tag:blogger.com,1999:blog-34323687.post7603276115260851103..comments2024-03-29T15:07:48.008+00:00Comments on Macro Man: Brother, can you spare a loan?Macro Manhttp://www.blogger.com/profile/12324967552369915949noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-34323687.post-48234040473102936762016-09-21T14:13:44.313+01:002016-09-21T14:13:44.313+01:00> modestly higher interest rates will not put t...> modestly higher interest rates will not put the kibosh on bank lending<br /><br />Well, sure. This is a look in the rearview mirror, if you believe the <a href="https://www.frbatlanta.org/cqer/research/shadow_rate.aspx" rel="nofollow">Wu-Xia shadow rate model</a> has any validity. While not sold on its precision, I think there's something to it.<br /><br />> Personal consumption as a percentage of GDP is at record levels<br /><br />Unless you think health care is just another consumer good, strip it out of PCE to measure personal consumption as a percentage of GDP. Tldr: <a href="https://fred.stlouisfed.org/graph/?g=7jH9" rel="nofollow">not a record</a>.<br /><br />> mortgage lending has been tepid...despite the ultra low rates on offer<br /><br />Now we are <a href="https://fred.stlouisfed.org/graph/?g=7jIY" rel="nofollow">getting somewhere</a>, along with <a href="https://fred.stlouisfed.org/graph/?g=7jJF" rel="nofollow">this series</a>.<br /><br />It seems eminently plausible that a slightly higher Fed target is part of good policy under current circumstances. The mechanics I could imagine involve a, government spending and investment back to Reagan-era levels, b, public building programs or some other alternative to fill the gap in residential investment, combined with c, a slightly higher Fed target.<br /><br />How to get good effects from c alone, however, eludes me. Can someone walk a slow thinker through the mooted mechanics?wcwhttps://www.blogger.com/profile/16307608293310560164noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-72506217818985581882016-09-21T13:44:07.244+01:002016-09-21T13:44:07.244+01:00I definitely think the elderly, small businesses, ...I definitely think the elderly, small businesses, local banks etc should be blown out of existence. If that happened, we would see massive civil unrest, and the current politicians, central bankers and CEOs facing lifetime imprisonment. Sounds great.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-25564218373332254452016-09-21T13:11:40.511+01:002016-09-21T13:11:40.511+01:00...To move rates now given the recent activity dat......To move rates now given the recent activity data would imply a reaction function that is totally random, and Macro Man cannot see how that outcome would do anything but obliterate the remaining credibility that the Fed possesses.<br /><br />...OK, MM. But the question is,When is it ever going to be the time to raise rates? Haven't we seen the They should raise, but they don't? question posed time after time after time over the last 8 years?<br /><br />..If indeed, lower rates are squeezing elements of the financial society we now live in, what is the answer? Do we just allow the elderly, many small businesses, local banks, etc. to just go out of existence? I see that the latest Gallup poll of peeps who declare themselves middle class has declined by 10 percent over the last 8 years...<br /><br />...The EPA should protect the endangered financial species disappearing from the globe!<br /><br />http://wolfstreet.com/2016/09/20/or-well-lose-the-whole-middle-class-gallup-ceo/Bruce in Tennesseenoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-48829051675227357342016-09-21T12:55:13.590+01:002016-09-21T12:55:13.590+01:00Regardless of should or should not, Janet is not g...Regardless of should or should not, Janet is not going to blow a hole in the USS S&P 50 days before the election, especially since DJT plans on giving her the boot. Since the Fed has no credibility as it is, no reason they shouldn't shed their apolitical facade as well. Shoelessnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-935081613070850392016-09-21T12:10:35.232+01:002016-09-21T12:10:35.232+01:00"The obvious follow up is why households are ..."The obvious follow up is why households are not borrowing more. The primary answer is that mortgage lending has been tepid...despite the ultra low rates on offer. Another reason, however, is that really isn't much pent-up demand (except, apparently, for jack-less mobile phones.)"<br /><br />Sorry to lower the level of analysis, but could it not just be that borrowing - especially for non-productive consumption - is always an exercise in bringing forward future demand, and after a 30 year credit cycle of historic proportions this pony has simply run as far as it can (irrespective of interest rates)?<br /><br />As for the Fed, uncomfortable though I find it to be on the same side of the fence as Barclays and BNP, the evil genie that told me Wales would win the Euros (well...almost) is telling me not to be surprised by a surprise. It's no longer just the Fed's credibility that's at stake - that ship sailed and sank some time ago (imho) - but the credibility of global monetary policy as a whole. Perhaps a bit more dot-plotting and some huffing and puffing about December might hold back the growing tide of skepticism for a bit longer, but even central bankers must surely have worked out by now that they're skating on rapidly thinning ice. Based on precedent, nothing happens this afternoon - but conversely, neither should a surprise be altogether surprising.Error404noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-18702952901409208452016-09-21T11:54:55.995+01:002016-09-21T11:54:55.995+01:00BOJ now explicitly targeting yield curve. Does th...BOJ now explicitly targeting yield curve. Does this:<br /><br />A) Cause US 10-yr rates to go lower because of money flows to the US?<br /><br />B) Cause US 10-yr rates to go higher because global rates elevate, re-basing off the higher anchors in negative rate countries?<br /><br />Based on A or B will drive risk-move in US. Difficult for FED and BOJ to both surprise dovish<br /><br />Big in Japan:<br />http://crackerjackfinance.com/2016/09/big-in-japan-can-the-fed-trump-the-boj/Crackerjack Financehttp://www.crackerjackfinance.comnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-15725188743063046802016-09-21T08:51:38.352+01:002016-09-21T08:51:38.352+01:00"If it's worthy of comment, Macro Man wil..."If it's worthy of comment, Macro Man will do so later today"<br />So, we will hear from you tomorrow. Have a rest.checkmatehttps://www.blogger.com/profile/03688082792316894545noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-55624243888149520512016-09-21T08:28:50.902+01:002016-09-21T08:28:50.902+01:00I'll trade knowledge with the the 12yo HFM.
C...I'll trade knowledge with the the 12yo HFM.<br /><br />Central Bank QE discounted cash flow spreadsheet variables.<br /><br />Cash flow one:<br /><br />var 1: weighted average of money ( trading partners in the swaps market ) <br />var 2: amount of jealousy ( from other central banks )<br /><br />Cash flow two:<br /><br />var 1: the amount of satisfaction obtained from a having a beer after the last race on a Saturday with someone, and then kicking on till Monday's open in Tokyo.<br />var 2: the probability of var 1 happening again. <br /><br />ps.."F##k You" amplitudeinthehousenoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-13833669263362877332016-09-21T07:08:57.916+01:002016-09-21T07:08:57.916+01:00No doubt many of you are perplexed by statements s...No doubt many of you are perplexed by statements such as "controlling the shape of the yield curve" etc. Allow me therefore to clarify the impact of these CB decisions:<br />BOJ = positive for equities<br />FOMC = positive for equities<br /><br />Easiest job in the world.<br />12yo HFMnoreply@blogger.com