NEW YORK (May 12)—April Consumer Price Index (CPI) inflation printed at an 8.3 percent, year-on-year, yesterday morning, down from 8.5 percent in March, but 2/100ths (or “20 bps”) higher than the market consensus estimate of 8.1 percent. Core inflation, which includes all items, less food and energy, came in at 6.2 percent, down from 6.5 percent…
Where Have the Workers Gone?
May 13, 2022
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baby-boom generationBusiness & EconomyBusiness ColumnistsOpinionThinking About ChinaViewpointsworker shortage
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Commentary Businesses complain incessantly these days of labor shortages. Rising wage rates would seem to induce more people to seek paid employment, and they have to some extent. Still, a historical shortfall exists in the percent of the population at work or actively seeking employment, a shortfall that has limited the economy’s growth potential. Because…
Sky-High Stock Values Falling Back to Earth
May 13, 2022
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Business & EconomyBusiness ColumnistsFederal ReserveinflationOpinionrecessionstock pricesThinking About China
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Commentary The one sort of inflation that’s certainly not here to stay is high stock prices. Huge stock swings are indications that the “sky’s the limit” stock market is nosediving back to Earth. It had to happen sooner or later, and global volatility and recession are leading the downward trend. A soft landing is unlikely…
The Fed and the Sound of Inevitability
May 12, 2022
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Business & EconomyBusiness ColumnistsdepressionOpinionquantitative easingquantitative tighteningrecessionViewpoints
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Commentary “You hear that Mr. Anderson? That is the sound of inevitability.” – Agent Smith (The Matrix) In the movie Matrix, the hero, Neo or Mr. Anderson, is eventually able to escape from the chokehold of Agent Smith and avoid a collision with an approaching metro train (the “sound of inevitability”). The Federal Reserve, with…
Asset Bubbles & Forward Returns
Commentary Asset bubbles have been prevalent throughout history. Whether it was the “Tulip bubble” in the 1600s, the South Sea bubble of the 1700s or the Dot.com bubble of 2000, they resulted from excessive investor speculation. Of course, the other side of the inflation was the long unwinding of those bubbles as valuations mean reverted…
Asset Bubbles and Forward Returns
Commentary Asset bubbles have been prevalent throughout history. Whether it was the “Tulip bubble” in the 1600s, the South Sea bubble of the 1700s or the Dot.com bubble of 2000, they resulted from excessive investor speculation. Of course, the other side of the inflation was the long unwinding of those bubbles as valuations mean reverted…
Why the Fed Can’t Hike T-bill Rates and What That Really Means
Commentary It was very early in the morning, U.S. time, and the 4-week U.S. Treasury bill then being traded all over Asia suddenly captured a huge bid. At around 3:30 am EDT, May 11, the equivalent yield on this particular short-term instrument ticked lower and lower. Two hours later, around 5:30 am, the rate had…
The Failure of Central Banking: Politics
Commentary The view was generally held that centralization of banking would inevitably result in one of two alternatives: either complete government control, which meant politics in banking, or control by ‘Wall Street,’ which meant banking in politics. – Paul Warburg, 1930 The idea of the central bank was born in the Middle Ages, when failures…
Inaction in Europe Makes the Fed’s Anti-Inflation Fight Tougher
May 11, 2022
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Business & EconomyBusiness ColumnistsFederal ReserveinflationOpinionThe European Central Bank (ECB)Thinking About China
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Commentary The European Central Bank (ECB) has made the Federal Reserve’s (Fed) job harder. After dangerously ignoring inflation for months, Fed Chairman Jerome Powell has at last adopted an anti-inflationary policy stance. The Fed will gradually unwind its former practice of directly buying securities on financial markets—what central bankers refer to as “quantitative easing.” Sales…
The Fed Made a Serious Mistake
Commentary The latest released U.S. inflation was expected to slow down. The rationale behind such a bet by the economists might be the high base of a year ago: March 2021 was at 2.6 percent, and April 2021 was 4.2 percent. If only in this sense, a slower number for last month may not mean…
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