Thursday , February 27 2020
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Tag Archives: PCE

Will The Corona Virus Trigger A Recession?

As if waking up to an economic nightmare, investors see headlines like these and many others flashing across their Bloomberg terminals: Facebook says Oculus headphone production will be delayed due to virusApple extends country wide store closing for another weekFoxconn delays iPhone productionQualcomm cuts production forecast due to virus uncertaintyStarbucks announces China store closures through Lunar New Year, uncertain when they may reopenUS Steel flashes a warning of a cut in...

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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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Can Six Myths Keep The Market Going?

Piper Jaffray forecasts by year end 2020, the S&P 500 (SPX) will hit 3600, a 12.8 % increase. Of eighteen analysts interviewed by Marketwatch only three forecasters expect a decline for the SPX. Will the SPX reach 3600?  The SPX has soared over 400 % from a low of 666 in 2009 to over 3200 at the close of 2019. Mapping the SPX ten year history onto a psychology market cycle map of growth and decline phases poses interesting questions. As the market has zoomed over 400% upwards over ten...

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Is Inflation Really Under Control

Recently, analysts have been discussing the pros and cons of using negative interest rates to keep the U.S. economy growing.  Despite this, Fed Chairman Jerome Powell has said that he does not anticipate the Federal Reserve will implement a policy of negative interest rates as it may be detrimental to the economy.  One argument against negative interest rates is that they would squeeze bank margins and create more financial uncertainty. However, upon examining the actual rate of inflation we...

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The ISM Isn’t An Isolated Case

They absolutely loved the China PMI numbers, after having taken no note of Japan’s IP, dismissed Markit’s slightly higher revisions, and then totally hated the ISM’s Manufacturing PMI. That last one was supposed to join the others in moving substantially upward, contributing to widespread hopes all recession fears have been extinguished even this late into 2019. Instead, the Institute of Supply Management index continues to suffer. This one hurts, too, because it was this outfit who really...

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Three (Rate Cuts) And GDP, Where (How) Does It End?

The Federal Reserve has indicated that it will now pause – for a second time, supposedly. Remember the first: after raising its benchmark rates apparatus in December while still talking about an inflationary growth acceleration requiring even more hikes throughout 2019, in a matter of weeks that was transformed into a temporary suspension of them. Expecting the easy disappearance of “transitory” factors, that Fed pause was to be followed by the second half rebound and eventual if careful...

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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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GDP And Revisions Highlight The Vulnerabilities

It usually takes them a little while, a couple of benchmark adjustments to better conform to the true shape. Today’s GDP report included the latest revisions to the underlying data. Overall, not much changed. The changes are applied to Q1 2014 and forward, upping Real GDP growth slightly in 2015, adding a little bit more to the tail end of Reflation #3 in 2017, and them taking some away from what’s recorded so far under Euro$ #4. Most noticeably, that last 4% quarter (Q2 2018) is now gone and...

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Federal Reserve Headlines – Fact or Fiction?

“When it becomes serious, you have to lie.” – Jean-Claude Juncker, former President of the Eurogroup of Eurozone finance ministers On July 16, 2019, Chicago Federal Reserve President Charles Evans made a series of comments that were blasted across the financial news wires. In the headlines taken from his speech on the 16th and other statements over the past few weeks, Mr. Evans argues for the need to cut interest rates at the July 31st meeting and future meetings. In this article, we look...

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More and More The Economic Inflection

You do wonder sometimes whether the person responsible for writing these things ever cringes while they do so. Are they ever shocked by a sudden bout of conscience? Then again, most of it is bland boilerplate language and when it’s not the difference is hidden under a maze of intentionally induced complexity or misdirection. The statement the FOMC released after its April/May policy meeting started out with the following: Information received since the Federal Open Market Committee met in...

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