Tuesday, August 23, 2016

Fed's Low-Productivity Conundrum May Be - Just Maybe - Because Of Loss Of Jobs To China

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*There is an amazing US rhetoric differential when speaking to China's yuan versus Japan's yen.
*That hints at US policy lenient to loss of jobs internationally which is leading to low productivity at home.
*Fed officials can't figure out low productivity.
*Using the Fed's productivity definition, loss of jobs abroad could be the reason.
The Fed has been trying to think of reasons why their monetary policies have not been working. In past reports we've been citing demographics. In this report we wanted to focus on the US's lax attitude on yuan (NYSEARCA:CYB) devaluations as a hint to where the loss of productivity has come from.
The Fed admits defeat.
Listen to this. The Fed in their FOMC meeting said their monetary policies are no match for this economy.
"The risks to the forecast for real GDP were seen as tilted to the downside, reflecting the staff's assessment that both monetary and fiscal policy appeared to be better positioned to offset large positive shocks than adverse ones."
Above, the Fed said in their last minutes their policies are good for cooling the economy but not getting growth to pick up. They admit defeat.
"Policymakers also observed that, in order to promote the Federal Reserve's policy objectives, the framework should have the capacity to supplement conventional policy accommodation with other measures."
Are they thinking about another QE if growth were to slow? The Fed is worried about their tools not working.
Fed Vice-Chair Stanley Fischer blames productivity for monetary policy not working as have other officials. That said he doesn't know what's causing low and negative productivity.
Fed Vice-Chair Stanley Fischer called monetary policy "the only game in town" but needs fiscal policy. His implication like most Fed comments is that monetary policy is not working. After eight years of trying it didn't work to drive the expected growth.
What's his reason for it? Productivity. Productivity is the reason that monetary policy doesn't work.
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Chaim Siegel has been working with hedge funds and mutual funds as an analyst and PM his entire career. Chaim specializes in earnings and predicts, analyzes and reacts to earnings and earnings events as well as developing current company stories with a hedge fund perspective. If you want his analysis real time sign up to the right for real time email alerts. #in, $spy, $qqq, $iwm, $vxx, $ycs, $fxe, $EUO, $YCS, ^GSPC, INDEXSP:.INX, #elazaradvisorsllc, CME Globex: ES Disclosure: These trades can lose you money and principal especially when using leverage BY USING THIS SITE YOU AGREE TO TAKE ALL RESPONSIBILITY FOR YOUR OUTCOMES AND LOSSES AND HOLD BESTIDEAS, ITS CONTRIBUTORS AND ELAZAR ADVISORS, LLC HARMLESS

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