Fear of increasing inflation in the U.S. appear to be the trigger behind the market volatility of previous weeks. Recent gains in hourly compensation to workers have had analysts measuring the effect of wages on inflation. In turn, analysts began pondering changes in Fed's monetary policy due to the apparent overheating path of the economy; … Continue reading Rent Prices Stickiness and the Latest CPI Data.
The stock market seems to be returning to the old normal of higher levels of volatility. I suggested on Tuesday that former Fed Chairman Alan Greenspan’s comments could have brought back volatility by triggering the Dow Sell-off on Monday, February 5th. As I wrote early in the week, I believe that we should observe some panic manifestation … Continue reading Timorous evidence of “Contagious Effect” after Dow Sell-Off.
The stock market keeps on sending signals of correction as the Dow Jones struggle to rebound from Monday’s 5th of February sell-off. Economic analysts began early in the week to point out to fear of high inflation due to an upward trend in workers compensation. News reports were mostly based on strong beliefs and arguments … Continue reading The Missing Part of the Dow Jones and Stock Market Sell-off Analysis.
On February 5th, 2018, Dow Jones index fell 1,175 points after the trading day. Four economic scenarios are being analyzed in the news as of the first week of February 2018. First, there are indeed both Stock Market and bonds Bubbles. Second, the Monday Dow’s selloff is just an anticipated correction move on the investor's … Continue reading Recent Narratives of Stock and Bond Bubbles.
The US economy added 228,000 new jobs in November of 2017 and analysts rush to assess the state of the economy as “STRONG.” Although the job reports are indeed good indicators of the performance of the US economy, one should not simplify the job report as the snapshot of the economy that allows for those … Continue reading The overuse of the word “Strong” in economic news.
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The series of documents published by the White House Council of Economic Advisers indicate that President Donald Trump’s Tax Reform will end up being his economic growth policy. The most persuasive pitch behind the corporate tax cut is that lowering taxes to corporations will foster economic investment thereby economic growth. Further, the political rhetoric refers … Continue reading Raising economic expectations with the “after-tax” reckon: President Trump’s corporate tax cut plan.
In a previous post, I covered how heteroscedasticity "happened" to me. The anecdote I mentioned mostly pertains to time series data. Given the purpose of the research that I was developing back then, change over time played a key factor in the variables I analyzed. The fact that the rate of change manifested over time … Continue reading I recognized Heteroscedasticity by running this flawed regression.
Although the Federal Open Market Committee (hereafter FOMC) March’s meeting on monetary policy focused on what apparently was a disagreement over the timing for modifying the Federal Bonds interest rates, the minutes indicate that the disagreement is not only on timing issues but also on exchange rate challenges. Not only does the Fed struggle with … Continue reading Unemployment √. Inflation √. So… what is the Fed worrying about?
When it comes to loan rates, the one that concerns the most regular consumers is the mortgage loan interest rate. This past February 2016 a 30-year mortgage interest rate averaged 3.66 percent accordingly to Freddie Mac, whereas the homeownership stubbornly kept its 63 percent level. So, with the mortgage interest rates averaging 3.53 percent (15-year … Continue reading Why Is the Homeownership Rate Still Falling? An alternative explanation.