by Many are still celebrating the Easter holiday today, but not Tom Keene and Lisa Abramowicz and the Bloomberg team. They hosted me on Bloomberg TV today. As is often the case, the discussion was broad, covering the pressing economic and financial issues. In the first clip, which runs about 2.5 minutes, I sketch out the argument for the US economy being in a late-stage expansion. I cite the 12-month moving average of non-farm payrolls (peaked in 2015) and auto sales (peaked in 2016), and the rising delinquency rate on credit card debt. I suggest that the fiscal stimulus in the pipeline will extend the US recovery into 2019, but I expect the business cycle to turn down in late 2019 or early 2020. The fiscal stimulus
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| Many are still celebrating the Easter holiday today, but not Tom Keene and Lisa Abramowicz and the Bloomberg team. They hosted me on Bloomberg TV today. As is often the case, the discussion was broad, covering the pressing economic and financial issues.
In the first clip, which runs about 2.5 minutes, I sketch out the argument for the US economy being in a late-stage expansion. I cite the 12-month moving average of non-farm payrolls (peaked in 2015) and auto sales (peaked in 2016), and the rising delinquency rate on credit card debt. I suggest that the fiscal stimulus in the pipeline will extend the US recovery into 2019, but I expect the business cycle to turn down in late 2019 or early 2020. The fiscal stimulus also encourages the Fed to look past near-term softness. Even though the yield curve (2/10 year) is not inverted, the continued flattening is also what one would expect as a late cycle tell. |
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| The second clip, which lasts about 1 3/4 minutes, discusses the foreign exchange market proper. It is difficult to talk about the dollar in general now as there have been strong divergences. The Australian and Canadian dollar, for example, made new lows for the year in the second half of March, while the yen traded at its best level since the 2016 US election. On the other hand, the euro has been rangebound since mid-January.
My 2009 book, Making Sense of the Dollar, anticipated a sustained dollar rally. It worked ok until last year. Given the policy mix and the widening interest rate differential, I have been reluctant to abandon the view. That said, a move above $1.26-$1.27 in the euro would be significant. |
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