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The three things to look for in these Fed projections
The FOMC is scheduled to release a policy statement tomorrow, with a press conference to follow. A quarter percent increase in the Fed funds target is guaranteed. But future Fed policy will depend on three Fed projections: the dot plot,…
Hyman Minsky and asset price inflation versus consumer price inflation
Hyman Minsky's financial theory of investment is unique. He looks at an economy as having two inherently different price systems. There's one price system for goods and services. And there's another one for assets. The econometrics that…
Questions about the bond bear market and ‘Trump unchained’
In March, signs of inflation have subsided and bonds have rallied. Maybe the bond bear market Gross and Dalio foresee isn't actually going to happen. A lot of the future price action hinges on future monetary policy.
The US curve inversion has already begun – DiMartino Booth
Market data don't speak to full employment right now. Inflation expectations would be rising. They don't speak to the 4 or 5% GDP growth Larry Kudlow expects either. Instead we should be wary of potential stagnation, even recession. And a…
Trump is playing the ‘Taiwan Card’ against China now
Right before the inauguration, US President Trump tried to use Taiwan for negotiating leverage against China. This proved a non-starter. Trump is now unchained from moderating influences. So, the 'Taiwan Card' is back on the table.…
Geopolitical risks as Trump cleans house
The Fed will play a key role in 2018 if the US economy slows. But the real unknown is geopolitical, much of it driven by Donald Trump. As Trump's poll numbers have remained low, as the stock market has begun to falter and Republican…
The return of regional inequality: Europe from 1900 to today
A recent literature has explored growing personal wealth inequality in countries around the world. This column explores the widening wealth gap between regions and across states in Europe. Using data going back to 1900, it shows that…
More on renewed curve flattening and Fed overtightening
The US Treasury yield curve has resumed the flattening that caused bond markets worry last Fall. This is a negative signal for future growth. Curve flattening signals Fed tightening. With the primary risk overtightening. I expect a…
Post-market: JGBs, Treasuries and a global growth slowdown as Trump consolidates power
It seems like just a week ago, we were talking about synchronized global growth. Suddenly signs of deceleration are everywhere. And bond markets are feeling it. I don't see the economy falling out of bed though, barring an exogenous shock.…
Pre-market: Goldman on how the Fed creates the next recession
Right now, many economists are talking about US growth through 2019 and a 3% unemployment rate. Goldman Sachs chief economist Jan Hatzius is one of them. The fly in the ointment is the Fed and its accelerated rate hike timetable.