American Manufacturing Shrinks for the Fourth Straight Month ISM Survey Points to Worse Environment for Manufacturing than 2012 Exports Perform Worst in ISM Report Source: January 2016 Manufacturing ISM Report on Business … [Read more...]
Expect an Easy Money Message from the Fed
Just last month, the Fed hiked interest rates for the first time in almost a decade and told the public that it would gradually raise rates—four hikes were supposedly in the cards for 2016. Today, the Fed meets again and many are hoping Yellen & Co., will deliver a dovish message. Some are even agitating for more bond buying. Could the Fed really change its mind on the outlook for the economy after just six weeks? You betcha. I give you exhibit A and exhibit B below. The Fed claims that its monetary policy is data dependent, but by data they really mean the level of stock prices, … [Read more...]
Recession Here
The latest industrial production numbers were released this morning and they came in below estimates with the prior month revised down. The year-to-year rate of change in industrial production is now -1.75%. In the post WWII period, industrial production has never contracted by 1.75% or more without that contraction being associated with a recession. One data point does not a recession forecast make. And this time could of course be different as the industrial sector is a much smaller part of the economy than it was decades ago, but investors should have their antennae up sensing for signs of … [Read more...]
Genius behind The Big Short Says Economy is Toxic
Michael Burry, played by Christian Bale in The Big Short, was ahead of the market on predicting the financial crisis beginning in 2007. Today Burry is sounding an alarm once again as he tells New York Magazine of the market, "We're right back at it." Where do we stand now, economically? Well, we are right back at it: trying to stimulate growth through easy money. It hasn’t worked, but it’s the only tool the Fed’s got. Meanwhile, the Fed’s policies widen the wealth gap, which feeds political extremism, forcing gridlock in Washington. It seems the world is headed toward negative real interest … [Read more...]
The Monday Melee: Headwinds for Manufacturing
Manufacturing Corporation Sales Down 3 of Last 4 Months Steelmakers Hurting USAToday reports: Steelmakers are suffering their worst downturn in at least 15 years, partly because oil producers have drastically cut drilling activity and so have less need for steel pipes. This week's drop in oil prices below $40 a barrel could intensify the pain for steel manufacturers by delaying a rebound in energy investment, saysBarclays analyst Matthew Korn. Yet the oil slump only partly explains the steel industry's woes. Steel producers have been hit by a global nose-dive in commodity prices … [Read more...]
Fed Ends Historic Era by Raising Rates
The Fed ended seven-years of sitting on its hands by finally raising interest rates. Really? One will have to look pretty hard to actually see it. Here’s a thought, how about Janet Yellen testifies in front of a room of retirees at a Town Hall style meeting instead of in front of a room of bureaucrats in D.C. Does she not have a clue what her rock bottom interest rates are doing to retirees? … [Read more...]
Recession Risk: Will Higher Rates Kill Growth?
With the odds of a rate hike at the Fed’s December meeting now approaching 75%, we are picking up chatter about the Fed making a policy error if they go through with a hike. This line of argument contends that the U.S. economy is too weak for a rate hike or series of rate hikes. Higher interest rates will just send the economy right back into recession and the Fed won’t have any tools to combat the downturn. While the U.S. economy may not be as strong as the Fed assumes (see our dismal chart on the Dow Transports vs. Industrials below), hiking rates in December wouldn’t be the policy error. … [Read more...]
This is Why Economic Policy Keeps Getting Worse
Noah Smith wrote a piece last week for Bloomberg View titled Most of What you Learned in Econ 101 is Wrong. Noah is a PhD economist who teaches at Stony Brook University. Noah tells readers that introductory econ textbooks have a big problem and that problem is that most of what is in them is probably wrong. Noah says: “In the last three decades, the economics profession has undergone a profound shift. The rise of information technology and new statistical methods has dramatically increased the importance of data and empirics. This means that many professional economists are no longer, … [Read more...]
The Rising Costs of Thanksgiving
Every year the Farm Bureau puts out a report on the price of Thanksgiving dinner. This year, no surprise, the price of Thanksgiving has increased again. From the Farm Bureau: WASHINGTON, D.C., November 19, 2015 — The American Farm Bureau Federation’s 30th annual informal price survey of classic items found on the Thanksgiving Day dinner table indicates the average cost of this year’s feast for 10 is $50.11, a 70-cent increase from last year’s average of $49.41. The big ticket item – a 16-pound turkey – came in at a total of $23.04 this year. That’s roughly $1.44 per pound, an … [Read more...]
What We’re Reading 11-23-2015
Elizabeth Warren's Tax Warning - WSJ Argentina Shifts Right - The Guardian Why Housing Hasn't Lifted the Economy Much - WSJ Reining in a Sprawling Federal Reserve - WSJ The Downside of Stock Buybacks - Reuters The Best Year-end Tax Moves - Fortune … [Read more...]
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