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Finance

Yellen Should Not Let Wages Be Her Guide

For its part, the Fed seems determined to see wages rise before it begins to normalize its benchmark rate. Given the wide gap between zero and some neutral rate, waiting for a signal from wages will be too late.

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Encima Global Projects World GDP Will Shrink in 2015

We had thought that global GDP would grow enough in 2015 to provide a platform for some further growth in U.S. corporate earnings. However, we now think world dollar GDP will decline 0.4% to $76.7 trillion in 2015 from our 2014 forecast of $77 trillion. A 2015 decline would be the first since 2009, with negative implications for corporate earnings and equity prices.

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The Challenge for the European Central Bank

The European Central Bank may disappoint once again at Thursday’s meeting.  Given deteriorating conditions in the euro area, the failure to embark on a quantitative easing program, as other major central banks have already done, becomes tough to defend.

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Stop Worrying About Deflation

Monetary policy should seek to avoid sustained deflation or very low inflation as part of its inflation targeting commitment. But that is not the same as believing that a short-run deviation from 2% inflation would pose a severe economic risk.

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The Economics and Politics of Good Leaders

“Do well by doing good.” So goes the business mantra. But what does it mean? And why do even well intentioned leaders have a hard time fulfilling this popular ambition? 

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No Reason to Fear Fed Rate Hikes

The current five-year old expansion would fare just fine and even be enhanced if the Fed began hiking rates. Normalizing interest rates should be welcomed, not feared by the Fed.

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Watch for the FOMC Debates

The Federal Reserve’s policy statement, to be released immediately following this Wednesday’s meeting, will likely show further signs of dissension within the Federal Open Market Committee. For now, debate within the Federal Open Market Committee ought to be viewed as positive. 

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Mr. Market Withholds His Approval

Every year, economists put pen to paper and make projections for the next 12 months. In addition to forecasts for real GDP growth, inflation and consumer spending, they look into their crystal ball to determine what the Federal Reserve will do with its benchmark rate and what long-term interest rates will do in response.

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5 reasons Janet Yellen shouldn’t focus on income inequality

Since 1970, income inequality has increased for a number of reasons that should not concern Janet Yellen.

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The Fed’s Inflection Point

The Federal Reserve has reached an inflection point. As they complete the last rounds of their bond-buying programs, Federal Open Market Committee members must now decide how quickly to bring short-term interest rates back to more normal levels from their current settings of near zero.

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