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Home / Tag Archives: Federal Reserve/Monetary Policy

Tag Archives: Federal Reserve/Monetary Policy

More Slumping Durables In August—–The New Abnormal

Durable goods continue to suggest a weak economy that only seems to remain in that state. Year-over-year, unadjusted estimates for new orders rose slightly for the first time since May, while seasonally adjusted total orders (including the transportation sector) were fractionally lower at $226.9 billion. That amount was 2% less than January 2016 and 4.3% below August 2014. Once again we find that the seriousness of the slump is not defined by its depth but its length, especially since there...

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Good Job, Mario! NIRP Slams Commerzbank And 9,000 Jobs

On August 31, 2008, Germany’s Commerzbank announced that it was purchasing ailing rival Dresdner Bank from Allianz SE. As usual, however, the deal wasn’t described in those terms as nothing ever is so honest in public. Then-Allianz CEO Michael Diekmann said at the time of the announcement: As a strong bank, the new company can safeguard jobs in the long term. With a stake of nearly 30 percent Allianz will be the largest shareholder of the new bank and will gain access to a powerful...

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It’s Not Really About Deutsche Bank

It is never a good thing when official sources either named or unnamed are quoted in the media as denying bailout discussions. For any bank such rumors and denials are harmful because, obviously, they are a reflection of common perception. Furthermore, most people know all-too-well the true nature of any denials, thus reinforcing only that much more the troubling perceptions in the first place. For Deutsche Bank to be the institution in question is altogether different. When Germany’s...

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Monetary Insanity: When It Doesn’t Work——Just Promise To Keep Doing It Until It Does

On July 14, 2006, the Bank of Japan raised its benchmark overnight rate off zero for the first time since introducing the world to ZIRP in 1999. In doing so, the BoJ noted that the Japanese economy in its view continued to “expand moderately” and that risks inside the economy were “balanced.” The central bank also sought to reassure, further commenting that despite one 25 bps rate hike “an accommodative monetary environment ensuing from very low interest rates will probably be maintained for...

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Memo To Kuroda: It Doesn’t Work!

What good is a target or even an emphatic commitment to it if you have already proven you can’t achieve it? So far the only “market” that really counts isn’t buying the new promises, either. We’ll see if that is just a knee-jerk reaction or if it re-ignites the contrary “dollar” trend that had so plagued Abenomics going back to last summer. As of Bank of Japan’s end of period balance for July, the combination of QQE and whatever odds and ends of minor “extraordinary” policies implemented...

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China’s Red Ponzi Was Built On The Biggest Dollar Short Ever

As if we needed more evidence, the Chinese liquidity system is stuck. As much as authorities in China might complain about the global credit-based reserve currency system, as PBOC Governor Zhou Xiaochuan put it in March 2009, and quietly seek out its replacement, they not only allowed it to happen they quite eagerly participated in it so long as it appeared to fuel their economic “miracle.” The monetary system in China is not Chinese; it is at most translated into RMB as its basis is derived...

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More Data For The ‘Data Dependent’ Fed To Ignore

The University of Michigan released its September update for their surveys of consumers. The overall index of consumer “sentiment” was unchanged from August at 89.8, and up just 3% from last September. This “confidence” index peaked in January 2015 at 98.1 and has been sideways to lower ever since. Most of the internals were practically unchanged throughout, leading Chief Economist Richard Curtin to note: …modest gains in the outlook for the national economy have been offset by small...

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When The ‘Risk-Free’ Rate Is Risk…

Treasury bill rates have been trading notably higher of late, with the 3-month bill equivalent yield as much as 37 bps this week. Though it was the highest rate since November 2008, a true reading of bill history shows that it is not a matter of Fedearl Reserve policy “normalization.” Trading in bills, especially the 3-month, makes indications of risk somewhat more obscured. For example, though “dollar” liquidity was clearly problematic and getting worse from mid-July 2015 all the way...

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More Bad Economic News From The Oil Patch

At the end of August, the US Energy Information Administration reported that it had been overstating domestic demand for oil and energy products to a considerable degree. Using imprecise and lagging data, the calculations for the amount of product being exported overseas was understated by an average of 16%. That meant more output was being used elsewhere, thus less product being used here. While that is a positive for US producers being able to ship wherever they can, it was a more savage...

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The JOLTS Phantom: Hires or Job Openings?

In all honesty, I could start almost any piece I write with the phrase “economists are stumped.” It has become something of a baseline where there is some element or condition of the global economy that doesn’t make sense to them. The latest update in JOLTS for July continues to be faithful to the seeming contradiction. By view of the Job Openings portion of the report, the labor market is beyond robust, hitting a new record high and perhaps suggesting the economy is not damaged by the...

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