The Angry Bear

by New Deal democrat Resolving the contradiction between the yield curve and housing If you listen to the yield curve, it is screaming “recession!”  If you listen to new home sales, they are saying “no worries!”  One of them is wrong. For the last couple of weeks, I have been going back over history in an effort to resolve the contradictory signals. One important portion of that work has been to focus on the non-financial leading indicators, and in...

Will China Play The Rare Earth Card In The Trade War? The rumor that China might play its “rare earth card” was the rumor today that helped push down both stock and oil markets according to a variety of reports.  The trigger for this seems to have been a visit on May 26 by China’s president, Xi  Jinping, to a rare earth facility, along with some rumbling statements associated with that visit.  They may not do it, but the possibility of blocking exports...

Trucking tops ailing rail (nerdy) Since the beginning of this year, weekly rail volumes have usually been negative.  The full year to date volumes have also been negative YoY: Since all manufactured goods have to be transported to market, if this is something confirmed in other transportation readings, it would clearly be recessionary – as in, a recession has already started. One alternative measure of the transportation sector is the Cass Freight...

Conservative Economists Discover the Baumol Cost Disease A little over a year ago Mark Perry wrote this nonsense: The chart above (thanks to Olivier Ballou) is an update of a chart we produced last year about this time, and shows the percent changes since January 1997 in the prices of selected consumer goods and services, along with the increase in average hourly earnings in this version … Blue lines = prices subject to free market forces. Red lines =...

Khamenei Denounces Rouhani For Negotiating Nuclear Deal This has been reported by Juan Cole.  Apparently Supreme Jurisprudent, Ali Khamenei of Iran in a speech to a large number of university students has seriously denounced President Rouhani for having negotiated the JCPOA nuclear agreement with the United States and other powers.  During the negotiations Khamenei played a mixed role, raising doubts about the negotiations, but allowing them to continue...

Read Brad’s post. my comment on “Milton Friedman’s redefinition of “neutral monetary policy” to mean “whatever monetary policy keeps nominal GDP on its trend growth path” led people prone to motivated reasoning in a laissez-faire direction completely and horribly astray… astonishing failure to mark one’s beliefs to market” Someone should write a book “Economic Theory: What Went Wrong”. You had a draft in your mind some years ago. PseudoDeLong wrote...

The Western Hemisphere’s portion of the Arctic looks set for a record low Given Donald Trump’s view that global warming is a hoax, I am surprised that almost 2 1/2 years into his Presidency NOAA’s “Arctic Sea Ice” page is still with us. And since I am a nerd, during the spring and summer it is something I check. In past years, sea ice melted much more in the Eurasian arctic at the extremities of the Gulf Stream than on the North American side. In...

Sheila Bair, who ran the FDIC during the crisis, argues against further bank bailouts. She earned great respect. One thing, which she doesn’t mention, is that she refused to let Geithner use the FDIC trust fund to bear the lower tail risk while leaving the upper tail profits to investors in Public Private Investment Partnerships. She insisted on having a veto on non-recourse FDIC loans used to purchase newly made pools of iffy mortgages. As a result,...

Initial claims, temporary staffing point to weaker May jobs report  – by New Deal democrat As I’ve noted a few times recently, I’m paying additional attention to the weekly jobless claims numbers, partly because I suspected that the late Easter this year resulted in some residual seasonality (which I think has been demonstrated), and partly because if my slowdown forecast is correct, it ought to start showing up there. The initial claims report this...