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Tag Archives: Jay Powell

Processing Powell’s Rout

The US is going it alone. The rest of the world isn’t so synchronized like it was, purportedly, in 2017. No matter, at least for Americans. Even Europe, last year’s poster boy for what this upswing was going to accomplish, has thoroughly disappointed. The United States is just going to have to leave everyone else behind with no regrets. The Eurozone, Japan and select emerging markets all seem to be struggling economically with low inflation levels, poor policy responses, and low demand....

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The Only People Who Don’t (Want To) See It

If everything was going to plan, non-standard monetary policy at the zero lower bound (QE) would have raised inflation expectations increasing the level of aggregate demand as businesses and consumers ramped up their activities in anticipation of higher costs. The more this “overheating” goes on, the more forceful it becomes. Eventually, by virtue of the Phillips Curve, aggregate demand is so strong for so long that any slack in the labor market is absorbed leaving businesses to energetically...

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Whose Tightening Is It Anyway?

I suppose it’s only fair. After all, they started it. Earlier in the year, Federal Reserve officials including Chairman Jay Powell suggested it was all Trump’s fault. The abrupt difficulties presented by the dollar were, they said, the result of tax cuts swelling the deficit and thereby threatening capital markets with a “deluge” of Treasury bills to digest. This past weekend, apparently, the shoe was on the other foot. The President was, it seems, under the impression, according to the Wall...

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Why Hysteria Died, In One Day

Why did inflation hysteria die? The answer is surprisingly simple. Proponents way oversold the thing. They kept claiming that the labor market, via a truly booming economy, would force the Fed’s hand. Wage growth was about to explode, therefore monetary policy couldn’t afford to be complacent. Aggressiveness was about to become Jay Powell’s go-to position. This year is now more than half over and…? With the FOMC once again refraining from action, you might begin to wonder what all the fuss...

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QOTD: Fed Chair Jay Powell

I do not dismiss the prospective risks emanating from global policy normalization. Some investors and institutions may not be well positioned for a rise in interest rates, even one that markets broadly anticipate. And, of course, future economic conditions may surprise us, as they often do. – Jay Powell, May 8, 2018 – Zurich Advertisements

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Does It Always Have To Begin In Farce?

Imagine you live in a terrific neighborhood backed right up to a large wilderness. This heavily forested area has inside of it grown up a tremendous amount of underbrush. The local government, concerned for your property as well as those of your neighbors, starts making noises about taking care of the land before it dries out and a wildfire starts and gets out of control. Intending on undertaking a controlled burn at some point, residents become more and more nervous. Their unease is not...

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Is It Ever Different This Time?

As my colleague Joe Calhoun likes to point out, nothing is new, everything has happened before. We like to think that’s not the case, as the saying goes every generation thinks it has invented sex. What changes is the form, the format largely remains the same. Human beings in 2018 are the same as they were in 1918. Quite recently, the stock market suffered a bout of liquidation. Whether or not that has concluded isn’t yet determined. The reasons for it, at least those given in the mainstream,...

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QOTD: Liqudity

“..liquidity is OK. But it may be more fragile, and more prone to disappearing in stress situations…There hasn’t been a liquidity-related incident that has had a significant effect on the real economy. That doesn’t mean it won’t happen.” – Jay Powell, Fed Chair designate div{float:left;margin-right:10px;} div.wpmrec2x div.u > div:nth-child(3n){margin-right:0px;} ]]> Advertisements

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Economy Turns Down: Commodity And Producer Prices Like Labor

It wasn’t just you, me, and common sense which were puzzled by the labor shortage of 2018. In his first few months on the job, Federal Reserve Chairman Jay Powell would reference the unemployment rate quite often in setting his view of the economy’s trajectory. As it fell lower and lower, it spiked his expectations for inflationary pressures. The level to which it was falling, though, seemed consistent with a downright shortage of workers. This was backed up by anecdotes coming in throughout...

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