Read more about the article A Possible Tug-of-war Between the Fed and the Markets

A Possible Tug-of-war Between the Fed and the Markets

There appears to be a double divergence between the market and the Fed. The inflation projections embedded in bond prices remain above those presented by the Fed. In addition, there appears to be a discrepancy between the mode of action announced by the Fed and what the markets predict as the Fed’s ‘reaction function’. The 10-year rise in market yields this year has been more pronounced than in previous times of instability, such as the 2013 taper tantrum and the sell-off of government bonds. The Fed's current complacency in relation to long yields can always be superseded by a revision of such a position for the sake of stabilization, if volatility increases in the long part of the yield curve.

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Read more about the article The size of Biden’s fiscal package

The size of Biden’s fiscal package

According to Treasury Secretary Janet Yellen, it would be better to run the risk of excess than insufficiency. In addition, the Federal Reserve's new monetary policy regime puts the 2% inflation target as an average, not as a ceiling forcing monetary policy to act to prevent it in advance. After a long period of inflation below 2%, even in years with low unemployment and interest rates on the floor, monetary authorities can afford to wait some time with above-average inflation until they are compelled to pull the brake.

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Read more about the article Whither Interest Rates in Advanced Economies: Low for Long?

Whither Interest Rates in Advanced Economies: Low for Long?

The action of central banks has been more reactive than proactive, more reflex than cause, and in their absence, macroeconomic performance would have been even more mediocre than it has been. There is a mismatch between the trend of increasing stocks of financial wealth, occasionally cut by shocks and crises, and the creation and incorporation of new assets accompanying economic expansion. COVID-19 is helping reinforce such trends.

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Read more about the article Dependency and disconnect of U.S. financial markets

Dependency and disconnect of U.S. financial markets

U.S. stock and corporate bond markets performed extraordinarily well from the March financial shock caused by covid-19 to the end of last month. Then, three consecutive weeks of decline in the three major stock market indexes have been followed this week by a global slump attributed to fears of new lockdowns. A period of disconnect of financial markets with the underlying real economy has culminated in a revelation of the former’s high dependency to Federal Reserve policies.

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Read more about the article Coronavirus: Denying a Crisis

Coronavirus: Denying a Crisis

Both US President Donald Trump and Brazil's leader Jair Bolsonaro face fierce criticism for their response to the coronavirus outbreak. As other nations accepted the advice of experts and went into lockdown to try to stop the spread, Brazil and the United States were almost carrying on as normal. In the UK, Prime Minister Boris Johnson may not have denied the seriousness of COVID-19, but his initial approach of taking it on the chin was a risky one. Could their inaction have cost lives? Guests: James Wallner Senior Fellow at the R Street Institute Otaviano Canuto Former Vice President of the World Bank Dr Bharat Pankhania Senior Clinical Lecturer at the University of Exeter Medical School

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Read more about the article Northern Triangle: The Origins of America’s Migrant Crisis

Northern Triangle: The Origins of America’s Migrant Crisis

Great Decisions examines the Western Hemisphere's migration crisis and the fractured societies at the heart of it: Guatemala, Honduras, and El Salvador. ------------------------------- The Foreign Policy Association produced a series of documentaries called Great Decisions 2020 to be broadcast on TV by the PBS (Public Broadcasting System) and followed by community group discussions all over the US. The pandemic has been forcing the cancellation of huge numbers of Great Decisions groups all over the country, so they decided to go ahead and put all of this season’s episodes on YouTube for free. Here’s the episode about U.S. Relations with the Northern Triangle where I was asked to issue my opinion about challenges and opportunities created by agriculture modernization in the region.

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Read more about the article Competing for Influence: China in Latin America

Competing for Influence: China in Latin America

Until recently, China had little interest in Latin America. Now, its investment is transforming the region. Great Decisions investigates this new alignment and the prospect of direct competition with the United States. ----------------- The Foreign Policy Association produced a series of documentaries called Great Decisions 2020 to be broadcast on TV by PBS (Public Broadcasting System) and followed by community group discussions all over the US. I participated in 2 episodes. The pandemic has been forcing the cancellation of huge numbers of Great Decisions groups all over the country, so they decided to go ahead and put all of this season’s episodes on YouTube for free. Here’s the China/Latin America episode 

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Read more about the article Interview with Otaviano Canuto 2

Interview with Otaviano Canuto 2

Will the economy fail to perform in 2020 or is a recession at hand? Otaviano Canuto, Senior Fellow at the Policy Center for the New South and Nonresident Senior Fellow at The Brookings Institution, joins me once again to discuss the last quarter of 2019 and speaks about the chances for a recession in 2020. Additionally, he talks about corporate debt and the outlook for the housing market in 2020. Wages and employment will likely feel and impact in 2020. Join me for the complete interview with Otaviano Canuto right here on The Leader Campus Voices.

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Read more about the article Trump Tariffs Have Hurt U.S. Manufacturing Jobs
MISH TALK May 10, 2019 https://moneymaven.io/mishtalk/economics/dear-president-trump-stop-the-damn-trade-lies-k5NFyqo6dEGhQQFCSp7OkQ

Trump Tariffs Have Hurt U.S. Manufacturing Jobs

The hike in tariffs imposed by the United States against its major trading partners since early 2018 has been unprecedented in recent history. President Trump alluded to, among others, the goal of revitalizing jobs in the country's manufacturing industry by protecting it from unfair trade practices of other countries, particularly China. However, according to a study by two Federal Reserve Bank staff - Aaron Flaaen and Justin Pierce - released last December 23, the effect so far has been just the opposite, i.e. a reduction in U.S. manufacturing employment!

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Read more about the article Trying to make sense of Mr. Trump’s tweet on Brazil and Argentina

Trying to make sense of Mr. Trump’s tweet on Brazil and Argentina

In our view, while clarification and formalization of measures do not come, I have to agree with a former colleague on the IMF Executive Board of Directors, the Argentine Hector Torres, who in a comment Monday on LinkedIn noted: “President Trump believes that governments of Brazil and Argentina are manufacturing currency devaluations to damage US farmers… and respond by raising tariffs on imports of steel and aluminum… the premise is wrong and the reaction folly! ”. Not without first contributing to the uncertainty that, as we have observed, has already negatively impacted the global economy.

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Read more about the article The US-China Trade War Is Accelerating China’s Rebalancing

The US-China Trade War Is Accelerating China’s Rebalancing

Over the past two years, with the US-initiated war, investors from Taiwan, Japan and the US have already accelerated the transfer of assembly lines and supply contracts in their ITC value chains from China to Vietnam, Thailand, Indonesia and, to a lesser extent, Mexico. On the other hand, the leap to the top of the technology ladder is what seems to be required long before the expected time…

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Read more about the article The Leader Campus Voices interview with Otaviano Canuto (2)

The Leader Campus Voices interview with Otaviano Canuto (2)

This week's Voices interview (10/29/2019) is with Otaviano Canuto, of the Brookings Institute and the Policy Center for the New South - formally of the World Bank, as we visit him once again to discuss the economy. He speaks about the U.S. economy slow down and about the world economy, which could struggle after the Brexit event. Listen to his insight on this week's Leader Campus Voices.

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