Housing, Fed Nominees, Bubbles


2019/04/24 13:14

Some quick updates tonight. First and foremost, the new home sales data is the latest to cut against the recessionistas. Housing continues to rebound from the dip at the end of last year:


A good story going into the back half of 2018 was that rising housing prices, both new and used, would eventually kill off some demand. Higher interest rates, less generous tax deductions, and a bit of economic uncertainty added to the stress on the sector and sales fell. Builders, now realizing they have likely sated the higher end of the market, appear to have turned their attention to lower-priced product:


Lower prices help lure buyers back into the market. Note though that a housing rebound does not necessarily rule out a recession. See, for example, the 2001 recession, during which housing played no real part. Still, if the housing downturn was an important component of your recession call, you should rethink that call.


As far as nominees to the Board of Governors are concerned, one down, one to go. Hermain Cain withdrew his name from consideration, apparently realizing that it was actually a job you were expected to take seriously, so you weren’t allowed to run side businesses or give paid speeches. And apparently he didn’t realize the pay wasn’t all that great relative to the prestige. Of course, there is also the issue that he would his name would be dragged through the mud again on those sexual misconduct claims.

就理事会的提名人而言,一个是下来,一个是去。 Hermain Cain从他的名字中撤回了他的名字,显然意识到这实际上是你应该认真对待的工作,所以你不被允许经营副业或发表演讲。显然他并没有意识到薪水与声望相比并不是那么大。当然,还有一个问题是,他的名字会在这些性行为不端的声称中再次被拖入泥潭。

Speaking of being dragged through the mud, Trump’s other nominee, Stephen Moore, is seeing his past catch up to him. Sam Bell, who apparently spends most of his days cataloguing Moore’s past, caught Moore saying this today:


Moore today: “they’re pulling a Kavanaugh against me…I’m taking a 68% pay cut to do this job so, you know, it’s true public service…the people who keep me going are the people who love what Trump is doing… and the prosperity that Trump is bringing” https://t.co/ohRlSsd6TT


— Sam Bell (@sam_a_bell) April 23, 2019

- Sam Bell(@sam_a_bell)2019年4月23日

Of course, with Moore there are tapes. Like of him being a goldbug. And actual writings that revealed, surprise, surprise, a strong misogynistic streak; see also Jim Tankersly at the New York Times. No one should feel sorry for Moore. Still, we can’t count him out just yet; Republicans in the Senate may have a hard time deep-sixing a chief proponent for their economic agenda. Can’t really say he is sufficiently qualified to guide your economic agenda but not be part of the Federal Reserve, right?

当然,摩尔有磁带。就像他是一个金币一样。而实际的着作揭示了惊喜,惊喜,强烈的厌恶症;另见纽约时报的Jim Tankersly。没有人应该为摩尔感到难过。尽管如此,我们还不能指望他;参议院的共和党人可能很难为他们的经济议程深入探讨主要支持者。真的不能说他有足够的资格来指导你的经济议程但不能成为美联储的一部分,对吧?

On a final note, stocks rallied to a record high Tuesday. Is this good news or a bad omen? Rich Miller at Bloomberg senses concern that history may repeat itself:

最后,周二股市上涨至历史新高。这是好消息还是坏兆头?布隆伯格的Rich Miller感到担心历史可能会重演:

Some Federal Reserve policy makers seem resigned to running a heightened risk of asset bubbles and other financial excesses as they seek to keep the economic expansion going.


I tend to think such concerns reflect too much recency-bias in our analysis. The last two cycles ended with asset bubbles, so this one must as well, right? My response is that Japan suffered through joint property and equity bubbles and has found it hard to recreate that dynamic despite years of ultra-low interest rates. We should be open to the possibility that we experience occasional mini-bubbles like oil shale and cryptocurrencies that have some sector specific impacts but are not economy-wide shocks.  Some bubbles just aren’t big enough to worry about from a macro perspective. The next cycle might just be a dirt-dull mild downturn like 1990.


Also on bubbles, I find it interesting that the path of equities still follows the pattern that followed past rate hikes:


Doesn’t look like a late 90’s type of surge. Looks pretty average instead.


That’s it for now.


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