Recap 8-05-13


Interesting quotes from Paul Volcker:

I have been struck by parallels between the challenges facing the Federal Reserve today and those when I first entered the Federal Reserve System as a neophyte economist in 1949. Most striking then, as now, was the commitment of the Federal Reserve, which was and is a formally independent body, to maintaining a pattern of very low interest rates, ranging from near zero to 2.5 percent or less for Treasury bonds. If you feel a bit impatient about the prevailing rates, quite understandably so, recall that the earlier episode lasted fifteen years.

I find that [dual] mandate both operationally confusing and ultimately illusory. It is operationally confusing in breeding incessant debate in the Fed and the markets about which way policy should lean month-to-month or quarter-to-quarter with minute inspection of every passing statistic. It is illusory in the sense that it implies a trade-off between economic growth and price stability, a concept that I thought had long ago been refuted not just by Nobel Prize winners but by experience.

The simple fact is the United States doesn’t need six financial regulatory agencies—the Fed, the SEC, the FDIC, the CFTC, the Federal Housing Finance Agency, and the Office of the Controller of the Currency. It is a recipe for indecision, neglect, and stalemate, adding up to ineffectiveness. The time has come for change. As things stand today, I am told that can’t happen and won’t happen. However powerful the arguments for action, the vested interests—within the agencies, in Congress, and outside—are just too strong.


  • US Non-Mfg ISM jumped to 56 vs 53.1 exp and 52.2 prev
  • UK Services PMI jumped to 60.2 in July vs 57.4 exp and 56.9 prev
  • Italy Service PMI improved to 48.7 vs 46.5 exp and 45.8 prev
  • China Non-Mfg PMI improved to 54.1 in July vs 53.9 prev. The HSBC measure was unchanged at 51.3.
  • Australia Retail Sales were flat MoM in June vs +0.4% exp and +0.1% prev

Upcoming Data:

  • Mon: Australia Trade Balance
  • Tue: RBA, Australia Home Loans
  • Wed: BoE Inflation Report, Carney Speaks, Japan Current Acct, Australia Employment,
  • Thu: BoJ, Japan Eco Watchers Survey, US Jobless Claims, JapanMoney Supply, China CPI
  • Fri: China IP, Retail Sales, Canada Employment