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Kevin Flynn, CFA

 
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  • Retail Sales Are Better Than They Look, But Not The Economy [View article]
    We haven't remained decoupled, as our own growth would surely be higher if Europe was growing at a similar rate. Trade levels remain dismally weak.

    Zero European growth isn't likely to tip the US into recession, however; the leading candidate for that is the end of our own business cycle. Events from abroad that could hasten or precipitate that ending include a global recession and/or some sort of credit shock. It won't be 1% Fed fund rates.
    Jan 16, 2015. 11:30 AM | Likes Like |Link to Comment
  • Retail Sales Are Better Than They Look, But Not The Economy [View article]
    It is true that 4% nominal GDP growth is less likely to cause inflation. The idea that the cycle can stay "lower for longer" is just a promotional slogan, much like "the new economy." Business cycles come to an end with or without rising interest rates or fiscal measures, and this one will too.

    You might not want to take Chinese government data at face value, particularly GDP measures.
    Jan 16, 2015. 11:23 AM | Likes Like |Link to Comment
  • Retail Sales Are Better Than They Look, But Not The Economy [View article]
    I'm not sure what you're asking, or what definitions you're referring to. Are you wondering about the accuracy of retail sales reports?
    Jan 15, 2015. 03:54 PM | Likes Like |Link to Comment
  • Economic Myth And Financial Reality [View article]
    The Fed's capacity is limited to monetary policy - a "blunt instrument," as the bank has oft acknowledged over the years.
    Jan 3, 2015. 10:21 AM | Likes Like |Link to Comment
  • Economic Myth And Financial Reality [View article]
    I don't share all of my data analytics. However, if you go to the BEA website you can find that the last business cycle ended in Q42007. Furthermore, you could find for yourself that peaks tend to precede the ends of cycles by about six to eighteen months. If you go to the BIS website, you can find their analysis that business cycles do not last more than eight years, though this is obviously not a physical law.
    Jan 2, 2015. 03:42 PM | Likes Like |Link to Comment
  • Economic Myth And Financial Reality [View article]
    Real economists would not agree with your assertion that monetary stimulus "has the same exact effects on the money supply as tax cuts," nor does monetary stimulus necessarily reach more people across the economic spectrum.
    Jan 2, 2015. 03:33 PM | Likes Like |Link to Comment
  • Economic Myth And Financial Reality [View article]
    And a Happy New Year to you too, Mr. Bear, one of my favorite readers!
    Dec 31, 2014. 02:57 PM | 2 Likes Like |Link to Comment
  • There's Just One Catch [View article]
    Also Hyman Minsky. It may well be that the Fed's determination to combat financial stress has lengthened the duration of the average bull market while increasing the size of the declines in bear markets. I'm expecting a big one myself at the end of the current bull.
    Dec 2, 2014. 04:01 PM | 1 Like Like |Link to Comment
  • There's Just One Catch [View article]
    Alexander, I'll cop a nolo contendere on the Catholic school Latin!

    The "lower for longer" theme is another example in a long succession of excuses for why one cycle is going to be better than all the others. They all appeal on some intuitive grounds - e.g., less excess should mean less correction.

    I'm not aware of any evidence about weaker business cycles lasting longer. But weaker economies ARE more susceptible to catching a cold, and I think Q1-14 was a good example of that. Besides being not strong to begin with, the current cycle has two major vulnerabilities: stock market valuation is far, far ahead of the real economy (whatever perma-bulls may say - it's denied in every cycle), and the central banks have almost nothing left to cushion the fall.
    Dec 2, 2014. 09:40 AM | 2 Likes Like |Link to Comment
  • There's Just One Catch [View article]
    I see the 7-10 year horizon for stock returns as being quite bleak at this point. I just think that they're going to go up more first.
    Dec 2, 2014. 09:25 AM | 3 Likes Like |Link to Comment
  • There's Just One Catch [View article]
    Yes. The point is that each various rallying cry for why things are just fine and must stay that way for a really, really long time is flawed in at least one important aspect.
    Dec 2, 2014. 09:23 AM | 2 Likes Like |Link to Comment
  • Before It's Too Late [View article]
    You make a good point. I would add that the Street's mantra is to ride a trade that works until it doesn't, and that most trades are broken by too many people crowding into it. The short-term effect is the increased sense of conviction that the trade must be right (we're all here), the long-term effect is that the boat sinks.
    Nov 24, 2014. 08:22 AM | Likes Like |Link to Comment
  • Before It's Too Late [View article]
    The stock market is usually able to shrug off interest rate increases, so long as they are not out of the blue. If the banks leave cash in the form of 2-year notes instead of reserves at the Fed, it helps the banks NIM but doesn't change much else. Velocity will increase if output increases and the banks lend out the excess reserves, not move them from one government ledger to another.
    Nov 20, 2014. 08:50 PM | Likes Like |Link to Comment
  • Before It's Too Late [View article]
    You make a very good point. Frankly I don't think raising FF rates to 1% will have much of any impact on the economy, nor should it. But the timing often makes the central bank look responsible.
    Nov 20, 2014. 07:37 PM | Likes Like |Link to Comment
  • Before It's Too Late [View article]
    That's the $64K question, isn't it? My own work indicates that the peak began late summer. They usually last about a year, but the end can be brought forward or put back by credit flows. What I can say definitively is that the Street as a whole always projects the end of the cycle to be at least two or three years into the future. Always.
    Nov 20, 2014. 04:32 PM | 1 Like Like |Link to Comment
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