No Economic News Is Good News

March 16, 2018

One of the best ways to tell that the economic news is good is that it simply isn’t showing up in the news. The old media saying, “if it bleeds it leads,” means you don’t see a lot of good news on the front pages. Hence, we now have politics taking the lead, along with various disasters. When business stories do appear, they are typically company specific and focus on (what else?) bad news. The Toys R Us bankruptcy is a case in point today.

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Could the Great Financial Crisis Happen Again?

March 14, 2018

Today marks the 10th anniversary of the failure of the Wall Street firm Bear Stearns, widely considered the opening act of the great financial crisis of 2008. Bear was done in, so the story goes, by a mix of ill-considered bets on mortgage securities and excessive borrowing. After it went down, banks started to look around to see what other companies might fail—and found that they really couldn’t tell. As a consequence, each bank started to pull back individually, and the flow of liquidity that supported Wall Street fell apart. As each bank pulled away, the fears of collapse started to turn into reality, which only worsened the problem. The downward spiral led to what we now know as the great financial crisis, from which we have been recovering for the past 10 years.

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An Economic Forecast: The Jobs Report, Tariffs, and Bear Stearns

March 8, 2018

I woke up this morning to a surprise. It had snowed, which was expected. After all the fear-mongering coverage, in fact, I expected the house to be covered, but it wasn’t so bad. The real surprise was the fact that a combination of wind and heavy snow had taken down several trees—including an 18-footer right across most of my driveway. All of a sudden, I was cut off.

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Gary Cohn Resigns: The Other Shoe Has Dropped

March 7, 2018

Yesterday, I wrote that the markets were likely to continue to trend upward, on the idea that the U.S. tariffs were not really going to happen. But then the news that Gary Cohn had resigned as head of the National Economic Council was announced—and this has changed that perception entirely.

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Market Ups and Downs: What's Going On?

March 6, 2018

Well, that was quick. After a sharp but short pullback in late January/early February, the market started to rally again. But it was derailed by the announcement—by the U.S. president—of an impending trade war. Then, after an even shorter and less sharp pullback, it seems to have started to rally again (although it is slightly down as I write this). What’s going on?

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A Look Back, a Look Ahead: An Economic Snapshot

March 1, 2018

As we head into March, I thought it would be a good time to take an economic snapshot—by looking back at February and at what we might expect in the month ahead.

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Federal Reserve Chair Jerome Powell: A New Sheriff in Town?

February 28, 2018

Yesterday was the first time that the new chairman of the Federal Reserve, Jerome Powell, testified before Congress. There has been quite a bit of coverage regarding what he said both in his initial statement and in response to questions. Here, I want to focus on just one sentence. After noting that “the FOMC [Federal Open Market Committee] routinely consults monetary policy rules,” he concluded with what I think was the most important sentence of the day: “Personally, I find these rule prescriptions helpful.” He then referenced a section in the Fed’s monetary policy report that goes through some of the more common rules and how the Fed applies them.

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