Toymaker Hasbro's sales fall 4 percent due to strong dollar http://t.co/8lgoU9uBID #Reuters
— Fawkes Partners Ltd. (@FawkesPartners) July 20, 2015
Should be, "Hasbro achieves global unit sales increase and strong price results in USD terms"
Hasbro has no control over what the regulated fiscal agent/financiers of their product then do in response to Hasbro's changes in unit pricing strategy globally.
The authors even reveal this here:
"Hasbro's sales in the United States and Canada rose 1 percent in the second quarter ended June 28. International sales, about 45 percent of total revenue, declined 9 percent, hurt by a strong dollar. The company's net revenue fell 4 percent to $797.7 million. Excluding the impact of the dollar, revenue rose 5 percent."
But the authors don't fully understand the process in time domain; this is all reported ex post.
5 comments:
Matt, can the USD's continuing appreciation become such a drag on the economy to the extent that it keeps the FOMC from increasing Fed Funds rate?
sapien hard to tell...
(FD: Personally I want them to raise aggressively... I think this is our current best chance for meaningful fiscal support at the Federal level..)
With the Fed, the way I look at it currently is that their monetarist ideology prevents them from raising as they have been at zero for like 7 years with no effect.... so if we have no meaningful growth in the ex post NIA numbers they look at and no growth even in the REAL employment numbers in 7 years they are probably thinking "how can we raise?" (and still stand by their monetarist dogmas?)
They are also probably thinking "we cant just sit at zero for ever can we?...."
The power of the monetarist dogmas still seems to be winning... for now... and they are just sitting there doing nothing...
and as far as import prices being lowered in USD terms (which THEN subsequently results in the USD rally...) I think this makes "inflation" look LOWER in their monetarist framework and they are LESS likely to raise in the face of these lower observed prices in USD terms... (and remember the US is a BIG net importer from the ROW USD zombie-exporters...)
If I read between the lines and you are looking for a bond rally I dont give that much chance here UNLESS they come out of left field with a new statement that they are going to unwind the QE FIRST, ie BEFORE raising rates... then we might get a bond rally, but right now with the Fed's QE rollovers, they are still sitting on bond prices imo no bond rally until the Fed gets out of the marketplace with the QE rollovers...
This is like being chained to a bench in front of the chimpanzee cage at the zoo and there is a big bunch of bananas hidden behind a rock and we are taking bets on which chimp will be the first to find the bananas and trying to explain why...
I think one important thing is to know that once they start to raise (again hard to tell when or perhaps even IF...) they will be thinking they are hitting the brakes but will instead be pushing on the accelerator... this is a known phenomenon:
https://en.wikipedia.org/wiki/Sudden_unintended_acceleration
rsp,
Interest rates setting acts on the economy chiefly through the housing channel. The housing channel is the driver of the US economy.
The Fed supported housing values by keeping rates low so that the crash didn't overshoot wrt housing valuation, threatening bank solvency. As a result, housing prices did not correct sufficiently wrt to the run up.
That rippled through the economy as a lagging recovery as investment in new housing shrunk and hasn't yet really recovered other than in multi-unit building for rentals.
The new normal in the housing market is rentals rather than home ownership. This is resulting in a restructuring of the US economy.
Of course this is due not only to interest rates but also stagnant incomes, a skewed employment market with high youth unemployment, youth being saddled with education debt, and delayed household formation.
Now the Fed doesn't want to raise rates prematurely, which will increase the cost of mortgages and the monthly nut, preventing housing from recovering further unless incomes grow proportionately to offset the rise in the monthly nut.
It's not an interest rate issue but a demand issue and higher rates will not necessarily lead to higher demand, since those who receive interest payments tend to be savers.
So I don't see the Fed raising interest rates much before they begin to see signs of "wage inflation."
That might not ever come Tom.... Austerity, globalization, etc...
Could be at zero for a long time if so... Rap,
Could be at zero for a long time if so.
As WM recommends. Keynes also recommended keeping interest rates low.
Interest rates affect investment especially through the housing channel.
Fiscal is the way to influence demand.
The way to prevent housing bubbles is not raising rates but regulating collateral (asset side of banking).
Pretty simple. Someone should try it.
Post a Comment