For the first time in 5 years, markets were actually unsure what the Fed was going to do, with yesterday’s fed funds options calling it an even chance that the Fed would settle for a 25-basis-point cut or go all the way to 50. Capital Chronicle had prepared amusing posters as to just how to interpret a 25-basis-point as opposed to a 50-basis-point cut. Fifty it was, disappointing perhaps knzn who wanted a 175-basis-point cut, but delighting economic researchers like Refet Gurkaynak and Eric Swanson who both emailed me their high spirits at finally getting another data point for what happens when the Fed surprises the markets.
Author Archives: James_Hamilton
Economic indicators of success in Iraq
Some economists have been interpreting economic developments as shedding light on the success of the military surge in Iraq. I think one needs to use a bit of caution in drawing conclusions from such evidence.
Catch the wave
I keep trying to warn my friends in the Federal Reserve about the tsunami that’s coming their way.
The commercialization of space
Google seems to be thinking big.
OPEC production quotas
How should we interpret yesterday’s announcement from OPEC?
By how much will the Fed cut rates?
Once again we’re seeing a big divergence between what the markets expect the Fed to do and what the Fed expects the Fed to do.
Jobs numbers disappoint
Was that the other shoe we just heard drop?
Open thread on declining Saudi oil production
An article I wrote on Saudi Arabia’s Ghawar oil field appears in the latest issue of Atlantic magazine. I’m putting up this post primarily to provide a forum for readers who might want to offer comments on that discussion.
Borrowing short and lending long
Here I elaborate on the description of the nature of current problems in financial markets that I offered at the Fed’s Jackson Hole conference last week.
August auto sales
August light-vehicle sales give us an early indication of how the real side of the economy is holding up under the financial turmoil that began August 9. And the results are not too bad, considering.