Monday, September 26, 2016

Little Stevie Hayward of Powerline: Still an Economic Jackass

Today, Little Stevie Hayward of Powerline has a post up titled, "Don't Look Now, But."  It's his usual cut and paste job masquerading as economic analysis.  He first points to the weak state of corporate earnings, noting they are headed for another decline.   But, it's obvious that he has no idea what's behind this number.  The big issue is weak oil company revenues.  Consider this chart from

Notice the very large drop in energy revenues.  China's switch from a manufacturing economy to one driven by consumer demand is another cause (Stevie might want to take a look at information from the RBA -- that's Reserve Bank of Australia -- for context).  In fact, 7 industries reported positive earnings growth.  So, this isn't exactly the Armageddon he's predicting. 

He then notes the China and Japan are selling treasuries.  Let's place that move in context.  Here's a chart of the 30-year treasury yield for the last 30+ years:

Interest rates have been declining for the last 40 years.  There's a lot of reasons for this.  To get caught up on that, read Bernanke's Global Savings Glut theory or Larry Summers Secular Stagnation argument.  Which little Stevie Hayward won't do, because it uses big words and contains math.  
  I realize that criticizing Little Stevie Hayward of Powerline is like shooting fish in a barrel.  He's that stupid.  But, so long as he keeps writing, I'll keep pointing out how incredibly stupid he is.