Category Archive: Global Macro

Why We’re Doomed: Our Economy’s Toxic Inequality

Why are we doomed? Those consuming over-amped "news" feeds may be tempted to answer the culture wars, nuclear war with North Korea or the Trump Presidency. The one guaranteed source of doom is our broken financial system, which is visible in this chart of income inequality from the New York Times: Our Broken Economy, in One Simple Chart.

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United States: Still No Up

The Asian flu of the late 1990’s might have been more accurately described as the Asian dollar flu. It was the first major global test of the mature eurodollar system, and it was a severe disruption in the global economy. It doesn’t register as much here in the United States because of the dot-com bubble and the popular imagination about Alan Greenspan’s monetary stewardship in general.

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L’impact de la délocalisation de la production sur la balance commerciale US.

Dans la série sur la balance des paiements et les zooms sur les balances commerciales, voici l’évolution de la balance commerciale américaine. Nous voyons clairement qu’elle était neutralisée à 0 durant l’ère où les devises du monde devaient être arrimées, selon les Accords de Bretton Woods, au dollar qui lui-même était partiellement couvert par l’or.

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Data Dependent: Interest Rates Have Nowhere To Go

In October 2015, Federal Reserve Vice Chairman Bill Dudley admitted that the US economy might be slowing. In the typically understated fashion befitting the usual clownshow, he merely was acknowledging what was by then pretty obvious to anyone outside the economics profession.

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U.S. Export/Import: Losing Economic Trade

The oil effect continued to recede in late spring for more than just WTI prices or inflation rates. US trade on both sides, inbound and outbound, while still positive has stalled since the winter.

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China: Losing Economic ‘Reflation’

If “reflation” was born last year in Japan, and I think it was, it was surely given its most tangible dimensions in China. The idea that the Bank of Japan was going to do something magnificent was perhaps always a longshot, but enough given the times for people to hope (sentiment) they might try (helicopter). The Chinese, however, have been relatively more pragmatic. Authorities began 2016 with an actual rather than imagined “stimulus” injection...

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Are We Already in Recession?

How shocked would you be if it was announced that the U.S. had just entered a recession, that is, a period in which gross domestic product (GDP) declines (when adjusted for inflation) for two or more quarters? Would you really be surprised to discover that the eight-year long "recovery," the weakest on record, had finally rolled over into recession?

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Bi-Weekly Economic Review: Ignore The Idiot

Of the economic releases of the past two weeks the one that got the most attention was the employment report. That report is seen by many market analysts as one of the most important and of course the Fed puts a lot of emphasis on it so the press spends an inordinate amount of time dissecting it.

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“Under Any Analysis, It’s Insanity”: What War With North Korea Could Look Like

Now that the possibility of a war between the US and North Korea seems just one harshly worded tweet away, and the window of opportunity for a diplomatic solution, as well as for the US stopping Kim Jong-Un from obtaining a nuclear-armed ICBM closing fast, analysts have started to analyze President Trump’s military options, what a war between the US and North Korea would look like, and what the global economic consequences would be.

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La mondialisation de l’esclavage permet la croissance des entreprises. Dossier.

Un Indien travaillant dans une fabrique de briques à l’extérieur de Calcutta, le 7 mai 2017. DIBYANGSHU SARKAR / AFP Nous avons parlé ces derniers temps d’excédents et de déficits de balances commerciales. Pourtant aucune rubrique de cette comptabilité de l' »intégration » d’un Etat dans le monde globalisé ne pénalise celui-ci en matière d’abus de travailleurs, voire d’esclavagisme. Pire, les abus sont en croissance. Il faut dire que l’affaire est...

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Oil Prices, CPI: Why Not Zero?

In the early throes of economic devastation in 1931, Sweden found itself particularly vulnerable to any number of destabilizing factors. The global economy had been hit by depression, and the Great Contraction was bearing down on the Swedish monetary system. The krona had always been linked to the British pound, so that when the Bank of England removed gold convertibility (left the gold standard) from its notes on September 19 that year the Swedish...

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Emerging Markets: What has Changed

Tensions on the Korean peninsula are still rising. Hong Kong boosted its 2017 growth forecast. S&P affirmed Israel’s A+ rating but moved the outlook from stable to positive. The corruption investigation against Israeli Prime Minister Netanyahu has intensified. South Africa's parliament voted down the no confidence motion against President Zuma. Argentina officials are taking steps to support the peso. Banco de Mexico has ended its tightening cycle.

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Real GDP: The Staggering Costs

How do we measure what has been lost over the last ten years? There is no single way to calculate it, let alone a correct solution. There are so many sides to an economy that choosing one risks overstating that facet at the expense of another. It’s somewhat of an impossible task already given the staggering dimensions.

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Oil Prices: The Center Of The Inflation Debate

The mainstream media is about to be presented with another (small) gift. In its quest to discredit populism, the condition of inflation has become paramount for largely the right reasons (accidents do happen). In the context of the macro economy of 2017, inflation isn’t really about consumer prices except as a broad gauge of hidden monetary conditions.

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China Exports, China Imports: Textbook

China’s export growth disappointed in July, only we don’t really know by how much. According to that country’s Customs Bureau, exports last month were 7.2% above (in US$ terms) exports in July 2016. That’s down from 11.3% growth in June, which as usual had been taken in the mainstream as evidence of “strong” or “robust” global demand.

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Is Another Oil Head-Fake Brewing?

Over the past decade I've addressed what I call Head-Fakes in the cost of oil/fossil fuel: even though we know the cost of extracting and processing oil will rise over time as the easy-to-get oil is depleted, oil occasionally plummets to such low prices that we're fooled into thinking it will remain cheap for a long time to come.

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Emerging Markets: The Week Ahead

EM FX appears to be rolling over (see our recent piece “Is EM FX Finally Turning?”). Technical indicators are stretched as many EM currencies bump up against strong resistance levels.  Strong US jobs data is bringing Fed tightening back into focus.  We think ZAR could be shaping up to be the canary in a coalmine. It was -3% vs. USD last week and by far the worst in EM.

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U.S. Treasuries: Not Really Wrong On Bonds

It is often said that the market for US Treasuries is the deepest and most liquid in the world. While that’s true, we have to be careful about what it is we are talking about. There is no single US Treasury market, and often differences can be striking. The most prominent example was, of course, October 15, 2014.

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Emerging Markets: What has Changed

The Reserve Bank of India started an easing cycle by cutting all policy rates 25 bp. Bank Indonesia has tilted more dovish after signaling earlier this year that the easing cycle was over. Czech National Bank became the first in Europe to hike. Political risk is rising in Israel. President Trump signed the Russia sanctions bill. Nigeria is trying to unify its system of multiple exchange rates.

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Why We’re So Risk-Averse: “We Can’t Take That Chance”

If our faith in the future and our resilience is near-zero, then we can't take any chances. You've probably noticed how risk-averse Hollywood has become: the big summer movies are all extensions of existing franchises--mixing up the superheroes in new combinations, or remaking hit films from the past--all safe bets.

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