Category Archive: 5) Global Macro

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The Fantasy of Central Bank “Growth” Is Finally Imploding

2019-08-30

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2019-08-30

TCMDO, 1950 - 2019
It was such a wonderful fantasy: just give a handful of bankers, financiers and corporations trillions of dollars at near-zero rates of interest, and this flood of credit and cash into the apex of the wealth-power pyramid would magically generate a new round of investments in productivity-improving infrastructure and equipment, which would trickle down to the masses in the form of higher wages, enabling the masses to borrow and spend more on...

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Does egg freezing give false hope to prospective parents? | The Economist

2019-08-29

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The fertility business is booming—egg freezing is being sold to a generation of men and women increasingly interested in deferring parenthood. But is optimistic marketing giving false hope? Read more here: https://trib.al/7K9Lw4O On July 25th, 1978, in Oldham, England, a baby girl named Louise was born. Unlike any baby before her, Louise was conceived in …

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Japan: Fall Like Germany, Or Give Hope To The Rest of the World?

2019-08-29

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2019-08-29

Japan JGB, Jan 2014 - Jul 2019
After trading overnight in Asia, Japan’s government bond market is within a hair’s breadth of setting new record lows. The 10-year JGB is within a basis point and a fraction of one while the 5-year JGB has only 2 bps to reach. It otherwise seems at odds with the mainstream narrative at least where Japan’s economy is concerned.

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Emerging Markets: FX Model for Q3 2019

2019-08-28

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2019-08-28

Emerging Markets FX Q3 2019
The broad-based dollar rally remains intact despite the market’s overly dovish take on the Fed. We still believe markets are vastly overestimating the Fed’s capacity to ease in 2019 and 2020. What’s clear is that the liquidity story is not enough to sustain EM. MSCI EM FX is on track to test the September 2018 low near 1575 and then the April 2017 low near 1568.

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Definitely A Downturn, But What’s Its Rate of Change?

2019-08-28

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2019-08-28

US Durable Goods Chicago Fed NAI, Jan 2006 - 2019
The Chicago Fed’s National Activity Index (NAI) fell to -0.36 in July. That’s down from a +0.10 in June. By itself, the change from positive to negative tells us very little, as does the absolute level below zero. What’s interesting to note about this one measure is the average but more so its rate of change.

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Dollar Firm as Markets Calm

2019-08-27

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2019-08-27

Dollar Firm as Markets Calm
Market sentiment has improved after President Trump said China has asked to restart trade talks. PBOC fixed the yuan basically flat and firmer than what models suggested. The G-7 summit wraps up today with little to show for it. We believe the Chicago Fed National Activity Index remains the best indicator to gauge US recession risks. Germany July IFO business climate came in weaker than expected

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Monthly Macro Monitor: Does Anyone Not Know About The Yield Curve?

2019-08-26

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2019-08-26

Economic Growth & Investment
The yield curve’s inverted! The yield curve’s inverted! That was the news I awoke to last Wednesday on CNBC as the 10 year Treasury note yield dipped below the 2 year yield for the first time since 2007. That’s the sign everyone has been waiting for, the definitive recession signal that says get out while the getting is good.

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The Benefits of a Profoundly Shattering Recession

2019-08-26

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2019-08-26

SPX Everything Bubble, 2000 - 2019
Does anyone really think The Everything Bubble can just keep inflating forever? What do I mean by a profoundly shattering recession? I mean, a systemic, crushing recession that can't be reversed with central bank magic, a recession that only deepens with time. The last real recession was roughly two generations ago in 1981; younger generations have no experience of a profound recession, and perhaps older folks have forgotten the shock, angst and...

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DM Equity Allocation Model For Q3 2019

2019-08-25

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2019-08-25

We recently introduced our Developed Markets (DM) Equity Allocation model. Building on the success of our EM model, this new framework extends our analysis to cover 24 DM equity markets. Our analysis is meant to assist global equity investors in assessing relative sovereign risk and optimal asset allocation across countries within the DM universe.

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WARNING!?Charles Hugh Smith: We’re seeing a general uprising against the neo-liberal elites

2019-08-24

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WARNING!?Charles Hugh Smith: We’re seeing a general uprising against the neo-liberal elites WARNING!?Charles Hugh Smith: We’re seeing a general uprising against the neo-liberal elites WARNING!?Charles Hugh Smith: We’re seeing a general uprising against the neo-liberal elites...

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Germany’s Superstimulus; Or, The Familiar (Dollar) Disorder of Bumbling Failure

2019-08-24

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2019-08-24

European Economy, 2004-2019
The Economics textbook says that when faced with a downturn, the central bank turns to easing and the central government starts borrowing and spending. This combined “stimulus” approach will fill in the troughs without shaving off the peaks; at least according to neo-Keynesian doctrine. The point is to raise what these Economists call aggregate demand.

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What does a cashless future mean? | The Economist

2019-08-23

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Many countries are going cashless at great speed. What are the advantages of ditching hard cash and what are the dangers? Read more about a cashless future here: https://econ.st/2Mwhipb Click here to subscribe to The Economist on YouTube: https://econ.st/2xvTKdy Somewhere in the near future physical money will become like these – Relics of a different …

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Charles Hugh Smith on Advice for Millennials: Low Cost Education and Where the Jobs Are!

2019-08-23

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Charles Hugh Smith on Advice for Millennials: Low Cost Education, Affordable Housing and Where the Jobs Are! Click here for the full transcript: http://financialrepressionauthority.com/2019/08/22/the-roundtable-insight-charles-hugh-smith-on-advice-for-millennials-low-cost-education-affordable-housing-and-where-the-jobs-are/

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Our Wile E. Coyote Federal Reserve

2019-08-23

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2019-08-23

Whatever the Fed chooses to do, it's already failed.. Wile E. Coyote has gotten a bad rap: in all fairness, his schemes are ingenious, if overly complicated, and it's not his fault that the Acme detonator misfires or the Road Runner doesn't respond as predicted. Every set-up to nail the Road Runner should work. That it fails and leaves him suspended over the cliff for a woefully brief second to intuit his impending doom really isn't his fault.

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Dollar Firm Ahead of Jackson Hole

2019-08-22

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2019-08-22

FOMC minutes were not as dovish as many had hoped; bond and equity markets are set up for a big reset. Today sees the start of the annual Fed symposium in Jackson Hole; the US reports a slew of data. Markit flash eurozone August PMI readings were reported; ECB publishes the account of its July 25 meeting.

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Brazilian real stands out in EM currency scorecard

2019-08-21

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2019-08-21

EM FX Scorecard, August 21
Prospects for emerging-market currencies look cloudy. The currencies of countries with sound external buffers and limited exposure to global trade should fare relatively better than others.In recent months, the global environment has become more challenging for EM currencies. Trade tensions have increased and are weighing on economic activity. Commodity prices have also fallen.

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That Can’t Be Good: China Unveils Another ‘Market Reform’

2019-08-20

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2019-08-20

China Internal/External, 2014-2019
The Chinese have been reforming their monetary and credit system for decades. Liberalization has been an overriding goal, seen as necessary to accompany the processes which would keep the country’s economic “miracle” on track. Or get it back on track, as the case may be. Authorities had traditionally controlled interest rates through various limits and levers.

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Hong Kong Protests: The Economist live Q&A

2019-08-19

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Protests have been raging in Hong Kong for months. Robert Guest, our foreign editor, joins Anna Bucks, the producer/director of “Hong Kong protests: what’s at stake for China” (https://econ.st/30kucKm) for a live discussion. If you want to find out more about the unfolding situation—and what might happen next—then submit your questions and we’ll try and …

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MH41 – Talking Markets with Charles Hugh Smith

2019-08-19

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Some Brief European Leftovers

2019-08-18

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2019-08-18

Europe Industrial Production, 2013-2019
Some further odds and ends of European data. Beginning with Continent-wide Industrial Production. Germany is leading the system lower, but it’s not all just Germany. And though manufacturing and trade are thought of as secondary issues in today’s services economies, the GDP estimates appear to confirm trade in goods as still an important condition and setting for all the rest.

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