Outlook:

The Big Story yesterday went unreported—the TICS report showed China raised its holdings of US Treasuries by $4.2 billion and Japan, by $2.2 billion. So much for diversifying out of dollars because of the deficit or Trump or any other reason. Nobody even bothers anymore to take the old-timey Excel files published by the Treasury and make a pretty chart.

Today we get March industrial production, including manufacturing, which was lousy in Feb. Tomorrow is Feb trade numbers and the Beige Book, with retail sales on Thursday when everyone will be eyeing the door.

US

Something to close on: Chicago Fed Pres Evans said the Dec hike was not a mistake and he will be happy to leave rates alone until fall of 2020 (which is when we hold the next presidential election). We say this looks a lot like an offer to Trump—shut up about the Fed being wrong and bad and we will give you something you want—no more hikes. To help that outlook along, the Fed is newly investigating whether it somehow got the employment mandate wrong. The scope of the new study is not clear. It may end up changing the percentages or something. We have long argued the data is bad in several ways. From an economist’s perspective, a fresh look into the Phillips curve is a good thing and (obviously) overdue. From a voter’s perspective, it’s as though the Fed is climbing into bed with the Orange Menace to save tis skin.

Bottom line, we got nothing. We have no fresh news or perspectives today, however hard the analysts strive to make hay out of straw and old straw, at that. Trust the charts but draw plenty of them to avoid pre-judging and suffering from the consequences of confirmation bias.

Note to Readers: We will not publish any reports on Thursday or Friday. Publication resumes the following Monday, April 22.

 


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