Post Tagged with: "United States"

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Baumol’s cost disease, aging societies and inflation expectations






Quick hit here. I have been banging on about lowflation, repeatedly suggesting it is here to stay. The Fed, on the other hand begs to differ and is pre-emptively normalizing rates, as a result. No matter how you look at this, there’s a rub though: We all consume different products, so we each experience a different individual inflation rate. Even […]

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The wisdom of crowds and government bond markets

The wisdom of crowds and government bond markets






When you look at how markets are positioned, it’s clear that a lot of people see continued low growth for years to come – a veritable Japanification of the US economy. I hope this is one of those times that markets are wrong. But I am not willing to bet on the hope, just the opposite.






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The oil price cliff dive will end the prospect of double-barrelled tightening

The oil price cliff dive will end the prospect of double-barrelled tightening






A pause is being considered at the Fed, even by hawkish FOMC members. The oil price crash now gathering steam makes this pause more likely. Maybe Bullard’s infamous low dot on the Fed’s Summary of Economic Projections is the right way to look at Fed policy.






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How monetary policy entrenches secular stagnation






Recent statements by monetary authorities in Canada, the United States and the United Kingdom tells us rate hikes are possible in all three this year. This trio of English-speaking G7 nations is at a different phase of the monetary policy cycle than Europe or Japan. The implications are unclear though.






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The Fed will continue to tighten despite inflation below target

The Fed will continue to tighten despite inflation below target






New York Fed President William Dudley has reiterating Fed Chair Janet Yellen’s determination to push forward with interest rate hikes despite inflation below 2%. The Fed will continue to have this stance unless and until economic data weakens significantly.






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The Fed’s financial stability concerns, auto subprime edition

The Fed’s financial stability concerns, auto subprime edition






Below are some data points from recent credit statistics and analyses, showing trends in the auto credit sector.






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The Fed’s financial stability concerns before its June hike

The Fed’s financial stability concerns before its June hike






Hiking rates now after a monster commercial real estate cycle has already developed is akin to closing the stable doors after the horse has already bolted. But this may be a concern of the Fed. Let’s see what the Spring 2017 OCC Risk Assessment says when it comes out.






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Why commercial real estate will be central to the next credit bust

Why commercial real estate will be central to the next credit bust






On Sunday, macro strategist Lawrence McDonald made three tweets about corporate real estate I think merit highlighting. They show a corporate real estate market that has been white hot during this particular business cycle. And that means it is one of the credit sectors to watch for signs of distress






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Secular stagnation is a policy choice

Secular stagnation is a policy choice






In my most recent posts, I have been saying that bond markets are pricing in secular stagnation scenarios based on how shallow the yield curve is. But secular stagnation is a policy choice. And that is something I thought I should highlight in view of UK Prime Minister Theresa May’s change of heart in pursuing austerity. Some comments below






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What are credit markets signalling about the US economy?

What are credit markets signalling about the US economy?






The US economy has been very resilient during this post-crisis business cycle, as we are now into our ninth year of economic expansion. Soon we could hit a record for the length of an expansion. Yet, with that backdrop, 10-year Treasury yields were at 2.13% this morning – even as the Fed signals more hikes to come in 2017 as well as reverse QE. I think the bond market is signalling continued low growth and low inflation. Some thoughts below






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On the Fed’s pause due to dual-barrelled monetary tightening

On the Fed’s pause due to dual-barrelled monetary tightening






Fed Governor Jerome Powell recommended a June hike and 2017 balance sheet reductions, in one of the last public speeches by a Fed official before the June FOMC meeting. When the Fed follows Powell’s game plan, we will be in the unchartered waters of dual-barrelled tightening, with the attendant risks that entails. Some comments below






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All politics are local: understanding Trump’s threats and misunderstanding Merkel’s disappointment

All politics are local: understanding Trump’s threats and misunderstanding Merkel’s disappointment






What Angela Merkel was doing this past weekend when she spoke of the need for Europe to “take our fate into our own hands” was using an international issue for domestic purposes.






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