Jerome Powell emerged victorious in the political war that threatened to derail his re-nomination to lead the Federal Reserve for a second term. Winning the economic war that awaits, however, will likely be a much tougher battle.
Monthly Archives: November 2021
Macro Briefing: 23 November 2021
* Biden chooses Jerome Powell for second term as Fed chair
* New economic challenges await Powell in his second term as Fed chair
* US expected to announce release of oil from strategic reserve
* Turkish lira crashes as President Erdogan vows more rate cuts as inflation surges
* Eurozone economic growth rebounds in November via PMI survey data
* UK input inflation reaches new record high in November via PMI survey data
* Will higher rate of women attending college vs. men change the economy?
* US existing home sales rose to 9-month high in October
* US economy rebounded sharply in Oct via Chicago Fed Nat’l Activity Index:
Risk-Off Sentiment Hit Most Markets Last Week
US bonds edged higher for the trading week through Friday, Nov. 19, but red ink took a toll on the rest of the major asset classes, based on a set of ETFs.
Macro Briefing: 22 November 2021
* Rebounding US Covid-19 cases suggest a holiday surge is coming
* US intel suggests Russia preparing for possible Ukraine invasion
* Protests turn violent in Europe against new Covid-19 restrictions
* Migrant crisis on EU-Belarus border may get worse, warns Poland’s PM
* Japan working on plan to release crude-oil reserves to help tamp down prices
* Supply chain bottlenecks may be easing, but labor shortages could persist
* Inflation appears pandemic-driven v. excessive spending generally
* US 10yr-2yr yield curve near four month low:
Book Bits: 20 November 2021
Timothy J. Sinclair
Summary via publisher (Cornell U. Press)
To the Brink of Destruction exposes how America’s rating agencies helped generate the global financial crisis of 2007 and beyond, surviving and thriving in the aftermath. Despite widespread scrutiny, rating agencies continued to operate on the same business model and wield extraordinary power, exerting extensive influence over public policy. Timothy J. Sinclair brings the shadowy corners of this story to life by examining congressional testimony, showing how the wheels of accountability turned—and ultimately failed—during the crisis. He asks how and why the agencies risked their lucrative franchise by aligning so closely with a process of financial innovation that came undone during the crisis. What he finds is that key institutions, including the agencies, changed from being judges to being advocates years before the crisis, eliminating a vital safety valve meant to hinder financial excess.
High Beta Continues To Lead US Equity Factor Returns In 2021
With just over a month to go until we put a fork in 2021, high beta stocks look set to deliver the strongest performance among US equity factors this year, based on a set of ETFs.
Macro Briefing: 19 November 2021
* Dems delay wide-ranging spending bill after GOP leader stalls vote
* Pressure among Democrats builds for Biden to combat inflation
* Japan approves new stimulus spending bill to boost economy
* Austria announces new national lockdown as coronavirus crisis deepens
* German producer prices in October rose at fastest rate in nearly 60 years
* CVS will close 900 stores to respond to changing “consumer buying patterns”
* US Leading Economic Index rose sharply in October, point to strong growth
* Philly Fed’s manufacturing index reports accelerating growth in November
* US jobless claims fall for seventh straight week:
10-Year Treasury Yield ‘Fair Value’ Estimate: 18 November 2021
The 10-year US Treasury yield has been moving higher in recent weeks. Does the shift signal an extended run higher? There’s a firmer upside bias lately, although this change doesn’t yet look decisive, although our average fair-value estimate of the 10-year rate continues to indicate that the path of least resistance is up.
Macro Briefing: 18 November 2021
* Rising shipping costs could drive consumer inflation higher next year, UN warns
* Has loose Fed policy become a threat to jobs?
* Inflation call on Wall Street linked with extreme career risk
* Biden calls for FTC investigation of “illegal conduct” re: surging gas prices
* Japan, S. Korea consider releasing oil from strategic reserves after US request
* Turkey’s currency falls to record low vs. dollar ahead of central bank meeting
* Amazon says it will stop accepting Visa credit card payments in UK
* US housing starts were surprisingly soft in October:
Rebounds In US Payrolls, Industrial Output Are Unusually Strong
October data for the labor market and the industrial sector continue to paint a bright profile of recovery in absolute and relative terms vs. previous economic expansions. Retail sales data through last month, updated earlier in the week, suggest the same for personal consumption expenditures, which will be updated for October on Nov. 24. The weak outlier is personal income and it’s unclear if this key indicator will deliver more encouraging results in the upcoming report.