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Thoughts From The Divide - Archive

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Superlative Labor & Missing Inflation - March 12, 2019

New Unemployment Rate data continues to surprise forecasters to the downside as job creation was at a record high. The strong labor market has economists puzzled over the lack of inflation, prompting the Fed to review their strategy, including looking at BoJ-inspired price controls.

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The Hibernating Phillips Curve - February 26, 2019

In a paper entitled “Prospects for Inflation in a High Pressure Economy: Is the Phillips Curve Dead or is It Just Hibernating?” by Peter Hooper, Frederick Mishkin, and Amir Sufi, they weigh in on the dynamic of inflation in a high pressure economy and the viability of the Phillips Curve.

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Mixed Housing Data - February 19, 2019

Recent housing data has been displaying mixed signals. On the positive side, homebuilders and consumers are confident in the future, while on the negative side, NAHB’s Opportunity Index, which measures affordability, is at its lowest reading in ten years. 

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SBOI, Inflation and the Fed - February 12, 2019

The NFIB released its Small Business Optimism Index and while the press was quick to comment on the weakness of the data, overall the numbers were not all bad. Also, get into why some research suggests that recent inflationary pressures are something to shrug off.

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Inflation and The Fed - February 5, 2019

While last Friday’s data dump all pointed to robust growth in the US, it seemed like the market was mostly focused on the hemming and hawing of the Federal Reserve. This week, we look at three interesting pieces that help make sense of it all.

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Cause and Effect - January 29, 2019

Jerome Powell and the Federal Reserve do not see the Fed Balance Sheet runoff creating problems, but the tide may be changing as QT may reverse the virtuous cycle created by QE. Recent housing data has further shown mixed signals and the government is a bit worried about mortgage lenders.

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Shades of Dove and Volatility - January 15, 2019

Whether you are bullish or bearish, the right side of the trade in Fed speak has been dovish. Current and previous Fed officials have been worried that the Fed is looming on policy error and could tip the economy into a recession. Also, Chris Cole of Artemis Capital thinks more volatility will show up in the markets.

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Economic & Policy Incongruities - December 11, 2018

Recently we’ve highlighted some US economic data has displayed some incongruities between ISM and Markit Manufacturing. Now, NFIB’s Small Business Optimism data, former Fed officials, and news sources have mixed signals.

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Rates, Rates, and More Rates - November 27, 2018

Going into the FOMC meeting in December, a number of important "rates" are making headlines. Vice Chariman Clarida discusses u* and r*. Research from the San Francisco Fed disagrees with Neel Kashkari's belief that the Labor Force Participation Rate implies Labor Slack. And, Mortgage Rates are the scapegoat for recent problems in the Housing Market.

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Where is Labor's Share - November 20, 2018

With much recent talk of workers being left behind, this weeks TFTD's focuses on a paper on the Labor Share from the NBER. While median labor share has increased, there are some negative trends, including increased value added at firms with low labor share, and asymmetrical responses to productivity shocks.

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Dovish Daly? - November 13, 2018

In a recent speech, San Francisco Fed President Mary Daly gave hope to those worried that the Fed was on a set path of hiking. First she assured the crowd that the Fed was data dependent, ignoring its horrendous record of forecasting problems and the massive transmission lag. Second she highlighted benign inflation numbers. Though inflation is still contained, recent job data indicates that wage inflation is on its way.

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