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Tag Archives: inflation

Don’t Make a Fetish Out of What may be a Minor Change in the Pace of ECB Bond Buying

Overview: Yesterday's retreat in US indices was part of and helped further this bout of profit-taking.  The MSCI Asia Pacific Index ended an eight-day advance yesterday and fell further today.  Japanese indices, which had set multiyear highs, fell for the first time in nine sessions.  Hong Kong led the regional slide with a 2.3% decline as China's crackdown on the gaming industry continued.  Some companies in this space were reportedly to enforce the limits on minors, remove "obscene and...

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The Eurodollar’s Nose

What an intriguingly odd month September 2017 turned out to be. To start with, Reflation #3 only seemed to be gaining strength. The full throat behind Inflation Hysteria #1 was still ahead, as was its related personage the BOND ROUT!!!! And yet, early in that late summer month a sudden eruption; actually several. On September 5, T-bills. A day later a big one, CNY. Gold. Repo fails. And on and on. While Reflation #3 would continue forward, and after October 2017 it seemed like the...

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Turning The LABOR SHORTAGE Up to 11

In Massachusetts, the Federal Reserve’s First District, restaurateurs have struggled mightily to find workers. As part of the central bank’s Beige Book, one contact of the Boston leadership said the industry was “facing the worst labor shortage he has seen in 35 years of experience.” In response to such a major threat, these firms become truly creative to try to entice employee prospects. According to the text of the Fed’s document, it’s not just restaurants, either, as this deficit has...

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What’s Real Behind Commodities

Inflation is sustained monetary debasement – money printing, if you prefer – that wrecks consumer prices. It is the other of the evil monetary diseases, the one which is far more visible therefore visceral to the consumers pounded by spiraling costs of bare living. Yet, it is the lesser evil by comparison to deflation which insidiously destroys the labor market from the inside out.You see inflation around you; anyone can only tell deflation by hopefully noticing and appreciating what must...

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The Week Ahead

Don't let the US holiday on Monday distract you.  The first full week of September is jam-packed.  The highlights include the ECB meeting and China's inflation.  The Reserve Bank of Australia and the Bank of Canada also meet.  The Bank of Russia hiked rates consistently since March and moved by 100 bp in July, and meets again on September 10. Its key rate stands at 6.5%, the same as the year-over-year CPI in July.  The rate stood at 4.25% as recently as February, with inflation at 5.7%.  It...

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Just In Time For Labor Day: It’s Not Payrolls Missing The Mark By Such A Wide Margin

It was a highly curious change in the shape of the labor force. Beginning October 2015 and lasting until March 2016, for six months Americans came flooding back into the labor market. Or, so they said. When the BLS’s various surveyors working on the Current Population Survey (known as the Household Survey) came calling for answers each month, all of a sudden, a whole lot more previously out of the workforce declared themselves back in.They didn’t all find jobs; hardly any of them would....

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China, Australia, and The European Way Into Reverse Repo

We are going to start here with Europe before heading to Australia and then getting to China – and then currency. Why the ECB? It is going through the same pangs of dissatisfaction as its cousin the Federal Reserve had last summer. Like the Fed in 2020, Europe’s central bank in 2021 has climbed to the end of its grand strategy review and following its own come to the same conclusion as that other.Symmetric inflation target requiring more nuanced forward guidance. If you aren’t distracted...

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Not Black Mouth To Bad Mouth The Global Causes of Transitory Inflation

Apparently, analysts were shocked when the Conference Board reported earlier today that its measure of consumer confidence, its own bread and butter, in the name, after all, dropped by a rather substantial eleven-plus points in August. And that was on top of a four-point downward revision to July. The new level of 113.8 compares to average expectations for ~124.0. Therefore, no small miss.The University of Michigan’s index of consumer thoughts and feelings had already plunged right off my...

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Two Major Surprises Today: China’s PMI on the Downside and Eurozone CPI on the Upside

Overview: The dollar has been sold against nearly all the currencies today.  Among the majors, the Antipodeans and  Swedish krona lead the move.  The euro rose briefly through $1.1830 in the European morning, its best level in a little more than three weeks.  The JP Morgan Emerging Market Currency Index is rising for the seventh time in eight sessions.  The risk-on mode to finish the month is evident in equities as well.  Following the new record highs in the US, the MSCI Asia Pacific Index...

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Little Follow-Through from Powell’s Goose

Overview: There has been some follow-through activity after Fed Chair Powell's pre-weekend Jackson Hole comments, which confirmed the likely tapering ahead of year-end while underscoring the distinction between taking one's foot off the accelerator gradually and stepping on the brake.  The record closes in US benchmarks helped lift Asia Pacific equities today. The MSCI Asia Pacific Index rose 3.3% last week, the most in six months, and extended those gains today with several markets,...

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