COMMENT AND CURIOS
- The rise in US 10-year treasury yields is not just about the Fed.
- Malcolm Gladwell on Albert O Hirschman and the power of failure.
Fiscalists vs market monetarists is a breakout skirmish between rivalrous, unnatural allies whose common antagonists are in retreat.
But on the post-crisis intellectual battlefield, they have mostly been on the same side — or at least stayed out of each other’s way. Read more
Dimon pledges to fight Whale suits: “Jamie Dimon hit back against allegations that JPMorgan Chase executives misled investors over the bank’s “London whale” trading losses, pledging to fight “to the end” against any lawsuits filed in the affair. “There was no hiding, there was no lying, there was no bullshitting. Period,” the JPMorgan chief executive said at an industry conference on Tuesday. ” (Financial Times) Read more
Report urging bank shares handout ‘well researched’ says Treasury: “A report urging George Osborne to hand out shares in Royal Bank of Scotland and Lloyds to the public was described by the Treasury as “quite robust and well researched”. Mr Osborne is expected to set out his ambition to return the two banks to the private sector next week, with the Treasury eyeing a possible start of that process with a disposal of 10 per cent of Lloyds shares this year.” (Financial Times)
Better news on economy boosts house sales, says Rics survey: “The number of homes sold in the UK has soared to its highest level in three and a half years over the past quarter, according to a property survey. The Royal Institute of Chartered Surveyors said on Tuesday that home sales rose to their highest level since January 2010 in the three months to May on the back of better news on the British economy.” (Financial Times) Read more
Japan revised up Q1 growth to annual 4.1%: “Japan has revised up its first quarter economic growth to 1 per cent, giving Prime Minister Shinzo Abe a boost as he seeks to strengthen his grip on power in next month’s upper house elections. Government data released on Monday showed that the economy expanded at an annualised rate of 4.1 per cent between January and March, lifted by strong household spending and a pick-up in private residential investment. That was much higher than the preliminary estimate of 3.5 per cent, which was already the fastest rate recorded by any Group of Seven economy.” (Financial Times)
Backlash over US snooping intensifies: “The Obama administration came under mounting bipartisan pressure on Sunday to scale back electronic surveillance following revelations last week that have raised new questions about government intrusion into citizens’ privacy. The calls came as the UK’s Guardian newspaper revealed that the whistleblower who leaked information about US surveillance activities was Edward Snowden, a 29-year-old former CIA employee who has taken refuge in Hong Kong, setting up a potentially delicate political issue with the Chinese authorities about his fate.” (Financial Times) Read more
The employment situation report superficially appears as mixed as the other recent US labour market indicators: payrolls reasonably higher in the establishment survey, the unemployment rate ticks up in the household survey.
But the tickup in the unemployment rate is the result of a slight increase in the labour force participation rate; employment growth in the household survey actually climbed 319,000. Read more
Just a short note from economist Jan Hatzius of Goldman Sachs reminding us that Friday’s employment situation report isn’t the only labour market indicator in town — and the others have revealed “a fairly mixed picture this month”:
1. Slightly better jobless claims. During the employment survey period (the week including the 12th of each month), initial jobless claims declined by 11,000 on a spot basis and 22,000 on a 4-week moving average basis. Continuing jobless claims were also down slightly. Read more
And the annual report from the St Louis Fed found that 62 per cent of the wealth recovery through the end of last year has been the result of rising stock markets — and stock ownership is concentrated among richer households.
A couple of years ago, we did a long Q&A with Fed staff economist Jeremy Nalewaik about his work on the differences between Gross Domestic Product and Gross Domestic Income.
The two indicators, as you would expect given their theoretical sameness, tend to be nearly identical over a long enough stretch of time. GDI is interesting mainly because Nalewaik had found that its early estimates tend to be revised less over time than are initial estimates of GDP. Read more
FT Alphaville attended the Sifma collateral conference last week. We found these slides, used by Greg Lyons of Debevoise & Plimpton, to be a very useful explainer of upcoming regulatory reforms (click to open pdf):
FT Alphaville is taking Monday 27th May off, for the spring bank holiday in the UK and Memorial Day in the US. Regular posting and our emails will resume on Tuesday.
We wish our readers a restful long weekend, and leave you with an eclectic mix of further readings: Read more
We’ve been combing through an interesting new Pew report on attitudes towards a number of economy-related issues.
Among the dominant themes are that people in advanced economies are more likely to report increasing inequality in the past five years, while respondents in emerging and developing economies had more faith in their prospects for economic mobility than their developed-country counterparts. Read more
David Keohane and Kate “Frenzy” Mackenzie* are joined by Citi FX strategist Steven Englander to discuss all things Abenomics — the risks and the possible rewards, why Steven is bearish, and what Kate’s baby daughter thinks of it.
Highlights follow, beginning with inflation:
Both headline and core PCE inflation in the first quarter came in below the Committee’s longer-run goal of 2 percent, but these recent lower readings appeared to be due, in part, to temporary factors; other measures of inflation as well as inflation expectations had remained more stable. Accordingly, participants generally continued to expect that inflation would move closer to the 2 percent objective over the medium run. Nonetheless, a number of participants expressed concern that inflation was below the Committee’s target and stressed that future price developments bore careful watching. Read more
The chart above is from Credit Suisse economists, who add: Read more