The difficulty of being a central banker in Europe is that you face the challenge of dealing with the structure of a monetary union with no fiscal union. At any given time, the economies of different countries will require different monetary policy. So, while Greece may be begging for easy monetary conditions, Germany may not require or even desire such loose [...]
A couple more points about GDP revisions and the outlook for Q2. First, with inventory revisions factored, GDP less the inventory contribution was -1.03%; worse than last year’s polar vortex problem. It was the worst quarterly result since the Great Recession, which more than suggests economic weakness as more than just winter or seasonal adjustments. If there is any seasonal [...]
Revisions to Q1 GDP were actually a little better than expected, as the new estimates show a -0.7% drop instead of what might have been as bad as -1.5% (with one more “regular” revision to come). Record inventory remained a record, revised from $122 billion to merely $106 billion, but PCE growth came down to just 1.8% - a far [...]
At some point in the middle of the last century, economics of money shifted to economics of psychology. When Milton Friedman wrote his 1963 book, A Monetary History, it was an effort that uncovered the role of money in the collapse of the Great Depression as he and his co-author, Anna Schwartz, saw it. Whether or not it was a [...]
In its 84th Annual Report released last June, the Bank for International Settlements departed from usual central bankish conventions and decried the growing departure from market discipline and even reality. The BIS even used the loaded term “euphoric” to describe what it saw as risk market prices no longer affected by fundamental economic conditions. As the Financial Times noted then, [...]
Yesterday I looked at funding markets and currency proxies for detecting the end to the “dollar” pause that began on March 18. Broader credit markets agree with that assessment so far, as nominal yields and the UST curve shape have started, at least, to be redrawn back into the tightening format. Nominal yields and inflation breakevens turned right at May [...]
Leave it to a self-described socialist to undermine his own argument. Decrying the apparent overabundance of personal hygiene and fashion, presidential candidate Bernie Sanders took to confounding as to how many ways evil capitalism could produce odor-altering products but leave so many so hungry. You don't necessarily need a choice of 23 underarm spray deodorants or of 18 different pairs [...]
When looking toward what might be coming next from the FOMC, the reigning theme remains “they don’t know what they are doing.” That sentiment applies, of course, retroactively to all the QE’s, Twists and badly implemented emergency measures on the way down, but attention is rightfully focused now on how to get to C. Going from A to B already, [...]
Nobody really knows what is going to happen as Greece disproves all the narratives about the ECB’s ability to actually fix anything. As with all things monetarism, the attempts of liquidity were really about time rather than dissuading imbalances. But the funny thing about trying to buy time is that it so often removes the very pressure necessary to instill [...]
Recent real estate figures for new home sales and existing home sales do not seem to agree on where the real estate market is trending. The new home sales numbers from the Census Bureau have been moving upward since the middle of last year (with potential revisions in mind) while resale levels from the National Association of Realtors show stagnation [...]
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