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Finding The Reason For the “Mysterious” Bond Rally (Hint, It’s Not The Chinese)

July 17, 2014

<Click on chart for larger image> The Wall Street Journal – China Plays a Big Role as U.S. Treasury Yields Fall Investors wrestling with the mysterious U.S. bond rally of 2014 got a clue about where to look: China. The Chinese government has increased its buying of U.S. Treasurys this year at the fastest pace… Continue reading Finding The Reason For the “Mysterious” Bond Rally (Hint, It’s Not The Chinese)

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The Divided Federal Reserve

July 17, 2014

The Wall Street Journal – HILSENRATH’S TAKE: TWO CAMPS IN THE FED’S RATE DEBATE Put aside the hawks and doves labels for a moment. There are two camps forming in the Fed’s emerging debate about when to start raising short-term interest rates. One side sees the jobless rate falling, inflation picking up and froth developing… Continue reading The Divided Federal Reserve

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The Federal Reserve’s New Job Market Index

July 17, 2014

The Federal Reserve – Assessing the Change in Labor Market Conditions Because the various indicators are available for different time periods, and some are only available with a lag, we estimate the model on an unbalanced panel, a situation for which factor models are well suited. We begin our estimation sample in July 1976, when… Continue reading The Federal Reserve’s New Job Market Index

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The “Rebounding” Economy

July 17, 2014

The Wall Street Journal – U.S. Economy Heating Up During Summer Economic activity in recent weeks got back on track after a rough start to the year, with the labor market gaining strength and facing worker shortages in some areas, according to the Federal Reserve’s latest survey of regional conditions. Manufacturing, consumer spending, tourism were… Continue reading The “Rebounding” Economy

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Drunkenmiller:  The Federal Reserve is Putting The Economy At Risk

July 17, 2014

CNBC – Druckenmiller: Fed policy ‘fraught with unappreciated risk’ I would say IBM is the poster child. They literally faced a threat not too dissimilar to what Kodak and Xerox, in terms of a new technology starting them right in the face. Instead of increasing investment to combat the threat, they’ve actually borrowed a lot… Continue reading Drunkenmiller:  The Federal Reserve is Putting The Economy At Risk

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Should Investors Listen To Yellen’s Stock Picks?

July 17, 2014

The New York Times – Neil Irwin:  Should Janet Yellen Be Giving Us Stock Picks? Ms. Yellen specifically called out the valuations of leveraged loans (which fund corporate buyouts) and high-yield “junk” bonds (which fund companies viewed as having risky finances) as potentially excessive. She acknowledged that prices for a wide range of assets, including… Continue reading Should Investors Listen To Yellen’s Stock Picks?

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The U.S. Dollar And Yellen’s Comments

July 17, 2014

The Financial Times – Yellen comments trigger dollar rally “The market is correct in seeing glimmers of hawkishness relative to the past and the absence of new dovish surprises,” said Steve Englander, strategist at Citigroup, while analysts at Morgan Stanley noted that her testimony “once again highlights the market’s sensitivity to rates volatility and the… Continue reading The U.S. Dollar And Yellen’s Comments

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Cartoons

July 17, 2014

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Charts of the Week

Charts of the Week

July 16, 2014

Charts of the Week Topics Covered This Week Include: The Federal Reserve’s Exit Tools Bearish On Bonds! Mixed Signals: The Economy And The Markets Q2 Earnings Is Officially Underway Crude Oil Production In The U.S. The BoJ Needs More QE The Boom In M&A Employment In Pictures Employment In Pictures – 2 Employment In Pictures… Continue reading Charts of the Week

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Yellen Lays Out The Fed’s Model Portfolio

July 16, 2014

The Wall Street Journal – Jon Hilsenrath: Fed’s Yellen: U.S. Economy Continues to Improve but Recovery Not Yet Complete Low Rates Seen as Appropriate as Labor-Market Slack and Below-Target Inflation Lingers Federal Reserve Chairwoman Janet Yellen signaled continued low interest rates in her semiannual report to Congress on Tuesday, noting that the U.S. economic recovery… Continue reading Yellen Lays Out The Fed’s Model Portfolio

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The Atlanta Fed’s New GDPNow Forecasting Model

July 16, 2014

MacroBlog – Introducing the Atlanta Fed’s GDPNow Forecasting Model – The GDPNow model forecasts are nonjudgmental, meaning that the forecasts are taken directly from the underlying statistical model. (These are not official forecasts of either the Atlanta Fed or its president, Dennis Lockhart.) – Because nowcasts are often based on both modeling and judgment, there… Continue reading The Atlanta Fed’s New GDPNow Forecasting Model

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The Bond Market Will Crash, Everyone Knows It, So Why Isn’t Everyone In The Bunker Getting Ready?

July 16, 2014

Econmatters – Fed Officials Trying to Warn Bond Markets The Fed officials have been coming out in speeches the last couple of weeks with rhetoric about ‘complacency’ and other such code words for chasing risk ahead of what the Federal Reserve knows is going to be an abrupt change in monetary policy over the next… Continue reading The Bond Market Will Crash, Everyone Knows It, So Why Isn’t Everyone In The Bunker Getting Ready?