There are signs that not only is money beginning to circulate more rapidly through cash registers everywhere, but that Corporate America is beginning to make good some of its recent, much-cited lack of physical investment and, conversely, is starting to eschew some of its contemporary over-indulgence in financial engineering.
It may be early days to be jumping to overly grand conclusions, but the last few quarters’ trend nonetheless bears watching. Continue reading …
Does it make sense to plot multi-decade asset prices on a linear scale? How reliable are macro ‘profit’ estimates? Why is the curve flattening and what will a reduction in Central Bank reserve balances mean for assets?
Certain schools of thought – among them the so-called ‘Market Monetarists’, as well as George Selgin’s Fractional Free Bankers – believe – in line with the thinking of the later Hayek – that the Fed would be better off effecting policy with regard to the maintenance of a steady rate of growth of nominal GDP.
Consciously or otherwise, we would argue that this is largely what it has done, over the years, and that this insight helps us tie together developments in the PMI, in business income streams, and in the Fed funds rate.
If there is one sector of the US economy where an Austrian-style Boom-and-Bust bust has taken place, it is the onshore oil industry – though, by extension, other primary resource industries, such as metals and mining and farming have also suffered in the ongoing aftermath of the general commodity bust.