Posts filed under “Think Tank”

“The Great Inflation Debate” and other stuff

Interestingly, the day after gold traded over $1000 and the US$ index fell to a one year low, Fed Pres Evans gives a speech at 8am titled “The Great Inflation Debate.” In the inflation data we still have disinflationary trends but the question is whether the Fed has laid the groundwork for eventual inflation as its development is a process, not an event and price stability and a stable currency go hand in hand. With mortgage rates falling to the lowest level since May, the MBA said refi’s rose 22.5% and purchases were up 9.5% to the highest level since Jan. The home buying tax credit expires on Nov 30 so there is a sense of urgency to take advantage. ABC confidence fell 3 points to a 6 week low led by a 6 point drop in the Personal Finance component. The Fed’s Beige Book should reflect the Q3 GDP upturn that we are seeing but the composition of it will be a focus. The Treasury comes to market with $20b of its benchmark 10 yr notes.

Category: MacroNotes

“New Normal” Means Central Banks Won’t Soon Exit

Good Evening: U.S. stocks rose for a third straight session, recouping almost all of last week’s losses in the process. That these gains were recorded in spite of dour employment figures, a massive drop in consumer credit, and a fresh round of warnings from folks like Nouriel Roubini, Mohamed El-Erian, and Bill Gross is at…Read More

Category: Markets, Think Tank

89 Bank Closures in 2009

> click for ginormous chart > Source: Bank closures hit 89 for 2009 Charlie Carter Financial Services Technology, 09/09/07

Category: Bailouts, Credit, Think Tank

July Consumer Credit

July Consumer Credit fell a much bigger than expected $21.6b vs the consensus of a drop of $4b to a total of $2.47t outstanding. June was also revised lower to a decline of $15.5b from the initial reading of a fall of $10.3b. Both revolving (mostly credit cards) and non revolving (mostly auto’s) credit balances…Read More

Category: MacroNotes

3 year note auction/where are the risk takers?

The 3 year note auction was solid as the yield was a touch more than 1 bps lower than where it was trading in the when issued market and the bid to cover at 3.02 was the best since Nov ’08 and well above the average in ’09 of 2.57. The level of indirect bidders…Read More

Category: MacroNotes

$/gold/TIPs/conventional treasuries

In response to the move lower in the US$ and move higher in gold and other commodities, the implied inflation rate in the 5 yr TIPS has risen 1.4%, up 10 bps from Friday and at the highest level since Aug 11th. The implied inflation rate in the 10 yr TIPS is up to 1.86%,…Read More

Category: MacroNotes

A Conversation About Payroll Data That You Never Saw On CNBC

I am pleased to introduce Bob Bronson. For the past 42 years, Bob Bronson has applied a disciplined, analytical approach to understanding and forecasting capital markets and advising investment advisors. Through his rigorous analysis of capital markets and economic data and his background in mathematics and financial economics, he has developed a number of unique…Read More

Category: Think Tank

Gold and the S&P’s

There is nothing like a vacation to get some r&r, spend some time with loved ones, reflect on the past and think about the future. With gold now above $1000 again, about the same level of the S&P’s, the $ index just 8% from record lows and 4 more years of B52 Ben, lets reflect….Read More

Category: MacroNotes

Bankers and Beavers

Bankers and Beavers Labor Day, September 6, 2009 Drive north on US Route 1 about 2 miles from Princeton, Maine and turn right on Telephone Road. Five miles of gravel takes you to the edge of Tomah Stream, a serene, magical place on the edge of the Passamaquoddy Indian reservation. We turned onto Telephone Road….Read More

Category: Think Tank

The Elements of Deflation

As every school child knows, water is formed by the two elements of hydrogen and
oxygen in a very simple formula we all know as H2O. Today we start a series that
starts with the question, What are the elements that comprise deflation? Far
from being simple, the “equation” for deflation is as complex as that of DNA.
And sadly, while the genome project has helped us with great insights into how
DNA works, economic analysis is still back in the 1950s when it comes to
decoding deflation. Notwithstanding the paucity of understanding we can glean
from the dismal science, in this week’s letter we will start thinking about the
most fundamentally important question of the day: is inflation, or deflation,
in our future?

But quickly, I want to thank the many people who wrote very kind words about last
week’s letter. Many thought it was one of the better letters I have done in a
long time. If you did not read it, you can read it here. And of course, you can go there and sign up to get this letter sent to you each week for free. Why not become of my 1 million (plus and growing) closest friends?

The Failure of Economics

Among the economists and writers I regularly read, there are some who, if they agree
with me, I go back and check my assumptions – I must have been wrong. Paul Krugman is one of those thinkers. I admit to his brilliance, but his left-leaning philosophy does not particularly square with mine, and I find that most of the time I disagree.

That being said, I strongly encourage you to read his essay in the New York Times Magazine, which comes out this weekend. It is worth the high price of the Times to read it, if you can’t get it online. It is a very hard critique and analysis of the failure of current macro and financial economic
thought, which didn’t even come close to predicting the current financial
malaise. Indeed, as he points out, most schools of thought said the state we
are in could not happen. You can read at the essay if you are a member, or
register for free if you are not.

Krugman writes, as I have in repeated columns, that we have taught two generations of
economists and financial practitioners faulty theories. Even now, believers in
the Efficient Market Hypothesis and CAPM hold to their beliefs in the face of
clearly contrary evidence. It is a very thought-provoking piece and worthy of a
long weekend read. He names specific names and pulls no punches. This is as
close to starting a barroom brawl as you get in economic circles.

Read More

Category: Think Tank