August 3, 2018

The employment report: almost perfectly anticipated

All elements of the report came exactly as anticipated, wage growth, hours worked, labor force participation and the unemployment rate. The only surprise was the 56K below expectation payroll. However, that was more than “compensated” by the upward revisions for the previous two months. Once again, many generally referred to the report as “solid” or “strong”. I have previously argued against that view. Here, I want to concentrate “fire power” on some other misconceptions regarding the labor market. Recently, Chairman Powell said: “Everywhere we go we hear about labor shortages. But where’s the wage reaction? “ “So it’s a bit… Read More

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UK Monetary Policy: walking to stand still (eh? what?)

In Governor Carney’s prepared opening remarks to the press conference after the Bank of England’s Monetary Policy Committee unanimously agreed to raise its Bank Rate from 0.50% to 0.75% he made a couple of statements. There was the obvious and expected one: “With domestically generated inflation building and the prospect of excess demand emerging, a modest tightening of monetary policy is now appropriate to return inflation to the 2% target and keep it there.” Then the curious one: “Policy needs to walk – not run – to stand still.” Classic Carney. He is such a sharp cookie. He knew that the unanimity on… Read More

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As reported here, recently the IMF posited a “Minsky Moment” is pending in the US, due to current-account trade deficits. The foreign-capital inflows are bloating US asset values into a towering house of cards which could soon tumble on the next windy day. In this regard, the IMF links arms with the tenacious tight-money crowd, which has a default position that loose money has bloated US asset values into a skyscraper anchored in quicksand. After the Pending Financial Debacle Having hunkered down in my hardened financial bunker, I read with interest a N. Gregory Mankiw New York Times op-ed regarding… Read More

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