Tag Archives: economy

The lagged effect of inflation. “Just call me Ishmael,” Jay. . [embedded content] Tags: economy,Featured,Federal Reserve/Monetary Policy,newsletter

Since the summer of 2020, my expectation for the US economy has been that once all the COVID distortions are gone, it would revert to its previous trend growth of around 2%. And that seems to be exactly what is going on with the economy right now. There was a shift in consumption preference during COVID for goods over services with the goods consumption rising well above the pre-COVID trend: . Now, some of that, as we know, is due to inflation so if we correct for...

Gregory (Scotland Yard detective): “Is there any other point to which you would wish to draw my attention?” Sherlock Holmes: “To the curious incident of the dog in the night-time.” Gregory: “The dog did nothing in the night-time.” Sherlock Holmes: “That was the curious incident.” From Silver Blaze by Arthur Conan Doyle, 1892 It is hard to determine sometimes what causes markets to move as they do. Take last Friday’s stock market selloff. The widely cited “reason”...

New home sales were reported for July as down nearly 13% to 511K, a number that is just about the average since 2010 (543k). But that doesn’t tell the whole story obviously. New home sales have fallen sharply since December of last year, down 39%. The drop from the peak in August 2020 is even more dramatic, down nearly 51%. Obviously, the fall this year is related to rising mortgage rates but that can’t be the reason sales have been falling for nearly two years....

The Chicago Fed National Activity Index rose to 0.27 in July with all four categories of indicators rising. The 3 month average was unchanged at -0.09. That indicates growth is slightly below trend and is far from the recession threshold of -0.7. The index had been down for two consecutive months and both May and June were revised slightly lower. The data in August so far has been positive as well, particularly the production data with IP last week surprising to...

It all became very clear to me sitting out there today, that every decision I’ve ever made, in my entire life, has been wrong. My life is the complete opposite of everything I want it to be. Every instinct I have, in every aspect of life, be it something to wear, something to eat… It’s all been wrong. Every one. – George Constanza If every instinct you have is wrong, then the opposite would have to be right. – Jerry Seinfeld From the Seinfeld episode “The Opposite” I...

Investors crave certainty. They want to know that there are definitive signals for them to follow as they adjust their investments to fit the current market and economy. They want to know that A leads to B leads to C. Tea leaf readers are always in high demand on Wall Street and they continue to find employment despite their almost universally dismal track record. In this case, it is demand that drives supply rather than the other way around. The constant demand for...

The employment report released last Friday was better than expected but the response by bulls and bears alike was exactly as expected. Both found things in the report to support their preconceived notions about the state of the economy. I do think the bulls had the better case on this particular report but there have been plenty of others recently to support the ursine side of the aisle too. My take is that everything about the economy right now, and really since...

Perspective: per·​spec·​tive |  pər-ˈspek-tiv b: the capacity to view things in their true relations or relative importance Merriam-Webster Perspective is something that comes with age I think. Certainly, as I’ve gotten older, my perspective on things has changed considerably. As we age, we tend to see things from a longer-term view. Things that seemed so important at the time, years ago, turned out to be nothing more than bumps along the road of life. That is as...

Well, that was a mess. The Richmond Fed’s Manufacturing Survey was at first released before being taken back. Initially reported as a plunge in the headline number, it was quickly scrapped once the statisticians remembered they had just discontinued their average workweek component – but had kept a zero in its place when tallying the overall PMI. With it, the PMI was originally calculated to have gone from bad in May (-9) to horrible in June (-19). Refiguring the...