Category Archives: Economic Analysis

Russia: When currencies collapse

In 2001, Warren Buffett wrote, “Only when the tide goes out do you discover who’s been swimming naked.” Too many times in history—but, apparently not often enough for despots to actually learn from it—this saying has rung true with commodity-dependent … Continue reading

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Will crude oil rout trigger a market correction?

Summary I think the drop in oil since June and in the S&P 500 Index from its November high represent a relatively slow deflating of a bubble in low-quality energy names, and the setback to the broader market is likely … Continue reading

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Japan’s election: 2013 all over again?

Japan’s Prime Minister Shinzo Abe received a tremendous vote of confidence as his Liberal Democratic Party (LDP) won a commanding lead in Japan’s lower house of parliament. The elections, called by Abe after a sales tax increase in April dipped … Continue reading

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November retail sales: Consumers to the rescue! But don’t fret early Fed rate hikes.

Retail sales increased 0.7% in November, beating the consensus estimate of 0.4%. Compared with last November, retail sales were 5.1% higher. These numbers are in nominal terms, meaning they are not adjusted for inflation. Even after adjusting for inflation, these … Continue reading

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Should you fear an unemployment rate that is too low? NAIRU nonsense

Some acronyms become part of everyday language—SCUBA (self-contained underwater breathing apparatus) and LASER (light amplification by stimulated emission of radiation) come to mind. NAIRU isn’t one of those acronyms. In some tribes of economics, NAIRU is an important concept for … Continue reading

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Employment situation: Don’t let the strength worry you

Nonfarm payrolls expanded by 321,000 in November, and the unemployment rate was unchanged at 5.8%, according to the Bureau of Labor Statistics. Nonfarm payrolls for September and October were also revised higher a total of 44,000. The number of long-term … Continue reading

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The ECB’s spark

At the most recent press conference after the European Central Bank’s (ECB’s) Governing Council meeting, ECB President Mario Draghi said the ECB has shifted from expecting to increase its balance sheet to around 3 trillion euros by June 2016 to … Continue reading

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Striking drop in oil

Oil prices have tumbled from $115 per barrel on June 19 to $70 per barrel. What started as a slow slide due to extra production coming online turned into a tumble when OPEC (Organization of the Petroleum Exporting Countries) leaders … Continue reading

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FOMC Minutes: Appearances are everything

The Federal Open Market Committee (FOMC) released the minutes from its October 28–29 meeting, when the Federal Reserve (Fed) wrapped up QE3. At the meeting, the Fed also acknowledged that the labor markets had made enough progress that there was … Continue reading

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Japan: Fallen and it can’t get up?

Second-quarter gross domestic product (GDP) growth in Japan was, almost by design, negative. That’s what happens when you dramatically increase a broad-based tax (the value-added tax, or VAT). Policymakers thought that the decline in growth would be temporary, changing direction … Continue reading

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