Category Archive: 5) Global Macro

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Mexico vs. Brazil Near-Term Outlook

2019-11-02

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2019-11-02

Interest Rates Favor Peso vs Real
Both Brazil and Mexico are in a good position to benefit from the current improvement in market sentiment. However, when comparing the factors driving the currencies of both countries, we think there are relatively more near-term positives for the Mexican peso than for the Brazilian real.

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Rugby World Cup: why size matters | The Economist

2019-11-01

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The Rugby World Cup saw heavier teams take to the pitch than ever before—England’s players are on average over 10% heavier than in 1991. So what impact is the increasing size of players having on rugby? Find out more here: https://econ.st/2PJVoiS Click here to subscribe to The Economist on YouTube: https://econ.st/2xvTKdy Isaac Newton’s second law …

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Three (Rate Cuts) And GDP, Where (How) Does It End?

2019-11-01

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2019-11-01

The Real GDP Problem,1988-2018
The Federal Reserve has indicated that it will now pause – for a second time, supposedly. Remember the first: after raising its benchmark rates apparatus in December while still talking about an inflationary growth acceleration requiring even more hikes throughout 2019, in a matter of weeks that was transformed into a temporary suspension of them.

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The Inventory Context For Rate Cuts And Their Real Nature/Purpose

2019-11-01

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2019-11-01

Case Study in Inventory, 2006-2019
What typically distinguishes recessions from downturns is the inventory cycle. Even in 2008, that was the basis for the Great “Recession.” It was distinguished most prominently by the financial conditions and global-reaching panic, true, but the effects of the monetary crash registered heaviest in the various parts of that inventory process.

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The Political Parties and the Media Have Abandoned the Working “Middle Class”

2019-10-31

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2019-10-31

Real Average Household Income, 1965-2015
Where is the line between "working class" and "middle class"? Maybe there isn't any. Defining the "middle class" has devolved to a pundit parlor game, so let's get real for a moment (if we dare): the "middle class" is no longer defined by the traditional metrics of income or job type (blue collar, white collar), but by an entirely different set of metrics:

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FOMC Preview

2019-10-31

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2019-10-31

Fed Funds Dot Plots, 2019-2022
The FOMC begins a two-day meeting today with the decision due out tomorrow afternoon.  The Fed is widely expected to cut rates 25 bp for the third meeting in a row.  What’s next? US data have undeniably softened in September.  Weakness in the manufacturing sector appears to have spread to the wider economy.  ISM PMI, jobs, CPI, PPI, and retail sales all came in weaker than expected. 

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Drugs in sport: can science stop the cheats? | The Economist

2019-10-30

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Science has made it is easier and faster to detect athletes who dope. So why are illicit performance-enhancing drugs still rife in sport? Read more here: https://econ.st/2Weuels Click here to subscribe to The Economist on YouTube: https://econ.st/2xvTKdy Over the years scientific progress has made it easier and faster to detect athletes who dope. But it’s …

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The Big Risks Left (and Right) In Europe

2019-10-30

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2019-10-30

Central Bank Failure, 1999-2019
Another local election in Germany, another stunning defeat for the ruling center. How many more of these does anyone need before they realize the electorate is going to keep migrating toward the poles? And it all stems from the one reason; there is no and has been no economic growth. But because the so-called establishment has insisted the economy is booming, or it was, people are doing what people always do.

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Monthly Macro Monitor: Market Indicators Review

2019-10-30

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2019-10-30

10-Year Treasury Yield, 2017-2019
Is the recession scare over? Can we all come out from under our desks now? The market based economic indicators I follow have improved since my last update two months ago. The 10 year Treasury rate has moved 40 basis points off its low. Real interest rates have moved up as well but not quite as much. The difference is reflected in slightly higher inflation expectations.

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Dollar Firm as Two-Day FOMC Meeting Begins

2019-10-29

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2019-10-29

The dollar continues to gain traction as the two-day FOMC begins; US political uncertainty has entered a new phase. Yesterday marked the third time that UK Prime Minister Johnson lost a vote for elections; he will try again today. Weak South Africa data support our call for imminent easing; the threat of sanctions against Turkey are back on the table.

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More Points For, And Pointing To, The Midpoint

2019-10-29

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2019-10-29

Wholesale Sales & Inventory, SA 2016-2019
It’s not surprising that the Census Bureau would report another weird sideways trend in wholesale sales. After all, the agency has already produced that kind of pattern in the related data for durable goods. For reasons that aren’t going to be explained, economic activity across the supply chain from producers to consumers has been curtailed. That hasn’t mean outright shrinking in seasonally adjusted forms, but it also doesn’t mean growth,...

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EM Preview for the Week Ahead

2019-10-28

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2019-10-28

EM has been on a good run but this week will be a big test.  Brexit uncertainty may finally end.  Or it may not.  A delay would be positive for EM, whilst a potential hard Brexit would be negative.  The Fed meets Wednesday and key US data will be reported during the week, culminating with the jobs report Friday. 

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Somehow Still Decent European Descent

2019-10-28

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2019-10-28

IHS Markit Germany Flash PMI
How times have changed. In the middle of 2018, we were told the risks to the global economy were all tilted to the upside. If central bankers weren’t careful, they chanced an uncontrollable inflationary breakout, the kind that would make the last few years of the 2010’s look too much like the 1970’s. Always eager to bottle up the inflation genie, Germany out of everyone actually welcomed negative factors as they built up during the year.

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Downward Home Prices In The Downturn, Too

2019-10-26

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2019-10-26

New Home Sales, 2011-2019
The Census Bureau reported today New Home Sales remained at a better than 700k SAAR in September following the big jump over the previous few months. Though the number was slightly lower last month than the month before, it wasn’t meaningfully less. As discussed yesterday, while that might seem the Fed’s rate cut psychology combined with the bond market’s pessimism (reducing the mortgage rate) is having a positive effect, I don’t see it that...

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Doping in sport: why it can’t be stopped | The Economist

2019-10-25

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Many sports’ reputations are being tarnished by doping scandals. The International Olympic Committee and The World Anti-Doping Agency (WADA) should be responsible for tackling drug cheats—but are they at the heart of the problem? Read more here: https://econ.st/2Weuels Click here to subscribe to The Economist on YouTube: https://econ.st/2xvTKdy It was one of sport’s darkest episodes. …

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Charles Hugh Smith new book – Will You Be Richer Or Poorer?

2019-10-25

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Charles Hugh Smith new book – Will You Be Richer Or Poorer? Click here for the full transcript: http://financialrepressionauthority.com/2019/10/25/the-roundtable-insight-charles-hugh-smith-new-book-will-you-be-richer-or-poorer/

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More Down In The Downturn

2019-10-25

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2019-10-25

IHS Markit US Manufacturing, 2012-2019
Flash PMI’s from IHS Markit for the US economy were split in October. According to the various sentiment indicators, there’s a little bit of a rebound on the manufacturing side as contrary to the ISM’s estimates for the same sector. Markit reports a sharp uptick in current manufacturing business volumes during this month.

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CHARLES HUGH SMITH – Whole Political Severe Is Highly Polarized Now

2019-10-24

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Macro Housing: Bargains and Discounts Appear

2019-10-24

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2019-10-24

Housing Construction, 2009-2019
While things go wrong for Jay Powell in repo, they are going right in housing. Sort of. It’s more than cliché that the real estate sector is interest rate sensitive. It surely is, and much of the Fed’s monetary policy figuratively banks on it. When policymakers talk about interest rate stimulus, they largely mean the mortgage space.

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The Unraveling Quickens

2019-10-24

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2019-10-24

Income Gains, 1980-2015
Even if we don't measure the erosion of intangible capital, the social and political consequences of this impoverishment are manifesting in all sorts of ways. The central thesis of my new book Will You Be Richer or Poorer? is the financial "wealth" we've supposedly gained (or at least a few of us have gained) in the past 20 years has masked the unraveling of our intangible capital: the resilience of our economy, our social capital, i.e. our ability...

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