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Results 301–350
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Who's Confused, the Fed or the Markets?
by Scott Brown of Raymond James,
The Federal Reserve provides a lot more information than it used to. The central bank issues policy statements, it makes public its economic projections and policy expectations, and the Fed chair holds regular press conferences to explain things.
The Return of Fiscal Policy?
by Scott Brown of Raymond James,
The world’s central bankers are tired of having to do all the heavy lifting to support growth. Some have suggested the need for fiscal policy to take a bigger role. Is that a good idea? Is expansionary fiscal policy even feasible at this point?
Yellen’s Jackson Hole Speech
by Scott Brown of Raymond James,
In Jackson Hole, Fed Chair Janet Yellen was not expected to speak much about the current economic outlook or monetary policy. In line with the general theme of the Kansas City Fed’s symposium, she did talk about the Fed’s monetary policy toolkit. However...
GDP, the Labor Market, and the Fed
by Scott Brown of Raymond James,
As if this year hasn’t been odd enough, the advance GDP report for the second quarter presented a strange picture. The headline figure (a 1.2% annual rate) was weaker than expected, due to a sharp slowing in inventories (in fact, inventories actually declined for the first time since 3Q11).
Real GDP: 2Q16 Outlook and Revisions
by Scott Brown of Raymond James,
The economic data arriving this week and next will help to solidify the near-term outlook for growth and monetary policy. There are almost certainly going to be surprises along the way and the financial markets have a tendency to over-react. However, it’s likely that the figures will remain consistent with moderate economic growth.
Fed on Hold, but for How Long?
by Scott Brown of Raymond James,
In mid-June, all the Federal Reserve’s 17 senior officials expected at least one increase in short-term interest rates by the end of the year and most were looking for two. Bear in mind, that outlook followed a weak initial payroll figure for May. In contrast, the financial markets have mostly priced out a Fed move for this year. Is the Fed trapped?
The June Employment Report
by Scott Brown of Raymond James,
The monthly job market report is valued for its timeliness and its ability to drive the outlook for a number of sectors, including manufacturing, construction, and retail sales. Still, the figures are statistical estimates and seasonal adjustment is often difficult. The upside surprise in June followed a downside surprise in May. Such large month-to-month swings are unusual, but they do happen from time to time. Yet, if the weak May number was an anomaly, then so too was the figure for June. Job growth appears to have slowed, but not terribly.
Meanwhile, Back at the Ranch…
by Scott Brown of Raymond James,
While the Brexit vote and initial reaction (over-reaction?) is behind us, there will be a lengthy and uncertain process of disentanglement from the European Union. Brexit has dominated the market action, but we should be seeing greater interest in the U.S. data.
Anarchy in the U.K. / I'm So Bored with the U.S.A.
by Scott Brown of Raymond James,
Caught leaning the wrong way, the financial markets were hit hard by the outcome of the U.K.’s referendum on EU membership. However, the decision to leave the European Union is not a Lehman-type event. A full-blown panic is unlikely and we should see the U.S. market settle down early this week. The outlook for the U.K. economy is not good. Meanwhile, back at home, investors will look to the calendar and collectively yawn.
Breaking Bad
by Scott Brown of Raymond James,
On June 23, the United Kingdom will vote on whether to remain in the European Union. The vast majority of economists are projecting dire consequences for the U.K. economy if voters decide to leave, with some likely spillover to the rest of the world. Until a few weeks ago, polls had pointed to an easy victory for the “remain” campaign. However, many polls now show the “leave” side ahead. Polls are widely regarded as unreliable, following the inaccuracies ahead of last year’s general election. Betting odds (to date) still favor “remain,” but it may be a photo finish.
A Slowdown in Job Growth
by Scott Brown of Raymond James,
The economy added nearly 697,000 private-sector jobs in May. That’s before seasonal adjustment (in comparison, we added 996,000 in May 2015). One month does not necessarily make a trend, but figures from March and April were revised lower, reinforcing the view that (seasonally adjusted) job growth has slowed. The question, for the Fed and for investors, is why.
On the Other Hand…
by Scott Brown of Raymond James,
The minutes of the April 26-27 Federal Open Market Committee meeting has returned monetary policy to the list of financial market worries. However, while most Fed officials believe that a June rate hike could be in the cards, that doesn’t mean that rates will be raised next month. On the one hand, there are reasons to resume policy normalization. On the other hand, there are reasons to delay. The end results will depend on how the Fed balances the data and the risks.
Retail Sales Figures
by Scott Brown of Raymond James,
Economic data reports are subject to measurement error, statistical noise, and seasonal adjustment difficulties. They should always be taken with a grain of salt. However, that’s not to say that the figures are useless. Rather, they are subject to interpretation. What then do we make of the situation when the hard data conflicts with the anecdotal information?
A Closer Look at the April Employment Report
by Scott Brown of Raymond James,
The Employment Report is by far the most important data release for the financial markets. However, investors aren’t always aware that the figures are statistics, reported with a fairly large degree of uncertainty. That raises the possibility of overreactions to what may just be noise. That said, the broad range of job market data is consistent with further improvement in labor conditions. At the same time, we can expect the pace of job growth to slow over time, simply because it has to.
Who Wants Pie?
by Scott Brown of Raymond James,
Productivity growth is perhaps the single most important factor in the economy. Increased output per worker facilitates improvements in the standard of living over time. It’s how our children have a better future. It also helps support corporate profits. What to make then of the current situation, where productivity growth has slowed to a crawl in the U.S. and around the world? Will there be enough pie to go around?
The Fed, the Dollar, and Trade Activity
by Scott Brown of Raymond James,
Financial markets have some tendency to over-react to news and the increased globalization of financial markets means that things can now get out of hand a lot more quickly on a global scale. Minor shifts in the Fed policy outlook have had a large impact on exchange rates. The strengthening of the dollar has had an outsized impact on commodity prices. However, shifts in the financial markets can themselves have important effects on economic conditions. It’s enough to make your head spin.
Expecting Mixed Economic Data
by Scott Brown of Raymond James,
The broad range of data suggests that the U.S. economy slowed in the first quarter. It’s more likely that this is merely “a slow patch” than the start of a more substantial downturn (not gonna use the r-word). The mixed nature of the economic data allows one to make any particular argument one wants and the noise is likely to add to market volatility in the near term.
The Economic Outlook and the Fed
by Scott Brown of Raymond James,
The first quarter’s market action was driving by the escalation of fear and the ebbing of that fear, ending with expectations of “more of the same” – that is, mixed but moderate economic growth and a very gradual pace of Fed tightening.
Can Manufacturing Jobs Come Back?
by Scott Brown of Raymond James,
The leading presidential candidates of both parties have pledged to bring manufacturing jobs back to America. It’s unclear exactly how this will be done or even whether it can be done. However, the sentiment has hit a nerve with many voters. The more important problem will be to figure out where the economy is headed over the long term and how to prepare the workforce for the future.
Turn, Turn, Turn
by Scott Brown of Raymond James,
The story goes that tighter Fed policy has strengthened the dollar, the stronger dollar has led to lower prices of oil and other commodities, and the drop in oil prices contributed to stock market weakness in January and February. However, stock market movements cannot be attributed wholly to the price of oil, the price of oil cannot by tied completely to the dollar, and the dollar’s strength has not been due entirely to monetary policy. Examining these links more closely may provide some insight into where we are heading in the months ahead.
U.S. vs. The World
by Scott Brown of Raymond James,
The recent economic data reports have continued to reflect the mix of global softness and domestic strength. The economy has continued to add jobs at a relatively strong pace in early 2016, although the real test for the job market will come over the next few months. The job market is getting tighter and, despite a dip in hourly earnings, wage trends are higher. January trade data, overshadowed by the employment report, suggest a larger drag on GDP growth in 1Q16, but the consumer should carry us through into the second half of the year.
Nothing Recedes Like Recession
by Scott Brown of Raymond James,
Recent economic data reports have been mixed, but generally consistent with moderate economic growth in the near term. That won’t stop investors from worrying. The overall theme of domestic strength vs. global softness is going to continue. However, there are likely to be some important issues in the job market and dilemma for Fed policy in the months ahead.
What to Worry About
by Scott Brown of Raymond James,
Global financial markets were unexpectedly volatile in January and there have been few signs of calm in February. Some of the worries are real; others imagined or overdone. It’s difficult for investors to slice through the noise. There is genuine concern that market fear could become self-fulfilling, and while the expectation is that the U.S. economy will muddle through and avoid a recession this year, the risks are tilted to the downside and policy options to counter a downturn are limited.
Spotlight on Yellen
by Scott Brown of Raymond James,
Fed Chair Janet Yellen will present her semi-annual monetary policy testimony to the House Financial Services Committee on Tuesday. She is expected to present a moderately upbeat economic outlook, but she should also note the abundance of downside risks to that outlook. This is an election year, so she is unlikely to receive a warm welcome. If fact, many are likely to criticize the Fed for raising rates in December. She will put up a credible defense, but that’s unlikely to appease the markets.
The Growth Outlook, Near and Far
by Scott Brown of Raymond James,
Real GDP rose at a 0.7% annual rate in the advance estimate for 4Q15, roughly what was expected before the release, but a lot lower than was anticipated at the start of the quarter. It’s not as bad as it looks. Growth was held back by foreign trade and slower inventory growth. Domestic demand was mixed, but moderate. The fourth quarter numbers don’t tell us much about the important question: what’s growth likely to be over the course of this year. More troublesome, there are more important concerns about the economy’s long-term prospects.
Will the Tail Wag the Dog?
by Scott Brown of Raymond James,
Global economic conditions do not appear to be severe enough to justify this year’s adverse market action. However, the adverse market action may pose a risk to the global economic outlook. While the global financial system may currently seem a bit unstable, it’s unlikely that fear will become a self-fulfilling prophecy. At least, that’s the hope.
What, Me Worry?
by Scott Brown of Raymond James,
Recent economic data releases have been mixed. However, despite strong job figures, most have been on the soft side of expectations. Lower commodity prices are tough for producers of raw materials, but beneficial to the buyers of those materials. However, the bigger concern is why commodity prices are falling. Many view the drop in oil prices as signaling a more pronounced global slowdown and fear that the U.S. domestic economy may not be robust enough to escape that. The anecdotal data from the manufacturing sector is much worse than is suggested by the hard economic data reports.
Grouchy Tiger, Somethin's Draggin'
by Scott Brown of Raymond James,
It was an important week for U.S. economic figures, but the data releases were overshadowed by market developments in China. The country’s new circuit breakers, which were meant to reduce market volatility, were a disaster, and were jettisoned after the Shanghai market was shut down completely in two of four trading sessions. The hope is that the Chinese authorities will stabilize the situation. However, currency management should be more of a challenge and poses the greater risk.
What Comes Next?
by Scott Brown of Raymond James,
The Federal Reserve has now raised short-term interest rates for the first time in nine and a half years. In the policy statement, the Fed signaled that policy will still be accommodative, that future action will be data-dependent, and that the pace of rate increase is likely to be gradual. None of that should be a surprise.
What to Expect When You're Expecting Uncertainty
by Scott Brown of Raymond James,
Last week, we looked at the Fed’s various policy tools and how the central bank will use them. This week, let’s examine the implications of a Fed rate hike. While a rate increase should be largely factored into the markets by now, the global reaction may be the largest concern for Fed officials.
What to Expect When You're Expecting (a Fed Hike)
by Scott Brown of Raymond James,
It’s anticipated that the Fed will begin tightening monetary policy soon, but many investors may be unfamiliar with how policy will be tightened. Let’s review the key policy tools and how this tightening cycle will differ from previous cycles.
Forecasting Exchange Rates
by Scott Brown of Raymond James,
Currency forecasting is inherently difficult. Getting monetary policy right can help in the short-term, but beyond three months, you can’t do any better than a random walk. That aside, the strong dollar (along with softer global economic growth) has played a major role in the slowdown in U.S. corporate profits this year. What can we expect for 2016?
Fed Up
by Scott Brown of Raymond James,
The agonizing over whether the Fed will begin raising short-term interest rates is unlikely to end soon. A 25-basis-point increase shouldn’t have much of an impact on the economy, especially if the Fed makes it clear that it intends to go slow with further rate hikes. However, the financial markets believe this to be a big deal. So it is. Fed officials have continued to signal that it “may be appropriate” to start in December, but they have also continued to signal that this is not a done deal.
The Job Market and the Fed
by Scott Brown of Raymond James,
The October Employment Report was stronger than expected, but should be seen in its proper context. That is, while October’s payroll gain far exceeded forecasts, it followed softer figures in August and September. The three-month average was moderate. Financial market participants believe that the report makes a December 16 rate hike a lot more likely. However, the Fed had already been signaling that such a move was likely.
Only the Data Can Stop a December Fed Rate Hike
by Scott Brown of Raymond James,
As expected, the Federal Open Market Committee left short-term interest rates unchanged last week. However, the wording of the policy statement was decidedly hawkish, suggesting (contrary to market expectations) that officials are leaning toward a move on December 16. GDP growth wasn’t especially brisk in the third quarter, but that was due largely to slower inventory growth. Domestic demand remained strong, but monthly figures suggest a loss of momentum heading toward 4Q15. Ultimately, the Fed’s decision will remain data-dependent and there are many reports between now and then.
Gross Domestic Product
by Scott Brown of Raymond James,
The Bureau of Economic Analysis will report its initial estimate of third quarter growth on Thursday. There’s always plenty of uncertainty in the advance estimate. The BEA does not have a complete picture and will have to make some assumptions about foreign trade and inventories in September. These figures will be revised, perhaps a lot, which is why it is more important to focus on the story behind the numbers.
The Budget and the Debt Ceiling
by Scott Brown of Raymond James,
Treasury reported a $439 billion budget deficit for the fiscal year ending in September. That sounds like a lot, but it’s 2.4% of GDP, below the average of the last few decades. However, that’s nothing to celebrate, as the retirement of the baby-boom generation will boost entitlement spending in the decades to come. There’s plenty of time to solve that problem, but the federal debt ceiling is a more immediate concern. Congress has just two weeks to work out a deal.
Employment, GDP, and the Fed
by Scott Brown of Raymond James,
The September Employment Report was disappointing, but not horrible. Some of the recent softening in the pace of job growth may reflect seasonal issues. Stronger seasonal hiring in May and June should naturally lead to more seasonal layoffs in August and September. That is unlikely the only explanation. Concerns about global growth and financial market volatility may have made firms, especially smaller firms, reluctant to hire. Estimate of 3Q15 GDP have been declining, while underlying domestic demand have remained strong.
Nearing Normalization / Shutdown Shuffle – Part 2
by Scott Brown of Raymond James,
Fed Chair Janet Yellen downplayed concerns about the rest of the world and indicated that she was among the majority of Fed officials expected to raise short-term interest rates this year. Meanwhile, while John Boehner’s resignation as House Speaker may signal an agreement on the budget, Congress has moved further away from future compromise.
Nearing Normalization / Shutdown Shuffle
by Scott Brown of Raymond James,
The key line that was added to the Fed’s policy statement suggests a sharper focus on what’s happening in the rest of the world, but let’s be clear. The Fed is not reacting to overseas developments per se, but to what shifting global economic and financial conditions mean for the U.S. economy. In focusing on the Fed’s decision to delay policy normalization, investors have ignored the increased risk of a government shutdown.
Results 301–350
of 577 found.
