Book Bits | 26 May 2018

Unelected Power: The Quest for Legitimacy in Central Banking and the Regulatory State
By Paul Tucker
Review via Reuters Breakingviews
How much influence should central bankers wield in a democracy? That’s the question Paul Tucker ponders in “Unelected Power: The Quest for Legitimacy in Central Banking and the Regulatory State”… Central bankers are being sucked into deeply political decisions over how the government is financed, and how income is distributed. Yet these “overmighty citizens” have no electoral legitimacy. At the same time, frustrated voters in the West have turned to demagogues. As a result, central bank independence is under threat.
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Research Review | 25 May 2018 | Business Cycle Risk

Is Fertility a Leading Economic Indicator?
Kasey Buckles (University of Notre Dame), at al.
March 28, 2018
Many papers show that aggregate fertility is pro-cyclical over the business cycle. In this paper we do something else: using data on more than 100 million births and focusing on within-year changes in fertility, we show that for recent recessions in the United States, the growth rate for conceptions begins to fall several quarters prior to economic decline. Our findings suggest that fertility behavior is more forward-looking and sensitive to changes in short-run expectations about the economy than previously thought.
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Macro Briefing: 25 May 2018

Trump cancels N. Korea meeting and China stands to benefit: NY Times
Taiwan scrambles jets as Chinese bombers circle island: Reuters
EU official: UK ‘chasing a fantasy’ in Brexit talks: Guardian
Revised UK GDP data for Q1 remains at sluggish +0.1%: Bloomberg
Mexican president is ‘optimistic’ as country makes new NAFTA offer: Reuters
Big tech faces big lawsuits as Europe’s new data protection law kicks in: CNN
ECB minutes: Euro zone growth could slow further: Reuters
US existing home sales fall in Apr; y-o-y change is negative for 2nd month: Builder
US jobless claims increase to 7-week high: MarketWatch
Kansas City Fed Mfg Index rises to new record high in May: KC Fed
2018 Atlantic hurricane season expected to be near- or above-normal: NOAA

Rate Hike Expected As Fed Signals It Will Allow Higher Inflation

The Federal Reserve is prepared to let inflation run above its two-percent target, according to the minutes of its policy meeting held earlier this month. The bond market appears comfortable with the news: the implied inflation forecast (based on the yield spread between nominal and inflation-indexed Treasuries) ticked down yesterday, reaching the lowest level in over a month for the 10-year maturities. Meanwhile, the crowd continues to bet that the central bank will continue to raise interest rates, including a hike at next month’s FOMC meeting. A period of dovish tightening, in other words, prevails.
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Macro Briefing: 24 May 2018

N. Korea again raises doubts about summit with US: MarketWatch
Trump is eyeing new tariffs on auto imports into US: CNN Money
US disinvites China for naval exercise: Politico
New US home sales dipped in Apr but continued to rise on y-o-y basis: MW
Fed minutes: officials will let inflation run above 2% target: CNBC
US opens investigation into Bitcoin manipulation: Bloomberg
US economic activity strengthened to a 3-month high in May: IHS Markit

Macro Briefing: 23 May 2018

US-N. Korea summit in doubt, Trump says: CNN
Trump hints at new round of tax cuts ahead of Nov elections: MarketWatch
Republican senators have doubts about Trump’s trade talks with China: The Hill
Fed’s Mester sees possibility of stronger inflation ahead: MNI
Eurozone growth slips to 1-1/2 year low in May: IHS Markit
Americans report stronger finances in new Fed survey: Reuters
Richmond Fed mfg index rebounds in May: Richmond Fed
US employment optimism rises to new high: Gallup
US gasoline rises to highest price since late-2014:

Macro Briefing: 22 May 2018

S. Korea’s president to meet Trump on Tues for N. Korea discussion: CNN
US reinforces E. Asia’s missile defenses ahead of N. Korea summit: Reuters
Trump retreats from imposing sanctions on China: Bloomberg
US demands Iran make changes to policy or face economic sanctions: Reuters
Goldman’s chief economist: US fiscal outlook is troubling: CNBC
Philly Fed president supports 2 to 3 rate hikes for the rest of 2018: Reuters
Minneapolis Fed president warns against aggressive interest rate hikes: MW
Atlanta Fed president: Fed close to its inflation, employment goals: Reuters
Chicago Fed Nat’l Activity Index: 3-mo avg for Apr rises to 2018 high: Chicago Fed