (if there is such a thing). The Federal Reserve’s 5th District Survey of Manufacturing (Richmond branch) dropped to barely positive, calculated to be just 1.0 in May following 20.0 in April and 22.0 in March. It follows an all-too-familiar…

201704.03
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A Second Confidence Experiment

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…

201507.29
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The Confidence Experiment

I typically stay away from sentiment indicators and measures of “confidence” not just because they are of dubious construction but they often don’t mean what they are taken for. In the case of consumer confidence, you get both problems simultaneously particularly at the ends of each cycle. In other words, just as “confidence” is at…

201411.25
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Contours of the Cliff

I usually ignore sentiment surveys as, to reiterate one more time, they do not mean what people think they mean (and certainly not how they are used). The ISM Manufacturing Survey, for example, has been on fire for most of 2014 in an almost exact mirror of 2011. And just like 2011, that told us…

201410.15
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What A Morning

An unbelievable morning of credit market trading has at least seen some semblance of “market” forces return by the afternoon. One aspect is certain, that the open was about as illiquid as the treasury market has seen in a long, long time. We should not make the mistake of illiquidity being only associated with selling,…

201211.25
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Uh, Oh. Bernanke Agrees With Me

There’s important potential for the economy to strengthen significantly if there’s a greater level of security and confidence about where we’re going. A plan for resolving the nation’s longer-term budgetary issues without harming the recovery could help make the new year a very good one for the American economy. Ben Bernanke in a speech last…