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Tag Archives: inflation

In The Fed We TRUST – Part 2: What is Money?

Part one of this article can be found HERE. President Trump recently nominated Judy Shelton to fill an open seat on the Federal Reserve Board. She was recently quoted by the Washington Post as follows: “(I) would lower rates as fast, as efficiently, and as expeditiously as possible.” From a political perspective there is no doubting that Shelton is conservative. Janet Yellen, a Ph.D. economist from Brooklyn, New York, appointed by President Barack Obama, was the most liberal Fed...

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The Inflation Check

After constantly running through what the FOMC gets (very) wrong, let’s give them some credit for what they got right. Though this will end up as a backhanded compliment, still. After having spent all of 2018 forecasting accelerating inflation indices, from around New Year’s Day forward policymakers notably changed their tune. Inflation pressures that were in December 2018 building underneath leading officials to fear a harmful breakout, by January 2019 they were suddenly “muted.” What’s...

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Monthly Macro Monitor: Doom & Gloom, Good Grief

When I first got in this business oh-so-many years ago, my mentor told me that I shouldn’t waste my time worrying about the things everyone else was worrying about. As I’ve related in these missives before, he called those things “well-worried”. His point was that once everyone was aware of something it was priced into the market and not worth your time. That has proven to be valuable advice over the years and I think still relevant today. We continue to hear, on an...

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Big Trouble In QE Paradise

Maybe it was a sign of things to come, a warning how it wasn’t going to go as planned. Then again, when it comes to something like quantitative easing there really is no plan. Other than to make it sound like there is one, that’s really the whole idea. Not what it really is and what it actually does, to make it appear like there’s substance to it. After experimenting with NIRP for the first time and then adding a bunch of sterilized asset purchases in 2014, Europe’s central bank was getting...

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Why The Japanese Are Suddenly Messing With YCC

While the world’s attention was fixated on US$ repo for once, the Bank of Japan held a policy meeting and turned in an even more “dovish” performance. Likely the global central bank plan had been to combine the Fed’s second rate cut with what amounted to a simultaneous Japanese pledge for more “stimulus” in October. Both of those followed closely an ECB which got itself back in the QE business once more. But all that likely coordinated “accommodation” was spoiled once the fed funds rate poked...

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GDP Estimates Collapse After Dismal ISM Report

GDPNow and other GDP estimates took a dive today on weaker than expected manufacturing reports. The GDPNow forecast for third-quarter GDP fell to 1.8% today on weak economic reports. Gold and Treasuries Rally GDP Estimates Q3 GDP growth estimate changes on FridayMorgan Stanley ⬇️ from 2.1% to 1.5%Macro Economic Advisors ⬇️ from2.2% to 1.6%NY Fed ⬇️ from 2.24% to 2.04%Atlanta Fed ⬆️ from 1.9% to 2.1%— UPFINA (@UPFINAcom) October 1, 2019Oxford Estimate Real Final Sales The...

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Currency War: Rising Dollar & Trump’s Retaliation

The ECB cut rates further into negative territory and the BoJ is expected to do the same. How long before Trump reacts? Japan Poised to Escalate Currency War A Bank of Japan board member says risks risks are growing and the BOJ Ready to Ease Again if Price Momentum Lost. “My recent concern is that, amid significant downside risks concerning overseas economies, negative effects would be exerted on prices,” Takako Masai said in a speech to business leaders in Tsu, Mie Prefecture,...

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Negative Rates Are Destructive But Profitable

“Remember that Time is Money.” Benjamin Franklin, Advice to a Young Tradesman It’s unfortunate that such genius identifications as the above have long been forgotten by the economic community. First penned in 1748, Benjamin Franklin makes the connection between human effort—or rather the application of human effort towards productive work—and the effect/product, i.e. wealth. We measure this increase in prosperity, of course, in terms of money. Thus, “Time is Money” (or rather, time is...

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Since 2000 Wage Growth Has Barely Grown, If You Even Got That Much

Women are slowly catching up to men in median wages but growth has been pathetic across the board. BLS data on real wages shows women are slowly catching up to men. That’s the good news. The bad news is real wages for women have only risen at slightly over 1/2 of 1 percent per year for 19.5 years. Men performed even worse. Real wages for men have risen at a pathetic rate of about 1/4 of 1 percent per year in the same period. The featured images is from a set of Interactive BLS...

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QE Debate: Powell’s Comment On “Resuming Balance Sheet Growth”

Some interpreted Powell’s statement to mean more QE. There’s a strong clue Powell meant something else. OK, but …. What did Powell Mean? Reminder: it is normal for the Fed's balance sheet to grow gradually. This is what he means. Not resumption of QE, as some have assumed. https://t.co/vUC3peXwrz— (((Frances Coppola))) (@Frances_Coppola) September 18, 2019I confess, I thought Powell was talking about QE, but I did not see the exact quote. Powell said “organic growth”. I believe...

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