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Finance, Economics, Markets and Technology
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14 сентября, 16:03

Hurricane Irma, jobless claims and economic growth

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Irma, the devastating hurricane that hit Florida with its full force, was not as destructive as it could have been. But the impact on the economy, beginning with unemployment, has already been felt. As the Hurricane made its way toward the US mainland, damage estimates ratcheted up. But the ‘Bermuda High’ dampened the impact. Here’s how Bloomberg describes it: The […] Related posts: Jobless claims are at their lowest level in 44 years Tomorrow’s jobs number would have to terrible to prevent a Fed hike Jobless claims up somewhat to 258,000 in week to 18 March 2017

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08 сентября, 16:04

Policy divergence revisited

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Three years ago, the Fed had begun tightening and all other central banks were still on easy street. Now, we are at an inflection point where other central banks are likely to tighten more than the Fed. That’s negative for the US dollar and positive for longer duration US Treasuries. Related posts: The oil price cliff dive will end the prospect of double-barrelled tightening The Trump Rally is over What will policy normalization mean for credit markets (wonkish)

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05 сентября, 16:51

Trump’s working class sellout, tactical nuclear weapons, government shutdown, tax reform and immigration

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Since Donald Trump became president, his core economic agenda has been sidetracked repeatedly by so-called cultural issues. However, now the administration is stepping up its tax reform effort. Even so, other issues threaten to derail this agenda item too. Moreover, it's not even clear we're talking about tax reform here. Thoughts below Related posts: The potential for military confrontation due to Trump’s foreign policy On the coming failure of Trump’s tax plan Donald Trump the risk taker, confirmation bias edition

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30 августа, 16:40

Quick thoughts on the failure of Fed-engineered unemployment

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I am a sceptic of thinking about low unemployment as a bad thing – which is what people who think about policy in terms of the Phillips curve do. Now a study by the Philly Fed is saying that the Phillips Curve is a poor forecasting tool. Will this have any meaningful impact on policy? Some thoughts below Related posts: The Fed will continue to tighten despite inflation below target Jobless claims and ADP data positive ahead of jobs report Jobs data: The US will hike in June amid high structural unemployment

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30 августа, 15:41

On the coming failure of Trump’s tax plan

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Recently I wrote that Donald Trump has failed to deliver any signs that tangible economic benefits are coming down the pike for his working class and blue collar base of support. It seems Trump has ‘sold out’ and is turning to corporate tax cuts at the expense of middle class tax relief. Some comments below Related posts: Is Trump just a conventional politician who uses over-the-top bluster? Trump is just a conventional politician who uses over-the-top bluster, NAFTA edition Why Comey’s dismissal is negative for the economy and markets

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23 августа, 15:37

The failure of the Trump presidency

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We are only seven months into Donald Trump’s presidency. And I think we can call it a failure. I’ll have a lot more to say on that momentarily. But I want to flag this as not being a dealbreaker for the US or global economy because people put too much emphasis on the political economy in Washington. But Donald Trump is failing. Related posts: Jobless claims are at their lowest level in 44 years Tomorrow’s jobs number would have to terrible to prevent a Fed hike Trump is just a conventional politician who uses over-the-top bluster, NAFTA edition

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21 августа, 18:35

The limits of monetary policy in today’s fiat currency world

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As the Federal Reserve meets at Jackson Hole this week, I thought now would be a good time to talk about the limits of monetary policy - and why monetary policy alone cannot restore robust growth. And as I write this I want to make clear the goal of policy and the assumptions I am making. Related posts: What are credit markets signalling about the US economy? Understanding what a neutral macro-economic policy looks like The dollar bull market will eventually break something

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29 июня, 16:56

How the Fed handles financial stability is key to avoiding a crisis

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I’ve got two objectives here. One is to talk about the Fed and the other is to discuss the evolution of the US economy. Most of what I want to say is upbeat, both on the Fed and the economy. And I’ll lead with that. I do have some doubts about the long-term though – and I want to give […] Related posts: Some incomplete comments on the current US economic environment Trump is just a conventional politician who uses over-the-top bluster, NAFTA edition What are credit markets signalling about the US economy?

28 июня, 16:37

US economic growth still in the 2ish% channel

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In the aftermath of the shale oil bust that sent the US economy to stall speed in 2015, growth has rebounded, but only to a sort of 2%ish level. Continued low inflation insures further low nominal GDP growth aka secular stagnation. But so far, this stagnation has not made the economy more susceptible to recession. Some brief thoughts below Here’s […] Related posts: The Fed’s financial stability concerns, auto subprime edition Is the new rout in oil getting worrying? The oil price cliff dive will end the prospect of double-barrelled tightening

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23 июня, 16:44

Baumol’s cost disease, aging societies and inflation expectations

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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 […] Related posts: How monetary policy entrenches secular stagnation The dollar bull market will eventually break something The Fed will continue to tighten despite inflation below target

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22 июня, 16:17

The wisdom of crowds and government bond markets

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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. Related posts: What are credit markets signalling about the US economy? Why the March 2017 jobs report won’t change the Fed’s strategy Trump is just a conventional politician who uses over-the-top bluster, NAFTA edition

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21 июня, 23:35

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

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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. Related posts: What will policy normalization mean for credit markets (wonkish) The Fed will continue to tighten despite inflation below target The Fed will continue to raises rates, even amid uneven economic data