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The threat of an overheated German economy

The threat of an overheated German economy






The Eurozone economy is doing really well. Some data points to 3% growth. The German economy is doing even better – with some data pointing to 5% annualized growth. But there’s a downside – overheating. And with the ECB at negative rates and engaged in 60 billion Euros of QE to boot, overheating in Germany is a reasonable fear. Some thoughts below

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More on why Trump’s woes aren’t driving markets

More on why Trump’s woes aren’t driving markets






This is a brief follow-up on the last post I wrote about how markets aren’t freaking out about the Trump scandals. I wrote that “this is only one day. What is happening with Trump – while negative – will not change the arc of the US economy and markets.” And we see that this is true today.






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Markets actually aren’t freaking out about Trump

Markets actually aren’t freaking out about Trump






We are seeing decent selling in today’s US equity markets, with the VIX up some 25%. And most people are pointing to the Trump scandals. But this is only one day. What is happening with Trump – while negative – will not change the arc of the US economy and markets.






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Why Macron’s work was made harder by German regional elections

Why Macron’s work was made harder by German regional elections






Germany held elections in Nordrhein-Westfalen (NRW) this past weekend. And the results, while encouraging for Angela Merkel’s CDU, point to difficulties that lie ahead for French President Emmanuel Macron’s reform agenda in Europe. This is negative for periphery bonds.






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Trump’s abuse of power and monetary offset

Trump’s abuse of power and monetary offset






Here in Washington, the city is abuzz over the crisis engulfing the Trump Administration. But politics are less important to markets than one might expect, despite markets being forward-looking. That’s because it’s often hard to judge what impact the politics will have on interest rates and profits. The negative impact of Trump on the US dollar is palpable, but I […]

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What Schäuble is really saying about Macron and Europe

What Schäuble is really saying about Macron and Europe






German Finance Minister Wolfgang Schäuble talked to German weekly Der Spiegel about the election of Emmanuel Macron as French President, and this interview is being widely quoted in the English-language press without benefit of a translation. Having read the article, I would say there is nothing extraordinary in his commentary. None of his positions have changed. Let me explain what he said below.






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Weekly initial claims down to 236,000 as Q2 heads to 3% growth






The labor market in the US is tighter today than it was at the same period last year. This, in conjunction with the last jobs report, gives cover to the Fed to hike rates in June.






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Why Comey’s dismissal is negative for the economy and markets

Why Comey’s dismissal is negative for the economy and markets






It is now clear that Donald Trump dismissed FBI Director James Comey in a fit of pique over the investigations into Trump’s ties to Russia. But this move has already backfired, with the Senate investigation issuing subpoenas to former Trump National Security advisor Michael Flynn. Rather than recede, the Russian investigations will dominate headlines for weeks and months to come. […]

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Competitiveness: two tales of systemic reform with Trump and Macron

Competitiveness: two tales of systemic reform with Trump and Macron






I just finished reading an illuminating article by Andrew Ross Sorkin on healthcare and it got me to thinking about a review of structural reforms by Dani Rodrik which encapsulates the problem with fixes to ‘competitiveness’. The message: target reforms like a laser or they won’t work.






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More Europe

More Europe






At the height of the European Sovereign Debt Crisis, German leader Angela Merkel was openly calling for ‘more Europe, not less’. With Emmanuel Macron elected to the Presidency of France on that platform, Merkel has perhaps her only chance to make good on that vision. First she needs to get re-elected though. But if she gets that far — and her party’s election win last night in Schleswig-Holstein suggests she will — she has to meet Macron with a reformer’s fervour or lose Europe to nationalism.






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Some thoughts on healthcare, inequality, and Baumol’s disease

Some thoughts on healthcare, inequality, and Baumol’s disease






Baumol was a giant in promoting entrepreneurship. And most importantly here, his theory on rising costs in labor intensive industries is something that the Nobel committee considered in 2003 and should have given him an award for.






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Jobs data: The US will hike in June amid high structural unemployment

Jobs data: The US will hike in June amid high structural unemployment






Remember the debates about structural unemployment back during the beginning of this recovery. The question was whether policymakers would write off a whole cadre of workers as ‘unemployable’ and formulate policy as if they weren’t important. After the April jobs report, I think we have our answer.






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