The timing of the Fed’s initial rate hike and the subsequent path of future hikes are prominent unknowns on the minds of market participants and commentators. But the question of mechanics — how the Fed will raise rates — also matters.
Our colleague Sam Fleming recently interviewed New York Fed president Bill Dudley and asked him about the possibility of the Fed’s maintaining a larger balance sheet indefinitely in conjunction with the use of its reverse repo facility. His answer suggested that the central bank remained undecided: Read more
This podcast was taped on Wednesday, 22 July. We plan to continue tinkering with Alphachat’s format, content and length of time for the rest of the summer. If you have feedback, good or bad, you can leave a comment below, email us at email@example.com, call us at 917-551-5012, or just tweet me at @cardiffgarcia. You can find Alphachat on iTunes and Stitcher. Thanks for listening! Read more
Some quick news first. The honchos who run this joint have given us the resources to produce Alphachats more frequently and regularly, and we plan to spend the rest of the summer tinkering with different ideas for content and length. But we’d also really like to know what you want to hear.
You have a few options: leave ideas in the comments section below, email us at alphachat [at] ft [dot] com, call us at 917-551-5012 (a US phone number), or tweet at me directly at @cardiffgarcia. You can find Alphachat on iTunes and Stitcher. Read more
Should Greece want to leave the euro? Lorcan Roche Kelly and Lars Christensen debate a recent post over at Lars’s blog. A fun and vigorous debate but some possibly NSFW language:
Last one — a chat with Zoltan Pozsar (in front of the Faces of Alphaville shooting gallery) on the safety of the US financial system, global regulatory architecture, and the Fed’s reverse repo facility:
A new paper from Craig Doidge, G Andrew Karolyi, and René M Stulz investigates the reasons why the number of publicly listed US companies peaked in 1996, even as the number of publicly listed foreign firms climbed.
From the study:
The number of U.S. listings fell from 8,025 in 1996 to 4,101 in 2012, whereas non-U.S. listings increased from 30,734 to 39,427.
(Click to enlarge, and careful with the dual Y-axes.) Read more
(Here’s the ubiquitous emergency link in case anyone suffers from tech bork, and the embedded podcast doesn’t appear.)
The latest Alphachat is a discussion about the business of podcasting with FT media correspondent Shannon Bond and Buzzfeed’s Nick Quah, both of whom also offer a few recommendations for FT readers at the end of conversation. Nick writes Hot Pod, an excellent weekly newsletter that chronicles ongoing events in the podcasting world, aggregating the big stories of the week and adding his own reporting and critical commentary.
A time guide below, and a few additional notes after: Read more
Here’s a story that you may have heard.
Median wages and living standards are stagnant, and by some measures they have worsened, having decoupled from productivity growth for several decades. Read more
Having fallen to 5.5 per cent, the US unemployment rate now touches the high end of the central tendency range of the Fed’s long-run estimate — its proxy for the non-accelerating rate inflation rate of unemployment. Read more
The issue of whether US inequality has climbed since the recession of 2008 has been relitigated this week. A short analysis by Stephen Rose claimed that income inequality had actually fallen, assigning the credit to public policy.
David Leonhardt of the New York Times discussed Rose’s findings, followed by further analyses and critiques from Ben Walsh and Nick Bunker. I’ll present the findings first before adding my own thoughts at the end. Read more
I really like my colleagues at the FT, but I spend at least half my working hours wishing they would stop talking. Pipe down. Not quite STFU but at least be mindful of making a racket. Read more
Earlier in January we refrained from commenting on the disappointing US wage figures in the December employment situation report.
The quarterly-released Employment Cost Index, as we and many others have noted, is a more comprehensive measure of labour compensation growth — better reflecting overall compensation and, as a fixed-weight measure, adjusting for shifts in employment categories. And we knew the Q4 numbers would follow the December jobs report a few weeks later — though not, sadly, in time for the Fed’s meeting last week.
The latest ECI was released Friday morning, and three quick points follow. Read more
Today’s FOMC statement should be about as shocking as the ending of The Sixth Sense.
Wait, you were genuinely surprised that Bruce Willis was dead the whole time? Fine, about as shocking as the final scene of The Usual Suspects then. Read more
Some thoughts, musings, and simply fun items we’ve recently come across:
1) As of the start of this week, global non-energy equities have held up fine: Read more
Have we been early or just wrong? Read more
Back in 2011, inflation climbed above the Fed’s 2 per cent target, but the FOMC resisted the impulse to tighten monetary conditions. Long-run inflation expectations hadn’t risen to worrying levels, and Ben Bernanke perceived that a price spike led by oil was likely to be “transitory”.
No surprise there: he wrote the paper on this very topic. And he was proved right. Read more
The first thing to be said about the macroeconomic impact of Obama’s executive order on immigration is that it will be small but not trivial.
The second thing to be said is that although the impact will be small, it will also be positive. Read more
Split in half the six years from the start of the US recession at the end of 2007 through the end of last year, and consider them as a pair of three-year periods.
In the first period — from 2007 through 2010, and which we’ll refer to as the crisis years — wealth inequality in the US spiked while income inequality actually contracted quite aggressively, the latter a reversal of the pre-recession trend. “Crisis years” isn’t a perfect label, as the recession actually ended in mid-2009, but it’s good enough for our purposes here. Read more
Jason Furman chairs the president’s Council of Economic Advisors and therefore has an obvious incentive to present the Obama administration’s policy outcomes in the best light, but nonetheless this chart from his recent speech is striking:
FT Alphaville and the FT’s US markets team are hosting a night of drinks and trivia in New York on the evening of Wednesday, November 19th.
The last time we did this (in London), we grilled you on the eurozone sovereign debt crisis, the complexities of synthetic ETFs, seasonal adjustments in economic indicators, and other proudly nerdy topics. Read more
The third quarter was the second straight three-month period showing a favourable trend for US nominal wage and salary growth, though a lot more acceleration is needed before it’s anything to celebrate:
When city-dwellers moan about their high cost of living, they often elicit the unsympathetic retort that they should shut up and praise the ghost of Jane Jacobs for the cultural vibrancy of their neighborhoods, the lucrative jobs, and the artisanal pizza.
Living in a great city is a consumption good, you whinging ninnies — you SHOULD have to pay for it! Why do you think you’re entitled to live wherever you want?
We had a chat with the FT’s US markets editor Mike MacKenzie about Wednesday’s FOMC statement. There were masks:
Full text here. The highlights:
– Large scale asset purchases have ended, as expected (though remember that the Fed is still reinvesting the principal on MBS and rolling over maturing treasuries). Read more
It’s hard to say which was more surprising — the passages in Janet Yellen’s inequality speech last week that appealed to American values, or the topics she chose to omit entirely.
To start with the latter, the interdependent relationship between inequality and economic growth has become a mainstream topic of economic debate in recent years, and a very contentious one. Read more
Two sets of charts from BCA Research with unclear implications:
From the transcript of St Louis Fed president James Bullard’s interview with Bloomberg Television:
I also think that inflation expectations are dropping in the U.S. And that is something that a central bank cannot abide. We have to make sure that inflation and inflation expectations remain near our target. And for that reason I think a reasonable response of the Fed in this situation would be to invoke the clause on the taper that said that the taper was data dependent. And we could go on pause on the taper at this juncture and wait until we see how the data shakes out into December. So… continue with QE at a very low level as we have it right now. And then assess our options going forward. …
The abundance of worrying news continues growing — the collapse of bond yields and equity markets, falling inflation and inflation expectations all across the developed world, the ongoing slump in commodity prices.
Whether such tumultuous activity in markets accurately reflects the updated prospects for the real economy is a difficult question. The doom-iest news has been coming out of Europe (ex-UK), where concerns of a triple-dip recession do appear warranted given the latest economic indicators from — not to mention the intransigence by policymakers in — Germany. But the prospects for Japan and emerging markets, many of whose fortunes are tied to commodity cycles, have also become more disquieting. Read more
(The chart frames the upper and lower forecasts of the central tendency, which removes the highest three and lowest three forecasts of the FOMC as a whole. The red line is the midpoint between the two.)
Starting in 2009, the midpoint of the central tendency projections for the long-run unemployment rate climbed from 4.9 per cent to 5.6 per cent during the next three years. Read more
It begins ominously:
Dancing, or better yet as the beginning of my Investment Outlook suggests, being asked to dance, seems to have become an important part of my life over the past month or so. Having first been asked by my wonderful wife, Sue, and now by Dick Weil and Janus from a business standpoint, I write to you today from my desk in a new Janus office in Newport Beach, California. Read more