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Unintended consequences of lift-off in a world of excess reserves
Unintended consequences of lift-off in a world of excess reserves Bar a disastrous NFP print this coming Friday the US Federal Reserve will change the target range for the Federal Reserve (Fed) Bank’s Funds rate from the current level of zero – 25bp to 25 – 50bp on December 16th. The Fed will effectively raise […]
The Yield Curve and GDP – a causal relationship?
The Yield Curve and GDP – a causal relationship? One of the most reliable indicators of an imminent recession through recent history has been the yield curve. Whenever longer dated rates falls below shorter dated ones, a recession is not far off. Some would even say that yield curve inversion, or backwardation, help cause the economic contraction. […]
Another petro-state throws in the towel – the last nail in the petrodollar coffin
Another petro-state throws in the towel – the last nail in the petrodollar coffin Source: Norwegian Ministry of Finance, Bawerk.net According to the proposed budget submitted by the current ‘blue-blue’ government the Norwegian deficit will reach another record high in 2016. Mainland taxes are expected to bring in 1,008 billion NOKs, while expenditures are estimated […]
Why NIRP may trump QE4
Why NIRP may trump QE4 The Fed unsurprisingly chickened out from the much touted September hike. International conditions and a disapproval from Mr. Market was enough to unnerve an increasingly bewildered FOMC board. Less well known is the fact that the FOMC gave a strong, and unexpected, signal to the Pavlovian world of central bank […]
From Miracle to Cataclysm – why the commodity bust will last for years
From Miracle to Cataclysm – why the commodity bust will last for years The Chinese Jīngjì qíjī, wirtschaftswunder, keizai no kiseki, milagro económico or whatever you want to call is neither a miracle nor distinctly Chinese. A basket case like Argentine managed to pull off a similar feat, albeit with more volatility, over a 42 year timespan beginning […]
Corporate foie gras
Corporate foie gras One of the arguments put forth in the bull vs. bear debate is that the solidity of US non-financial corporations have never been stronger. The amount of cash held by non-financial corporations has risen 150 per cent since the depth of the crisis in 2009. With such a massive cushion to stave […]
That 70s show – episode 4
That 70s show – episode 4 We have shown in the previous three episodes (episode 1, 2 and 3) how the US economy structurally changed after Nixon took the US off gold, letting the Federal Reserve do what it does best. Obviously, with the “hard” anchor of the US dollar cut loose, the rest followed suit. It is telling […]
That 70s Show – Episode 2
That 70s Show – Episode 2 In Episode 1 we showed how the US labour market changed dramatically from the 1970s on back of excess money printing which allowed Americans to buy tradable goods on the international market, hollowing out its own manufacturing base, and essentially creating an unsustainable consumer driven economy where the broad masses get their […]
