The “Boom” Is Off the Rose
The employment number was a shock to the “boom” economy narrative; it was the biggest consensus miss in history! The majority of forecasters, even those with scores of economists and huge budgets, simply got the “boom” narrative wrong. The Payroll Survey employment number was an “aberration” they hastily said. But the sister Household Survey tells […]
When the Stimulus Tailwinds Fade
Prologue Big numbers are showing up in U.S. economic data, partly due to the low levels of economic activity a year ago, partly caused by the reopening, and partly caused by the generosity of Uncle Sam. We’ve had three helicopter money drops, two of them in 2021. The economy is rapidly reopening as seen from […]
U.S. Data Says “Boom:” Part Base Effect, Part Transient, Part Real
Prologue The much anticipated economic boom has finally arrived! The NY Fed Weekly Economic Index exploded to the upside in late March and early April (see chart above). Retail Sales were up an amazing +9.8% M/M in March! That number is not Y/Y. The Y/Y number was +27.7%, but was greatly influenced by depressed Retail […]
Incoming Data Looks Robust – It’s A Mirage
Incoming PPI data marked the initial volley of the oncoming “siege” of inflation data. Despite reopenings, state Initial Unemployment Claims spiked as March ended. Either the reopening lags are longer than we thought, or disincentives from overly generous benefit payments are at play. If recent history is any guide, only part (25%) of the stimulus […]
Dysfunctional Credit Markets – Still Waiting on the Fed
As the week ended, U.S. credit markets appeared confused, if not outright dysfunctional. The 10-Year Treasury yield began February at 1.09% and reached an interim peak of 1.54% on February 25. Then it retreated to 1.42% as markets thought the rise had simply been overdone. But Fed Chair Powell’s refusal to assure financial markets regarding […]
Careful Mr. Powell; Higher Rates Will Kill the Recovery
Treasury yields rose again this week; blame this one on Fed Chairman Powell. In an interview at the Wall Street Journal’s Job Summit, he said that the Fed isn’t ready to stop the run-up in yields “until financial conditions tighten.” In so saying, he paved the way for those financial conditions to tighten as markets […]