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Finance, Economics, Markets and Technology
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18 июля, 16:59

Understanding what a neutral macro-economic policy looks like

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This is going to be a quick follow-on to the last post on monetary policy as the only game in town. I feel like the obvious question that post doesn’t answer is this one: what other policy tools we should use? And I want to tee up that question with this post. Related posts: Secular stagnation is a policy choice Monetary policy is at the end of the line Underconsumption and the end of excess demand

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18 июля, 16:20

Some thoughts on full employment and this asset-based economic recovery

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I see that Dartmouth economics professor Danny Blanchflower is talking about slack in the US labour market because he believes the Fed is premature in assessing its full employment mandate as fulfilled. I have a few thoughts on this issue I want to flesh out below and the crux of my narrative revolves around the over-dependence on monetary policy as a policy lever. Related posts: The yield curve is still flatter than at anytime since the last recession Jobs data: The US will hike in June amid high structural unemployment What are credit markets signalling about the US economy?

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13 июля, 15:38

An anecdote on the German housing bubble

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I don't know if there is a German housing bubble or even whether there will be one. I do know that we hear a lot about it in the press - the result of zero, even negative, interest rates. So let me give you a little anecdote from my trip to Germany last week. Related posts: The threat of an overheated German economy Germany is the biggest loser in 2017 Secular stagnation is a policy choice

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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? Re-calibrating our thinking about Brexit after MPC rate cut Why the March 2017 jobs report won’t change the Fed’s strategy

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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 Trump is just a conventional politician who uses over-the-top bluster, NAFTA edition

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21 июня, 16:43

How monetary policy entrenches secular stagnation

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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. Related posts: The dollar bull market will eventually break something Secular stagnation is a policy choice What are credit markets signalling about the US economy?

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20 июня, 16:35

Abenomics and Japanese growth

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Only during the Great Recession did nominal GDP break out of a tight range – and then, it did so to the downside. We are nowhere near the top of the range now, nor should we expect to be anytime soon. Related posts: Upbeat about the near-term, dubious on the longer-term Jobless claims are at their lowest level in 44 years Tomorrow’s jobs number would have to terrible to prevent a Fed hike

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20 июня, 15:38

How Brexit makes Britain poorer, forcing Carney to stay his hand

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The risk in the UK is an inflationary recession. For now, Mark Carney is resisting a rate hike. But how long will the Bank of England hold out? And how long can British consumers keep spending if real wages are falling? Two things would ease this pressure. One is some sort of fiscal support for real wages. The second is the fall in oil prices. As in the US, I see oil prices as key. Related posts: Why Canada is the country to watch on Trump’s trade policy Brexit is more important politically than it is economically Some brief thoughts on Brexit negotiations and the Norway model

20 июня, 14:50

Is the new rout in oil getting worrying?

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Earlier this morning, the New York Mercantile Exchange was quoting delivery for light sweet crude in July at $43.30. That’s a far cry from the $55 average that analysts had expected for 2017 as recently as last month. And all indications are that this price deflation is not transitory, but lasting. The selloff in oil brings year-to-date losses to some […] Related posts: How Brexit makes Britain poorer, forcing Carney to stay his hand Upbeat macro thoughts as Fed’s Jackson Hole Symposium begins On the Fed’s pause due to dual-barrelled monetary tightening