There’s New Hope for US Recovery as Early Cyclical Sectors Rebound
Something is changing in the US economic recovery. Housing and autos are finally starting to wake up from a recession-induced slumber, and the timing couldn’t be better.
read moreECB Bond Buying Is a Double-Edged Sword
European Central Bank (ECB) president Mario Draghi’s promise to do “whatever it takes to preserve the euro” and create a new bond-purchase program has been positive for market sentiment. But the program also carries real dangers if it breaks the fragile consensus on the board of the ECB and eases the pressure on governments to create a [...]
read moreBank of England Still Aiming at the Wrong Target
The UK is celebrating a near three-year low in consumer price inflation, but we think the Bank of England (BOE) should be more worried about the role that money and credit play in the inflation process.
read moreCollapse in UK Investment Income Is Cause for Concern
A collapse in direct investment income was the main factor behind the UK’s record second-quarter current account deficit. It’s too early to know whether this represents a permanent shift. But, if it does, it would make rebalancing the economy more difficult and have important implications for the pound.
read moreNo Manipulation of US Jobs Data, but the Numbers Are Noisy
In the heat of a US election season, the sharp drop in September’s unemployment rate raised some eyebrows. I think it is blatantly wrong to argue that government statisticians manipulated the data. But the jump in household jobs that triggered the drop in the unemployment rate was indeed extraordinary and requires further scrutiny.
read moreEuro-Area Interest Rates: To Zero and Beyond?
There has been some speculation that the European Central Bank (ECB) may soon push its deposit rate into negative territory.
read moreDoes an Odd Economic Tidbit Reveal Surging Optimism?
The Philadelphia Fed Index, a leading measure of US economic activity, beat analysts’ expectations. But what caught our eye—and many others’ as well—was a detail within the survey: the future index jumped more sharply than it has since February 1991, when the first Gulf War ended unexpectedly quickly.
read moreWeaker Growth Helps Shift Germany’s Approach to Sovereign-Debt Crisis
Recent German data show clearly that the sovereign-debt crisis is starting to bite. This might help explain why the government has given a green light to the European Central Bank’s (ECB’s) new sovereign-bond purchase program. It may also indicate a more lenient approach to Greece—at least for the time being.
read moreAfraid of QE3? Buy Real Assets
In the past few weeks, central banks have reaffirmed their intent to do “whatever it takes,” in European Central Bank (ECB) President Mario Draghi’s words, to address the various ailments afflicting the global economy. While central bank actions may or may not have their desired effects on the real economy, they do create short-term opportunities [...]
read morePolicymakers Powerless to Stem Capital Flight from Spain
Capital flight from Spain is accelerating. As foreign investors and banks pull massive sums out of the country, policymakers look powerless to stop it.
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