Jim Bullard, the President of the St. Louis Federal Reserve Bank, and one of the Fed members calling for rate hikes as recently as March (and just last month said he was considering one in June) has moved from hawk to uber-dove. Mr. Bullard now thinks the Fed should stay on hold for two and a half years. It would seem that a single weak employment report was the catalyst to drive Mr. Bullard to change his outlook and model for the U.S. economy. He now says the economy is in a new regime. It is more than a little concerning that the guys in charge of the economy are basing their decisions … [Read more...]
An Investment Risk That Can do Real Damage to Your Portfolio
We write a lot about monetary policy on this site, not because we enjoy the parlor game of trying to predict what the world’s central bankers are going to do next, but because over recent years, monetary policy has become the king-maker in financial markets. Those ignoring the actions, reactions, and mostly overreactions of the global central banking cabal may be unwittingly taking risks that have emerged as a result of the unprecedented scale of central bank intervention. First it was zero rates, then it was quantitative easing, then it was zero rates for longer. When these unconventional … [Read more...]
International Orgs Paint Cautious Picture of Economic Future
The OECD and the World Bank have both recently released forecasts of future GDP trajectory. The OECD's Composite Leading Indicators (CLIs) index fell in April, as it has done since January 2015. The index is built to lead the business cycle by about six months, and to project a slowdown or even a recession with a declining trend line. Despite the current negative trend worldwide, the index did highlight some spots of optimism, with stabilization in the U.S. and China, as well as for Russia and Brazil. While the OECD is predicting stabilization, the World Bank is projecting a more … [Read more...]
Introducing the Risk Analysis & Grouping Estimator or RAGE Gauge
Wouldn’t it be incredibly helpful to you and your family if you could swipe your iPhone and instantly gauge the pulse of the nation? Risks to the economy? And do it on multiple levels? At your fingertips would be an intelligent way to take the temperature, if you will, of the country. I wanted such a tool and I thought you would too. And I wanted it to be about stuff I’m interested in and not some irrelevant government statistic. Allow me to introduce to you the Risk Analysis & Grouping Estimator or RAGE Gauge. Stay tuned over the coming weeks to learn how it’s constructed. … [Read more...]
Who Says There’s no Inflation?
Over the weekend my kid’s asked for some money for ice cream. I gave them $20 and didn’t get much change. Who says there’s no inflation? … [Read more...]
Learning from the Stock Market Crash of 1929
Here you get a glimpse into what really caused the stock market crash of 1929 from the Cato Institute’s Alan Reynolds courtesy of his 1979 article in National Review. [gview file="https://www.richardcyoung.com/wp-content/uploads/2016/05/reynolds_speech_19791109.pdf" width="640px" save="1"] … [Read more...]
Fed Economist: Negative Rates a Tax
Chris Waller, an economist and EVP and Director of Research at the St. Louis Fed, wrote on Monday that negative interest rates are a tax in sheep's clothing. Waller says: Many foreign central banks—such as the European Central Bank, the Bank of Japan and the Swiss National Bank—have implemented negative interest rates on bank reserves as a policy tool to stimulate demand for goods and services. If a bank holds a dollar of reserves, the central bank may take, say, half a cent. The hope is that a negative interest rate will induce firms to lend out the reserves by charging a lower interest … [Read more...]
Rogers: U.S. Recession Within a Year
Billionaire investor Sam Zell is predicting global economic turmoil will push the U.S. into recession. Janet Morissey writes at The Wall Street Journal: Billionaire investor Sam Zell, who correctly called the top of the last commercial real-estate cycle, is predicting global problems will likely push the U.S. into a recession in the next year. While the U.S. is humming along fine at the moment, Mr. Zell warned that it isn’t immune to problems in the world economy. Those problems include low oil prices, falling import demand from emerging economies, volatile financial markets, deflation, … [Read more...]
Follow the Moving Van
Follow the money or the moving van to see which states are open for business and which one’s are not. From the United Van Lines "United National Movers Study": United has tracked migration patterns annually on a state-by-state basis since 1977. For 2015, the study is based on household moves handled by United within the 48 contiguous states and Washington, D.C. United classifies states as “high inbound” if 55 percent or more of the moves are going into a state, “high outbound” if 55 percent or more moves were coming out of a state or “balanced” if the difference between inbound and … [Read more...]
This Could Push the Economy over the Edge
As the Wall Street Journal reports today, the Obama administration is in a mad dash to rush out the regulatory wish list of the progressive left before leaving office. Everything from the electric industry to finance, healthcare, food, and even the labor market are in the Obama administration’s cross hairs. You might think that after almost 8 years of sub-par economic growth, starting from one of the most depressed bases in decades, that it would sink in that vast regulatory overreach creates uncertainty for business and hinders growth. You would of course be wrong. The small-business sector … [Read more...]
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