By.
Sampson I. Onwuka
MAY 8TH, 17
“Less is more when it comes to Federal Reserve policy”
Yellen
Lawrence Summers
@The writer is Charles W Eliot university professor at Harvard and a former US Treasury secretary
Friday’s US employment report was generally strong, with job growth of 211,000, declining unemployment and a drop in the number of workers involuntarily confined to part-time work.
A summary of the relevant points of the essay raised through 8 paragraphs lead from a commentary on the Federal Reserve and uncertainty in the market to a (2) narrative on Trump’s style of administration which is based on stock behavior, primary to overall market behavior., which (3) leads to a “Trump signature” a commentary on the secondary effects of administration of office– too early and too off to affirm, but an argument that converge to a style supporting short lived performance of the market.
We can summarize the essay as a reflection of the power of technology for everyday market and how it can influence the labor market, especially the losing negative of employment. A play featuring employment and labor, is a promising to the extent that an unemployment and technology is worth knowing, but altogether part two.
(1) We begin by the following statements, that, “The data, along with indications that growth in the second quarter is likely to come in above 3 per cent, suggest the economy is reasonably robust. But these economic data present difficult issues of interpretation and policy choice for the US Federal Reserve. Is the economy or the stock market enjoying a “sugar high” or is the current path sustainable?
The “sugar high” question is whether the market today with strung up notes of reigning the profit, is perhaps driven by others events from everyday life, a position the author defends in departures, that a trend in the market or any market has no definition saving a mode to attitude and power of the new administration. It is not impossible to re-orient the rest of us to the statuesque, that ‘less is more’ --going by the facts that they were sharp financial reflexes at the turn of the new year which ended slovenly without necessarily reigning the turn overs.
“What weight should the Fed give strong employment figures relative to gross domestic product growth that remains modest by historical standards and relative to low rates of inflation and expected inflation? How should the Fed treat the tension between the great uncertainty that so many economic actors experience and near-record low levels of market volatility and expected volatility?”
It is possible to highlight that the author from this line seem to unravel the academic measure for necessary for converting Fed's employment numbers against to market forecast, and also the range of economic growth useful for presidential behaviors and attitude to office. Secondly, the article mentions a case of low rate (inflation rate) factor to healthy economic growth and a possible impact of Trump years.
The author motions for historical ‘records’ in terms of low inflation, a claim that is not exactly indicative of the forces capable of thawing down any market through toxic assets. In a essence, we can argue that even at the height of exceptional economic welfare of our U.S, history does not easily support economic health and low rate, in fact Austerity which is an extreme case of the principle involved, often sabotage momentum.
(2)
“Given how little the administration has actually changed policy, recent economic performance was pre-determined before Donald Trump took office. Stock markets have boomed in recent months but it is less obvious that there is a sugar high element in their performance than it seemed around the turn of the year. Fundamentals unrelated to the new administration have strengthened, particularly as strong earnings reports for the first quarter have come in, growth abroad has strengthened and bond yields have declined. At the same time, the “Trump signature” in the market has attenuated: for example, high-tax stocks which outperformed after the election have given back their outperformance.
The author mentions a data and the second quarter, suggesting a possibly 3% rise in the economy against the low rates in the market. He is looking at the great opportunity for the Feds to react to the narrow gaps between low rates and economic health… What does the essay achieve, it speaks of the connection between low rate, smothered market as opposed to volatility and the emerging property of Trump era.
The author in the second paragraph is perhaps Balaise on the effect of ‘sugar’ for our world market. We notice that twice in two paragraphs he rendered his discussion useful by maintaining the impact of sugar and perhaps diabetics. Who is this sugar, and how does it apply to the market? We are looking at a school comfortable with Yellen – perhaps Yellen style of less, perhaps toeing the lines of Summers, but all the same, there is an admission that the society would not guarantee its existence through low rate and protected market interest.
“The greatest puzzle regarding the stock market is not its level but its lack of volatility. We have for months been in a period where volatility has been low by historic standards, despite what seems high policy uncertainty. Perhaps this reflects technical factors in the market. It may also be that uncertainty is a kind of self-denying prophecy as it causes investors to scale back their leverage, which in turn limits volatility. It is probably important to recognize also that much of market volatility reflects factors other than economic policy.
The economic First quarters of the year is interesting largely for an arranged estimate of Trump’s administrative behavior, new administration new style, and it seems that the market is operating against the public machination and experience, to an extent, we can be proud of the technical triumphs of the markets through the use of statistics and models for the market. At the beginning of American Economic life through the lash of seasonal markets and through the lens of manufacturer’s index, leads to speculation and through the factor called volatility – a deviation from norm, a normal reaction with regular markets in spite of uncertainty. Market expectations does not always depend on features, it depends in large part on observation – especially key observation.
(3)
“It is now very difficult to argue that there is a large amount of slack in US labour markets. Another year of employment performance like that we have seen during the past few months, would take the labor market into nearly uncharted territory. It has been surprising, in the face of the labour market tightening, that there has not been more evidence of accelerating wage inflation. A reasonable conjecture is that this reflects workers cowed by the possibility of being replaced by technology or foreigners. Indeed, given the tightness of the labour market, workers appear relatively reluctant to quit jobs.
The third movement is a little more aggressive, more animating, that if for instance he said that the “…greatest puzzle regarding the stock market is not its level but its lack of volatility.” We draw from the same blood, that volatility of market structure impose on investors, and in our case we run against the grain that ‘less is not always more’, that perhaps, the nature of economic losses is not advertisement on exuberance and investor confidence – it essence market behaviors influence attitude to market.
It is argued here that perhaps less is more, this is usually the case when there is hints of market reaction from new development, but this is not always the case, especially when there is large volume and large portfolio capable of sending the market in any direction and offending the rest of the factors given the quarters.
(4)
“What about slow GDP growth? There is little reason to think growth has moved out of the 2 per cent range in which it has been stuck for the last half a dozen years. If, as seems arithmetically almost inevitable, employment growth slows, GDP growth will as a matter of logic slow, unless productivity growth accelerates. There is little in the data to suggest this is likely in the near term.
Such position is a commentary from a certain experience but it altogether tend to throw light to the market on may have happened in the last few months. organ given the pastiche on caution/s. Market reactions are usually based on certain expectations, including arguments on seasons, etc., the impact on the market is another matter.
If the author criticized the prophets of economic boom, the essay will look brighter that as much management style influence, it is not exactly knowable how a Trump style (reflecting years of daring) will earn market volatility. His economic speeches are regular, his expectations engaging, there is care in his imagination and reach.
“So the next couple of years are likely to see slower GDP growth and possibly a tendency to rising inflation. What does this mean for monetary policy? The assumption manifest in the statements of the Fed and most commentary is that policy should be tightened over time through rising interest rates and a reversal of quantitative easing….’
We are happy to wallow on the magic that less is perhaps more, when there are reason to believe that such is perhaps the case. A market without friction, is a saturated market. A European market is an example since for instance the Euro – is a market of smooth surface.
The essay tend to defend that less – not more is root to economic health – it toes the lines of the doves at the Feds and stay the gospel of labor market without friction. The economy as this point is not doing very well, a fact that the author did not mention that
(5)
“Moreover, economists should now have great humility regarding the inflation process. The Phillips curve relation on which they have relied has largely broken down over the past several decades and so relying on it to take pre-emptive action with respect to inflation seems problematic.
Here, at the last time, “It may be that the economy will surprise in its ability to run hot without accelerating inflation.’’ There are reasons why this is the case, an ‘economy’ running hot ‘without accelerating inflation’ – that stag inflation from lack of obligation, especially the ‘bond’ which is tier…
(6)
“There is also the observation that price inflation remains very much under control and that some wage growth in excess of price growth would be desirable given the erosion of labour’s position in the economy over the last period.
(7)
“The Fed will have little room to respond if it overdoes things and the economy goes into recession. Sometimes the hardest and most important decisions in government involve doing less rather than more. This is one of those times for the Fed. Caution should be its watchword.
We are not entirely of some of suggestion raised in the later paragraphs, unlike his broach of subject, there is something in the middle paragraph that suggest that he was op on a second person. The sum of the use paragraphs seem to echo his command that ‘Less is more...’, a theory that defends his throwback to his years at the Treasury and Federal Reserve. Between labor, statistics (unemployment), and a new President, is an preserve that any administration is governed by attitude and sometimes it leads to speculation and our case, the tendency is towards a robust market whereas less is meeting for more.
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The author of the essay is Lawrence Summers, stands tall in U.S economy, especially equity, his suggestions over the years are not always article of history, but they reflect a certain economic reality. If he indicating that the tightening of the U.S labor market reflect some of the expectation with ‘Trump signature’ style of administration, he does not surrender to the new market to a 'symposium', on market behavior, perhaps trump administration make his essay essentially a relapse to frisson.
'Sampson Onwuka to Bloomberg op. Onuwah' is a child one's brain and a property that is now shared with anyone saving perhaps, the owner of the logo 'Bloomberg', or 'Onuwah'...there are technical reasons why people appropriate people's name in Texas and Austin -- it is unconstitutional and not unlike use of lethal weapons and bank robbery --- it is amusing to a point.
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