August 2017

PCE Inflation Report: The Fed ‘tricked’ again

Instead of climbing towards 2%, as the Fed is constantly “forecasting”, core PCE inflation has ticked down to 1.4% YoY while headline PCE inflation stayed pat (mostly because oil prices ticked up YoY). Being a monetary phenomenon, inflation has to be ‘motivated’ by monetary policy. Unfortunately, that´s something few seem to understand. Certainly the Fed

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GDP Report: Upward revision, but the ‘state of play’ hasn´t changed

When you look at annualized data, the GDP revision was ‘robust’: to 3% from 2.6%. On a year-on-year basis, however, it was ‘paltry’: to 2.2% from 2.1%, in line with what has been observed for the past 7 years. These marginal changes are far away from making a meaningful difference in the ‘state of play’,

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Central Banks hide their incompetence

Heard at Jackson Hole: The cyclical recovery was gathering both pace and geographical breadth, thanks in part to the stimulus efforts of central bankers, the European Central Bank president said, adding that even if inflation remained low, the euro area economy was “gaining ground”. Maurice Obstfeld, chief economist of the International Monetary Fund, said in
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Maybe it is all just a blip and it will settle back down to normal. Certainly, the markets are not betting on a surge in nominal growth when you look at FX, bond and equity markets. In fact, the surging EUR indicates money is tightening. Draghi tried to talk down the currency a few weeks
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Yellen’s future at the Fed

The media conclusion, following remarks Fed chair Janet Yellen gave at the yearly Jackson Hole financial elite meet up, was that she does not expect re-nomination. Yellen’s speech defended banking regulations put in place following the Great Recession, gainsaying the current administration which seeks to relax the costly stress testing and capital evaluation large US

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Durable Goods Orders: “Aircraft Blackout” (i.e. “Negative Noise”)

Durable Goods Orders: “Aircraft Blackout” (i.e. “Negative Noise”) What makes Durable Goods Orders a “high profile” indicator is that it can foreshadow significant changes in economic activity sooner than other statistics. That´s because it is about production that will take place in the months ahead. It is important to keep in mind, however, durable goods orders

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Under the Hood – NGDP Sub model forecasts

Our NGDP forecast, more precisely, our estimate of the markets NGDP forecast, is not the result of a single model. As is more and more common, we keep a ‘stable’ of top models, and average the forecasts from them. The idea is that, once we narrow the basket down to only models that performed well

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Only half minded

In Draghi Urges Open-Minded Central Banking as Economy Changes we read: Mario Draghi said central banks must be open-minded on policy innovations as they prepare for future economic developments — even if that concept is not clear to everyone. In a speech that avoided any specific signals on the European Central Bank’s current deliberations, the institution’s
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August 22 NGDP Update: Forecast lifts higher

August 22 NGDP Update: Forecast lifts higher The NGDP forecast has hiked from under 3.8%, up to 3.9% in dramatic fashion through late July. Well maybe not so dramatic, and the change is not so big, it is at least a consistent movement. What’s more, the forecast has mostly held at this level for the

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