Credit Writedowns

As a member of the euro area, Italy has no monetary sovereignty. The only thing keeping its debt yields low is the implicit backstop of the ECB. But because of the political turmoil, this backstop is now in question. And Italy could default…

North Korea is sometimes (hyperbolically) referred to as a Chinese client state. And this seems to be the perception that Trump has developed as well.

I want to make the case for thinking about the next recession now. And I lot of this goes back to what I wrote last November about now being the most dangerous period in the business cycle. Here's the basic framing.

There are two ways to explain persistently high corporate profit margins. One interpretation is about inequity, and implicitly about corporatism masquerading as liberty. And the other is about network effects creating an age of winner take…

As the Fed raises rates, it will likely be surprised both by how fragile EMEs are and by the spillover impact Fed policy still has abroad

Policy divergence is the driver of market vulnerabilities. The longer the US stands alone in tightening policy, the greater the stress on the financial system.

Noah Smith notes that wages aren’t the only way Americans make money. Increasingly, income comes via nonwage compensation and government transfers.

As good as the headline unemployment rate appears to be, we should worry that wage growth for the majority of Americans remains weak. The Federal Reserve, acting on the headline rate, will likely make a significant policy error and raise…

It's early days. So I wouldn't call this a crisis. What I would say, however, is that the Fed's rate hike train is doubly negative for the emerging markets. We can see the effects in Argentina and Turkey in particular.

Job growth has now begun a slight re-acceleration. If this trend holds, the unemployment rate will drop into the mid 3% range and the Fed will move to a fourth rate hike. The mix of continued job growth, tightening monetary policy, and late…