Farewell to unemployment rate. Dove signs from a larger dataset

Following some influent FOMC members, I believe Janet Yellen will spend a good part of her first press conference trying to explain FOMC´s brand new forward guidance. Last week, New York Fed released a new set of charts measuring various dimensions of the labor market.

The problem here is related to the difficulty to communicate based on 34 series. If FOMC chooses this way, it will come back to some kind of qualitative forward guidance. But the committee also has the option to consolidate all the information contained in the dataset (Bank of England did something likethis, calling this consolidated information output gap).

I´m not sure what option they will choose. But if they decide for consolidation, they might find a very dove sign. At least this is the message passed by the principal component (PC) of this dataset, showed in figure 1. As we can see, PC suggests that there´s much more slack in US labor market than we can conclude focusing only on unemployment rate.

cant believe these russians...

http://www.project-syndicate.org/commentary/sergei-guriev-breaks-down-the-direct-and-indirect-costs-of-russia-s-intervention-in-ukraine

China will not sink

They are taking steps to address the shadow-banking problem.
Concretly, they are moving faster to make capital mkts competitive by letting the private sector in, and also are freeing interest rates from central control.
I admit the S.Run may entail some ups and downs, but these guys are doing reforms!
Whereas here..

Copom Ata II

I’ve also read it. Agree it doesn’t hint at stopping. But I think they will, if nothing surprise. My call is not based on their communication, but on my impression of their dovishness.

European Unicamp

Back from London. I had the chance to talk with many European and UK economists. Fun.

For some reason European economists are very different from US economists. The latter got their PhDs, spent some time at the Fed, think in terms of models. The former are very well read, use great metaphors, but seem not to know the basics of supply and demand (of course I’m not talking about all of them).
I guess Unicamp opened a branch there.

Copom Ata

no news...

my reading: they didn´t signal they finished the task

but..

the Ata is not sufficient to discriminate between one more 25bps raise or a bit more than that -- though i am betting they stop at 11%

Felipe Curve

CORE inflation on unemp and Y/L for the USA:

R2 of 50%. The steep decline in inflation in 2009 (around 60) closely tracks U3 soaring by that time