Posts filed under “Data Analysis”
After almost seven years, the beginning of the end of ultralow rates is here.
What’s that you say? The Fed is going to raise rates?
Remember the so-called taper tantrum in 2013, when some traders dumped Treasuries to express their ire at the Federal Reserve for having the temerity to suggest that rates can’t stay at zero forever? Today it’s hard to imagine anyone left who doesn’t understand a rate increase is coming, most likely sooner (2015) rather than later (2016). Still, there’s a whole generation of traders who have never seen a rate increase, the last of which was a 25 basis-point bump in the fed funds rate way back on June 29, 2006.
Regardless, normalization of interest rates can’t get here soon enough for me, if for no other reason than to end this incessant game of “Will they or won’t they?” Higher borrowing costs are a small price to pay to shut up the ninnies who feel compelled to engage in the semantic game of parsing each and every word of every speech, Q&A session, and most especially the latest Federal Open Market Committeestatement.
Instead of hanging on every Fed utterance, let me suggest you take a different approach. Take one phrase from the Fed as your mantra: data-dependent. The rest of the Kremlinology over the incessant communications from, by or about the Fed should be ignored with prejudice. Instead, step back and take the 30,000-foot view to understand what is happening today, and what is most likely to occur in the future. That does a far better job communicating what is likely to happen than anything Fed Chair Janet Yellen will say in a news conference.
The big picture is simply this: The Fed has a dual mandate to keep inflation under control – check! – and to increase U.S. employment –check! When the Fed says any interest-rate decision is data-dependent, this is it’s talking about. If you want to put some flesh on those bones, let’s consider a few bullet points about the present environment
Continues here: Pay Attention, Ignore the Fed
@TBPInvictus If you’re just joining us, here’s our story thus far: Some on the right took a fairly benign article out of a Seattle publication and twisted it to fit their agenda, i.e. that the increased minimum wage there would spell disaster for the Seattle restaurant scene as eateries closed in rapid succession. Their hopes…Read More
@TBPInvictus Among the more overlooked data sources out there is the Federal Reserve’s Survey of Consumer Finances (SCF). My guess as to why it’s overlooked is that it’s only published triennially – not exactly a high frequency release. The most recent (2013) update was issued last September. As I saw very few, if any, write-ups…Read More
We seem to really enjoy contemplating the money and lifestyles of thetop 0.01 percent. The wealthiest Americans garner immense mind-share in the imaginations of the rest of the populace. We incessantly track the incomes of hedge-fund managers and other finance stars, the heirs to the Wal-Mart fortune and other $100 billion families. Don’t forget the Bloomberg Billionaires Index and the Forbes 400 and the wealthiest New Yorkers….Read More
Combining GDP and GDI for a Better Measure of the Economy Could Be Tricky Daniel Carroll, Jessica Ice Cleveland Fed, 7/20/15 After the Bureau of Economic Analysis (BEA) released its latest estimate of real GDP growth for the first quarter of 2015—a disappointing −0.2 percent—economists began looking for reasons for the sudden…Read More
“A gold mine is a hole in the ground with a liar standing on top of it.” – unverified quote attributed to Mark Twain A few weeks ago, we discussed how gold can’t seem to catch a break. Despite a parade of potential market-roiling news, the reaction of the shiny yellow metal has been one of benign indifference. After Federal…Read More