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# Buckling

Macronomics
1.18K Followers

"There exists everywhere a medium in things, determined by equilibrium."

- Dmitri Mendeleev, Russian scientist

Watching with interest the slowly grind higher in US interest rates with some weakening signs coming from US economic data, such as the US trade deficit in goods getting spanked with orders for larger domestic appliances and other durable goods falling by a cool 3.7% from the month before, led by a hard drop in vehicle demand, when it came to choosing our title analogy for this week's conversation, we reminded ourselves of "buckling" being a mathematical instability that leads to a failure mode. When a structure is subjected to compressive stress, buckling may occur. Buckling is characterized by a sudden sideways deflection of a structural member. This may occur even though the stresses that develop in the structure are well below those needed to cause failure of the material of which the structure is composed.

As an applied load is increased (US interest rate hikes) on a member, such as a column, it will ultimately become large enough to cause the member to become unstable and it is said to have buckled. Further loading will cause significant and somewhat unpredictable deformations, possibly leading to complete loss of the member's load-carrying capacity. If the deformations that occur after buckling do not cause the complete collapse of that member, the member will continue to support the load that caused it to buckle. If the buckled member is part of a larger assemblage of components such as a building, any load applied to the buckled part of the structure beyond that which caused the member to buckle will be redistributed within the structure. In a mathematical sense, buckling is a bifurcation in the solution to the equations of static equilibrium. At a certain point, under an increasing load, any further load is able to be sustained in one of two states of

1.18K Followers
During my career I have had different roles within various banks, covering various products, from FX to High Grade Bonds. I have always been passionate about markets and particularly on Macro trends. I am currently working in different role in another company and still in contact with the credit market business.

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No, Martin, accelerating inflation
Macronomics
02 Mar. 2018
yes you are right normbay, velocity in inflation is what matters as I wrote above in the blog post.
It seems that accelerating inflation is the worst environment for equities-apart from deflation, naturally!
Macronomics
02 Mar. 2018
Indeed, inflation is the "Big Bad Wolf" normbay!

Best,

Martin
I don't know how you do it Martin - such consistently excellent work and always at the heart of matters. Thanks for continuing to post at SA.
Macronomics
02 Mar. 2018
Thank you for the kind words Mitch, much appreciated. To tell you the truth I don't know myself how I manage it. It's always a difficult exercise when you are staring at a blank page. Again thank you for your continuous praise and support.

Best,

Martin
p
Thank you for a wide ranging, comprehensive, and cogently delivered review of the case as it unfolds...one hopes the fed would appreciate the same...and how to account for deviations from correlations noted, given the ongoing public conversation seems as if the fed “uses” an algorithm of too “simplified” factors......as if it applied to experimental design....without an equation yet calls for a great deal more sensitivity addressing errors, concerns, and efforts to govern the effects..