September 15, 2016

It´s not, as the WSJ would have it that “Cooling Indicators Suggest Slower Recovery”, but that the slowing recovery is cooling indicators! In mid-2010, the Fed consciously capped the recovery that had begun four quarters earlier, in June 2009. For the past two years, since it began its on/off threat of rate hikes, the already slow recovery is slowing down further. No wonder retail spending, industrial production and other spending categories are deflating. It´s not the Fed that is data-dependent, but the data that appears to be Fed-dependent. And there´s no end in sight to the Fed´s misguided reasoning, in… Read More

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August surveys of manufacturing have been almost uniformly poor, showing negative growth. It was no surprise that consensus expectations for Industrial Production were low, but the figures came in even lower and the prior month was revised down. The negative YoY trend for the index was thus reinforced, down more than 1%. the subset of Manufacturing Production, that excludes energy production, was also expected to be weak and yet came in even weaker and with the prior month downgrade too. As a result, a sort of promising break to actual growth YoY became a negative YoY trend. Since 1919, a… Read More

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There are, in general, two strategies undertaken by professional macro forecasters. The first strategy is to try and get the true expected path correct or at least act like that’s what you’re trying to do. This is what the big outfits do and what the major banks’ economics groups do. Notice I say “try” because most economic forecasters have been dead wrong about long term interest rates for the better part of this decade, while we Market Monetarists have been right. It was no mistake that I also used the word “act” in the last paragraph. Sadly, macro forecasting has… Read More

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