February 2019

Chronic and large US current-account trade deficits lead to vulnerable and bloated domestic asset values—no, that it is not the proposition of Trump Administration China-bashers, but rather the conclusion of the globalist International Monetary Fund. The short story: Big and sustained current-account trade deficits axiomatically produce large capital inflows to the US. That Niagara of inflowing capital seeks a home in stocks and bonds, and moreover, can leverage up to buy real estate. But the resulting lofty asset values are unstable, and risk a “Hyman Minsky moment.” That type of moment is economist-talk for when the investment-market decides Fat City… Read More

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NGDP Outlook Update – February 2019 A look at the Treasury Market

Let’s do a recap of the recent history of NGDP expectations. At the End of Q3 2018, the NGDP outlook was nearly fantastic. Throughout Q3, year-ahead expected NGDP, as interpreted by out market-driven forecast engine was holding around 5%. When Q4 began, there was a small dip in the year-ahead expectation, arising from the shift to a new four-quarter window in our calculation of YoY growth, not data.  The quarter started out fine, with expectations hitting 4.6% on November 7, 2018. Things went south from there; following a series bearish Fed actions and non-actions, in the face of flailing markets… Read More

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