Thursday , November 26 2020
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Tag Archives: Economics

#MacroView: A Vaccine And The “New New Normal”

Moderna and Pfizer recently announced they had potential vaccines for COVID-19 that are more than 90% effective. With that, the market surged, and a rotation into “economically sensitive” sectors occurred. While a “vaccine” will eventually come to the market, it will only ensure a return to the “New New Normal.” The Old “New Normal” Following the “Financial Crisis,” there was much discussion in the media about the “New Normal.” The term originated cautioning economists and policy-makers’...

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17/11/20: U.S. households: Debt Hostages to the Washington

Massive stimulus deployed in Q2 2020 has lifted substantially aggregate household incomes. Meanwhile, lower interest rates have boosted debt affordability, while new demand for credit collapsed. All of which means that, at least through 2Q 2020, U.S. households enjoyed some really dramatic reduction in the burden of debt:Income boost from Government transfers in 2Q 2020 was so large, it took household debt to income ratio down by a whooping 3 years in just one quarter, with the ratio...

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#MacroView: Is The Fed Stuck With “Forever Stimulus?”

I recently have discussed both the “Importance of Recessions” and how the ongoing “Rescues Ruining Capitalism.” However, while the data is clear that ongoing stimulus programs lead to weaker economic growth and a rising wealth gap, is the Fed stuck with “forever stimulus?” Such was a point that Mohammed El-Erian recently made, stating: “They are increasingly on what I call a no-exit paradigm.”  To understand the problem, we have to go back to the beginning. As we noted in our article on...

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The Economics Of Wine

What does an economist know about wine? Given that many wines need years to mature, how can one predict which ones will be great or not? Princeton’s Orley Ashenfelter explains how he used economic principles and regression analysis to predict wine quality (and score great deals!). His research helped spawn an entire field dedicated to the economics of wine. This video is based on the following paper: Predicting the Quality and Prices of Bordeaux Wines By Orley Ashenfelter...

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The Housing Debt Bubble Is Going To Burst

The $100B+ Housing Debt Bubble Is Going To Burst “Being self-employed, I don’t like to add extra bills or burdens, and with a moratorium, there’s no guarantee that later I won’t be further into debt.”                                                  Lucy, freelance photographer, Colorado – July 2020 Lucy’s concern about accumulating debt echoes across America. Millions of renters and homeowners are anxious about paying both their monthly housing bill and a ballooning debt balance....

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7/11/20: BRIC: Composite Economic Indicators for October

 I covered BRIC Manufacturing and Services PMIs for October in two earlier posts (see here https://trueeconomics.blogspot.com/2020/11/51120-bric-services-pmis-october.html), so now, Composite PMIs:Brazil Composite PMI rose to 55.9 in October, compared to 51.6 in 3Q 2020, and currently sits above Global Composite PMI of 53.3. The latest increase in PMI is a robust signal of partial recovery, marking the third consecutive month of > 50.0 readings that followed five consecutive months of...

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#MacroView: The Rescues Are Ruining Capitalism

I want to discuss a recent WallStreet Journal article by Ruchir Sharma entitled “The Rescues Ruining Capitalism.” We talk much about the bailouts and stimulus programs related to the economic shutdown and pandemic. However, the bailouts began back in 2008 when the Federal Reserve intervened with the insolvency of Bear Stearns. To date, the Federal Reserve, and the Government, have pumped more than $36 Trillion into the economy to keep it “afloat.” I say “afloat” rather than “growing”...

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Shedlock: Unemployment Plunges. BLS Says 2.2 Million Find Work

In October, the BLS reports that 2.2. million people found work. As the unemployment rate plunges, the Fed may be finding themselves trapped to take more actions. Did 2.2 million people find jobs in October? That’s what the BLS says. BLS Jobs Statistics at a Glance Details from the monthly BLS Employment Report. Nonfarm Payroll: +638,000 to 141,720,000 – Establishment SurveyEmployment: +2,243,000 to 149,806,000– Household SurveyUnemployment: -1,519,000 to 11,061,000- Household...

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Podcast With Sara Grillo: Are We Still A Capitalist Nation

I recently joined my friend, Sara Grillo for a conversation about capitalism, and whether we are still a capitalist nation. From Sara’s website: “In this podcast we contemplate whether or not the United States is still a capitalist nation. My guest, Lance Roberts, is the chief investment strategist at RIA Advisors. An RIA with $900MM in AUM. He is also, the editor-in-chief of RealInvestmentAdvice.com, a weekly subscriber-based newsletter distributed nationwide.” We explore what capitalism is....

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5/11/20: BRIC: Services PMIs October

In the earlier post, I covered BRIC economies manufacturing PMIs for October: https://trueeconomics.blogspot.com/2020/11/31120-bric-manufacturing-pmis-october.html. Now, leet's take a look at Services PMI.As the chart above illustrates:Brazil Services PMI rose from 47.5 in 3Q 2020 to 52.3 in October. Prior to October, Brazil's services sector was in a contractionary territory for three consecutive quarters. October marks the second month of above 50.0 readings, although...

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