Category Archives: Economic Analysis

The Fed’s patience cuts two ways

I found the market reaction to the Federal Open Market Committee’s statement perplexing. Initially, the stock market rallied, the dollar weakened, and oil went up. These are the things I thought should happen with the Federal Reserve (Fed) expressing more … Continue reading

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FOMC: More hints of dovishness

In a unanimous vote, the Federal Open Market Committee (FOMC) kept monetary policy unchanged. The FOMC acknowledged that the economy has been expanding at a solid pace rather than merely a moderate pace. The labor market also got an upgrade, … Continue reading

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What’s next for Europe?

Summary The European Central Bank’s (ECB’s) bond-buying program is coming at a time when the banking system is ready to start lending again, so it’s like running with the wind at your back. The rise of the anti-austerity Syriza party in Greece … Continue reading

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ECB’s shock and awe—or confusion?

The European Central Bank (ECB) defied my expectations and said it intends to purchase 60 billion euros of investment-grade debt per month until September 2016. That intention can change, giving the ECB flexibility to expand and contract the asset-purchase program … Continue reading

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Swiss National Bank and Reserve Bank of India deliver some surprises

Monetary policy works best (for good or bad) when it is surprising. Doing what’s expected tends not to create waves. So when the Swiss National Bank ended its three-year cap on the Swiss franc-to-euro exchange rate and, in an unrelated … Continue reading

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Retail sales unimpressed by lower gas prices

The drop in the price at the pump hasn’t yet translated into a surge in consumer spending. Retail and food-service sales dropped in December by 0.9%, according to the Census Bureau. Gasoline station sales fell 6.5%, as the rapid decline … Continue reading

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Bonds: 2014 year in review

The biggest bond market stories in 2014: Poor performance of the weakest corporate credits Strong performance by the weaker municipal credits Solid performance of the longest Treasuries Poor performance of the weakest corporate credits The second half of 2014 was … Continue reading

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Faster growth and falling prices: Not a new thing

The Institute for Supply Management’s (ISM’s) manufacturing index came in at a healthy 55.5%. This is a diffusion index, meaning that a reading above 50% indicates expansion. While the headline index for December was lower than November, it continues a … Continue reading

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Do early elections signal Greek drama redux?

Remember the Greek drama from 2009 to 2012? It was hard to get away from the coverage of whether there would be a Grexit, involving Greece exiting the eurozone. Greek finances were a mess, and there was political chaos. In 2010, the … Continue reading

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GDP: Not as spectacular as it appears

The seasonally adjusted annualized real growth rate of third-quarter gross domestic product (GDP) was revised from 3.9% to 5.0%. That’s the fastest pace of growth since the third quarter of 2003. In all fairness, however, a lot of growth in … Continue reading

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