Yesterday's FOMC Statement

The FOMC voted to leave the Fed's target interest rate unchanged at 0.00% to 0.25% for the 49th consecutive meeting yesterday. 

They did, in fact, announce the end of the third round of quantitative easing although they will continue to reinvest the cash-flows from the S.O.M.A. 

All told, the Fed has now increased its balance sheet through three rounds of quantitative easing by $3.7 trillion, from 6.2% of GDP to 25.7% (see chart).

(The Market Today ONLINE)

A very interesting data set....

starts and permits - September 2014

Some interesting data sets regarding housing...can anyone say 'continued volatility' with multifamily taking the lead...

U.S. housing starts increased 6.3% in September, driven primarily by multifamily construction.

GDP and Income - very revealing...

Source: NY Times

GUNDLACH: This Chart Is Why Janet Yellen Doesn't Want To Raise Rates 

Federal Reserve Chair Janet Yellen has long said she remains focused on the health of the labor market, and in her most recent public comments at Jackson Hole, she said that given the current state of the labor market, there was "no simple recipe for appropriate policy in this context." 

And for Gundlach, one chart makes clear why Yellen's desire to raise interest rates is most likely far less than many assume. 

Wages as a percent of GDP remain near multi-decade lows, and until this trend shows any sign of improvement, Gundlach doesn't think that Yellen will want to do anything with interest rates. 

Gundlach also noted that real wages for the bottom seven deciles of earners had fallen between 2007 and 2014, to which Gundlach said, "It seems tough that with so many workers losing purchasing power on a year-over-year basis, you could raise short-term interest rates." 

This graph appears to provide a vivid indicator that the world's economic condition is not moving in a 'positive' direction....yields headed downward is not indicative of strong economic growth trends! 

How much 'spoken word' power from the European central banks has assisted with this downward movement with everyone speaking about potential QE?

Although it is very interesting that the 'risk premium' for Italy and Spain appears to have dissipated...in spite of their continuing economic struggles.

Chart Of The Day

The Schizophrenic US Housing Market In One Chart

by Tyler Durden on 08/21/2014 

For those who are looking for just one chart with which to summarize the US housing market, here it is courtesy of the NAR, which earlier today reported July existing home sales, which despite beating expectations, were still 4.3% below the 5.38 million annualized homes sold a year ago.

The chart shows that while the housing market for the low-end continues to collapse (the 12.9% drop was "only" -12% three months ago), and the mid-range is virtually frozen, all the upside activity, activity which pushes the median price ever higher (in July it was $222,900, 4.9% percent above July 2013 and the 29th consecutive month of year-over-year price gains), was in the ultra-luxury segment, or houses which cost over $1 million as the "1%", both foreign and domestic, continues to convert their pieces of fiat paper into hard real-estate assets

Source: NAR

household income and the velocity of money

Two interesting data sets that provide some insight into the struggles that we are facing in the real life economics of the new normal...

Real median household income has declined, meaning the purchasing power of earnings fell.
 

 

An economy in good health has a high velocity of money.