There have been several theories floating around for why the Federal Reserve won’t raise rates in September: oil at $40 a barrel means there’s no inflation; the volatility in global markets; falling commodity prices suggest a global slowdown is a risk that might become more likely if China’s growth falters.

I find none of these especially persuasive. The latest excuse for Fed inaction making the rounds is the August employment situation report, out on Sept. 4. August data can be misleading, with seasonal adjustments caused by teachers returning to school and temporary automaker layoffs ending. We could see a weak monthly number and that would put the Fed on hold until at least December, according to various prognosticators.

I don’t know if the Fed will raise rates in September — I say 80 percent chance this year and even money for September. But nonfarm payrolls won’t be the determining factor, for many reasons.

First, is that people get taken in by the recency effect. The tendency to overemphasize the latest number in a data series is well known to statisticians, including those at the Fed. If the August number is an outlier, that variability is understood. Because 11 million jobs have been created since the Great Recession ended in June 2009, one month will not be extrapolated to infinity.

Second . . .


Continues here: Weak Reasons Fed Will Wait on Rates


Category: Bailouts, Federal Reserve, Fixed Income/Interest Rates, Inflation

10 Monday AM Reads

Welcome back to the monkey house, and the start of a new week of volatility. No worries, we have your backs with our last week of the summer, morning train reads: • Hawkish Rumblings (Tim Duy’s Fed Watch) see also Fed’s Fischer: ‘Good Reason’ to Think U.S. Inflation Will Move Higher (WSJ) • Are You a “Ben Graham Defensive Investor”?…Read More

Category: Financial Press

Corporate Guidance

Source: Dilbert

Category: Corporate Management, Humor

China 2015 = U.S. 2008

The REAL Reason China’s Economy Is Crashing China 2015 = U.S. 2008 We noted in 2009, in a piece titled “China 2009 = America 2001 = Rome 11 BC“: One of the top experts on China’s economy – [economics professor] Michael Pettis – has a very long but interesting essay arguing that China is blowing a giant…Read More

Category: Think Tank

Alan Adler, Inventor of AeroPress and Aerobie

Apparently, he mostly invents things that are round and begin with the words of Aero:

Inventor Portrait: Alan Adler (AeroPress; Aerobie) from David Friedman on Vimeo.
Source: Vimeo

Category: Food and Drink, Science, Technology, Video

Investors: Another Chance to Clean Up Your Acts

      My Sunday Washington Post Business Section column is out. This morning, we follow up a June column that advised taking advantage of markets at all time highs to clean up your portfolios. This time out, we look at the market turmoil as a reminder, and the snapback rally as an opportunity. The print version…Read More

Category: Apprenticed Investor, Asset Allocation, Investing, Really, really bad calls, Trading

10 Sunday Reads

Good Sunday morn. Pour yourself some Joe, and enjoy our morning reads: • 5 Days That Taught Investors All They Need to Know (WSJ) • A Tale of Two Liquidities (Bloomberg View) • U.S. In-Foreclosure Sales Drops to 15 Year Low in July (World Property Journal) • Even for Companies, the U.S. Is Split Between Haves and Have-Nots (Harvard…Read More

Category: Financial Press

How to Become a Bank

Source: Bloomberg

Category: Corporate Management, Credit, Digital Media, Finance

101 Best Wineries in America

# 101 Trione Vineyards and Winery, Geyserville, Calif. # 100 Dolin Malibu Estate Vineyard, Malibu, Calif. # 99 Hope Family Wines, Paso Robles, Calif. # 98 Ste. Chapelle Winery, Caldwell, Idaho # 97 Broc Cellars, Berkeley, Calif. # 96 Cornerstone Cellars, Yountville, Calif. # 95 Gruet Winery, Albuquerque, New Mexico # 94 MacPhaill Family Wines,…Read More

Category: Food and Drink

Trump Is The New Hit Single

The biggest story of the year is the failure of Re/code to go it alone. With the number one tech reporter on board, and a plethora of backup, it turned out no one cared, that the “Wall Street Journal” was the brand, and no one had the time, interest or inclination to go elsewhere. This…Read More

Category: Politics, Think Tank