Scientists believe that there have been at least five major ice ages in the Earth’s past, based on geological data and climate cycle analyses.
So how much data will it take for economists to embrace the notion that we’re in an Economic Ice Age?
Using faulty models and linear extrapolation techniques, the so-called “dismal science†of economics has been slow to accept the possibility of secular stagnation.
But another round of abysmal economic data has made it abundantly clear that the economy is frozen in place.
As the market action over the past few weeks shows, economic climate change has profound implications for traders and investors alike…
On March 18, the Federal Reserve significantly downgraded economic growth and inflation expectations. The market ultimately sensed a lack of urgency with respect to the first interest rate hike, as well as a lack of conviction regarding the pace of rate increases.
As a result of the “dovish†interpretation of the Fed statement, the U.S. Dollar Index has backed off of the 100 level. Since then, a series of generally atrocious economic data releases has exacerbated the dollar’s weakness.
The three-month moving average of the Chicago Fed National Activity Index, representing a blend of 85 monthly indicators, reached its lowest level in a year.
Yesterday, we found out that durable goods orders unexpectedly tumbled 1.4% in February.
Investment banks – including Barclays (BCS), Morgan Stanley (MS), Goldman Sachs (GS), and JPMorgan (JPM) – are falling all over themselves trying to lower Q1 GDP growth estimates.
Meanwhile, the market’s reaction, especially in precious metals, has been interesting over the past week. The table below shows various exchange-traded fund (ETF) returns – serving as proxies for macro movements – since just before the Fed announcement at 2 p.m. on March 18:
As you can see, commodities were some of the big winners over the past week.
