Since we experienced a severe economic trauma due to the subprime financial crisis, there has been an almost reflexive disbelief in the durability this economic expansion. There are times when I would count myself amongst the disbelievers. For example, during the shale oil bust, I worried that Fed rate hikes would be the straw that broke the camel’s back. But time and again, this economic upturn has shown resiliency. The one measure I look at that best encapsulates the resiliency is the initial jobless claims figure released by the US Department of Labor. They are almost dead-on real-time data. The series is released weekly, so you get freq...
The hour-long auspicious Muhurat trading session ended on a weak note today. While the BSE Sensex closed lower by about 194 points, the NSE Nifty ended lower by about 64 points. Meanwhile, BSE Mid Cap ended lower by 0.3% and BSE Small Cap finished up by 0.1% respectively. Losses were largely seen in bank stocks, metal stocks and PSU stocks. Gold prices were trading down by Rs 250 to Rs 30,750 per 10grams on the eve of Diwali. Rupee was trading at Rs 65.07 against the US$ in the afternoon session. Oil prices were trading at US$ 51.61 at the time of writing. Global stocks mostly fell after data showed that China’s economic...
Gold prices may continue to recoup the losses from earlier this week as the precious metal snaps the recent series of lower highs & lows. The recent price action boosts the near-term outlook for gold as the precious metal regains its footing ahead of the monthly-low ($1261), and bullion may continue to trade on a firmer footing as it appears to be carving an outside-day (engulfing). Keep in mind, fresh comments from Fed Chair Janet Yellen may tame gold prices as Fed Fund Futures highlight a greater than 80% probability for a December rate-hike, and the precious metal stands at risk of facing range-bound conditions should the central ba...
Every now and then, there’s a rash of commentary on national productivity. And for the British, productivity is all part of the Brexit angst, with the OECD, the Treasury, the Bank of England and Remainers all saying the average Brit’s poor productivity just goes to show how much they need the certain comfort of being in the EU. As Hilaire Belloc put it, we must hold on to nurse, for fear of something worse. Only this week, the OECD came out with a paper repeating its disproved nonsense about the economic consequences of Brexit, even recommending Britain should hold a second referendum to reverse the Brexit decision. To back up its analysi...
Manufacturing activity in the Philadelphia region continues to chug along as the Philadelphia Fed’s survey of manufacturing activity came in higher than expected for October rising to 27.9 compared to forecasts for a reading of 20. October’s reading represents the 15th straight month that manufacturing activity showed growth and is the strongest monthly reading since May. Looking at the chart below, the current period of consistent strength that we have seen has not been too common throughout the history’s survey. The table below breaks down this month’s report by each of its subcomponents and the results were mixed. While New Orders,...
I was at the center of the October 19, 1987 stock market crash, when the U.S. equity market dropped 20% in a single day. The second chapter of my book, A Demon of Our Own Design recounts my experiences during the 1987 Crash and provides an explanation of what went wrong. The essence of the problem was a programmatic positive-feedback strategy, namely, the dynamic hedging program of portfolio insurance, coupled with the time disintermediation between the speed of the index futures market in Chicago and the more deliberate pace of those in the equity market in New York. This is not so different structurally from what we have now with the time...
from the San Francisco Fed — this post authored by John C. Williams The Federal Reserve is moving towards more normal monetary policy, which means rising interest rates. But factors including the real natural rate of interest, a slower sustainable pace of growth, and inflation all point to a new normal where interest rates are lower than in the 1990s and early 2000s. The following is adapted from a speech by the president and CEO of the Federal Reserve Bank of San Francisco to the Community Banking in the 21st Century Research and Policy Conference in St. Louis on October 5. Today I’m going to talk about interest rates…in a lot of d...
30 year ago today, traders were having a bad day: the Dow, S&P 500, FTSE, DAX and CAC fell -23%, -20%, -11%, -9% and -10% respectively. The FTSE fell a further 12% the day after, reflecting the difficulties in fully reopening the market after the great storm a few days before. The day would eventually become known as Black Monday. In a “bit of fun” Deutsche Bank’s credit strategist, Jim Reid, decided to calculate where returns would be today had you bought various assets the morning after the crash. For this, the credit analyst used his regular monthly template of assets, and notes that the most important decision to ha...
The latest Conference Board Leading Economic Index (LEI) for September decreased to 128.6 from 128.8 in August and saw its first decline in over a year, partially due to the impact of the hurricanes. The Coincident Economic Index (CEI) came in at 115.7, up fractionally from the previous month. The Conference Board LEI for the U.S. declined slightly for the first time in over a year. Negative contributions from initial claims for unemployment insurance (inverted), building permits and average weekly manufacturing hours more than offset the positive contributions from the ISM® new orders index and the financial components. In the six-month p...
Gold and silver’s historical role in conflict shaped the world today and the modern financial system Gold played an important function in the great conflicts up to and throughout the 20th century Gold and the effective use of bullion played a crucial role in the outcome of the American Civil War Gold was an important economic agent in both World Wars, conferring a huge advantage on the allies In a world beset with risks of war both in the Middle East and with North Korea, Russia and China … gold will protect Gold and silver have played important roles during periods of conflict and have protected people but also protected nations and co...