Thursday , February 27 2020
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Tag Archives: GDP

#MacroView: Japan, The Fed, & The Limits Of QE

This past week saw a couple of interesting developments. On Wednesday, the Fed released the minutes from their January meeting with comments which largely bypassed overly bullish investors. “… several participants observed that equity, corporate debt, and CRE valuations were elevated and drew attention to  high levels of corporate indebtedness and weak underwriting standards in leveraged loan markets. Some participants expressed the concern that financial imbalances-including overvaluation...

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#MacroView: Debt, Deficits & The Path To MMT.

In September 2017, when the Trump Administration began promoting the idea of tax cut legislation, I wrote a series of articles discussing the fallacy that tax cuts would lead to higher tax collections, and a reduction in the deficit. To wit: “Given today’s record-high levels of debt, the country cannot afford a deficit-financed tax cut. Tax reform that adds to the debt is likely to slow, rather than improve, long-term economic growth. The problem with the claims that tax cuts reduce the...

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Falling Oil Prices An Economic Warning Sign

On Tuesday morning, I got engaged in a debate on the recent decline in oil prices following my report on COT Positioning in the space. To wit: “The inherent problem with this is that if crude oil breaks below $48/bbl, those long contracts will start to get liquidated which will likely push oil back into the low 40’s very quickly. The decline in oil is both deflationary and increases the risk of an economic recession.” It didn’t take long before the debate started. “Aren’t low oil prices good...

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As the Data Comes In, 2019 Really Did End Badly

The coronavirus began during December, but in its early stages no one knew a thing about it. It wasn’t until January 1 that health authorities in China closed the Huanan Seafood Wholesale Market after initially determining some wild animals sold there might have been the source of a pneumonia-like outbreak. On January 5, the Wuhan Municipal Health Commission issued a statement saying it wasn’t SARS or MERS, and that the spreading disease would be probed. In other words, you can’t blame...

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Dallas Fed President Sees “No Move” In Fed Funds Rate

Dallas Fed President Robert Kaplan made some interesting comments today on interest rates, repos, and the coronavirus. Dallas Fed President Robert Kaplan was on panel discussion today at the University of Texas McCombs School of Business on the “2020 Business Outlook: Real Estate and the Texas Economy” in Austin, Texas. Bloomberg Econoday Synopsis Dallas Fed President Robert Kaplan is neutral right now on monetary policy, saying neither a rate cut nor a rate hike are necessary in...

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SOTM 2020: State Of The Markets

“I am thrilled to report to you tonight that our economy is the best it has ever been.” – President Trump, SOTU In the President’s “State of the Union Address” on Tuesday, he used the podium to talk up the achievements in the economy and the markets. Low unemployment rates Tax cuts Job creation Economic growth, and, of course, Record high stock markets. While it certainly is a laundry list of items he can claim credit for, it is the claim of record-high stock prices that undermines the rest...

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Jerome Powell & The Fed’s Great Betrayal

“Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”John Maynard Keynes – The Economic Consequences of Peace 1920 “And when we see that we’ve reached that level we’ll begin to gradually reduce our asset purchases to the level of the...

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Duncan Says One Thing, Chicago Doesn’t Really Say Something Else

The boom never boomed. That’s what made the bond and money curves so flat in 2018. The data, the real economy behind the numbers, never matched the rhetoric. Even GDP. We’re in much the same position today, only starting from much weaker and worse. The rhetoric is still positive, except now it’s about a turnaround. But, and this is the same big “but”, at some point the turnaround actually has to turn the economy around. There was a lot of disquieting information contained within this week’s...

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Three Straight Quarters of 2%, And Yet Each One Very Different

Headline GDP growth during the fourth quarter of 2019 was 2.05849% (continuously compounded annual rate), slightly lower than the (revised) 2.08169% during Q3. For the year, the Bureau of Economic Analysis (BEA) puts total real output at $19.07 trillion, or annual growth of 2.33% and down from 2.93% in 2018. Last year was weaker than 2017, the second lowest out of the six since 2013. And that’s where the good news ends. Underneath the headline, not all that far into the details is a...

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