August 11, 2018

NGDP Forecast Model Refresh – Taking the Forecast to “11”

We’ve recently overhauled our forecasting system. It was a good time to do this, as the recent GDP revisions could have altered the statistical relationships between NGDP and our market-derived factors. Updating the forecast system The starting point for our forecasting approach is to assume that Market Monetarism is true enough to be useful. We take it as given that a weak form Efficient Market’s hypothesis is in play, and that an important determinant of many traded financial market prices is the expected path of US nominal GDP. It is easy enough to point out that market prices assume certain… Read More

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Not a quiet Summer. The USD may have begun a surge. The DXY index seems to have broken out decisively to the upside above 96.0. The great post-Trump devaluation looks to be going into reverse. That devaluation was very welcome and brought to an end the late Obama-era economic stagnation. Trump may have been celebrating the strength of the USD when taunting the President of Turkey in his tweet announcing higher steel and aluminium tariffs, but not too long ago he was arguing for USD weakness. So, is the USD rising due to USD strength or RoW currency weakness? Obviously… Read More

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