Category Archive: 5) Global Macro

Filter archive by: Show All Show only Articles Show only Videos

Are Central Banks Losing Control?

2017-03-11

by

2017-03-11

China Debt, 2002 - 2016
If you want a central banker to choke on his croissant, read him this quote from socio-historian Immanuel Wallerstein: "Countries (have lost the ability) to control what happens to them in the ongoing life of the modern world-system."

Read More »

No Paradox, Economy to Debt to Assets

2017-03-11

by

2017-03-11

Household Net Worth, April 1951 - 2016
It is surely one of the primary reasons why many if not most people have so much trouble accepting the trouble the economy is in. With record high stock prices leading to record levels of household net worth, it seems utterly inconsistent to claim those facts against a US economic depression.

Read More »

Emerging Markets: What has Changed

2017-03-11

by

2017-03-11

North Korean banks subject to international sanctions have been banned from using Swift. Korea’s Constitutional Court upheld Parliament’s motion to impeach President Park. Singapore eased some property market curbs after a three-year decline in home prices. Egypt partially reversed a cut in bread subsidies. Nigeria’s President Buhari returned to the nation after spending nearly two months in the UK. Moody’s moved its outlook on Argentina’s B3...

Read More »

Same Country, Different Worlds

2017-03-10

by

2017-03-10

China CPI PPI, February 2007 - 2017
To my mind, “reflation” has always proceeded under false pretenses. This goes for more than just the latest version, as we witnessed the same incongruity in each of the prior three. The trend is grounded in mere hope more than rational analysis, largely because I think human nature demands it. We are conditioned to believe especially in the 21st century that the worst kinds of things are either unrealistic or apply to some far off location nowhere...

Read More »

US Trade Skews

2017-03-09

by

2017-03-09

US Trade Export, NSA 1989-2016
US trade statistics dramatically improved in January 2017, though questions remain as to interpreting by how much. On the export side, US exports of goods rose 8.7% year-over-year (NSA). While that was the highest growth rate since 2012, there is part symmetry to account for some of it.

Read More »

China And Reserves, A Straightforward Process Unnecessarily Made Into A Riddle

2017-03-08

by

2017-03-08

China Official Foreign Exchange 2015-2017
The fact that China reported a small increase in official “reserves” for February 2017 is one of the least surprising results in all of finance. The gamma of those reserves is as predictable as the ticking clock of CNY, in no small part because what is behind the changes in those balances are the gears that lie behind face of the forex timepiece.

Read More »

Do Record Eurodollar Balances Matter? Not Even Slightly

2017-03-07

by

2017-03-07

Nonbanks TIC Other Outbound, Nov 1978 - 2016
The BIS in its quarterly review published yesterday included a reference to the eurodollar market (thanks to M. Daya for pointing it out). The central bank to central banks, as the outfit is often called, is one of the few official institutions that have taken a more objective position with regard to the global money system. Of the very few who can identify eurodollars, or have even heard of them, the BIS while not fully on board is at least open...

Read More »

Manufacturing Back To 2014

2017-03-07

by

2017-03-07

Factory Orders for All Manufacturing Industies, SA 1992-2016
The ISM Manufacturing PMI registered 57.7 in February 2017, the highest value since August 2014 (revised). It was just slightly less than that peak in the 2014 “reflation” cycle. Given these comparisons, economic narratives have been spun further than even the past few years where “strong” was anything but.

Read More »

Emerging Market Preview for the Week Ahead

2017-03-06

by

2017-03-06

EM FX was mostly softer last week, though it ended the week firmer, buoyed by outsized MXN gains Friday. The Fed is sending very strong signals for a March hike, which should keep EM FX on its back foot. However, with the March 15 FOMC embargo coming into effect, there will be no Fed speakers after Kashkari on Monday. Jobs data on Friday will be the highlight, but given the Fed’s signals, we do not think a soft report will derail a hike next...

Read More »

Bi-Weekly Economic Review

2017-03-05

by

2017-03-05

Economic Reports Scorecard. The economic data released since my last update has been fairly positive but future growth and inflation expectations, as measured by our market indicators, have waned considerably. There is now a distinct divergence between the current data, stocks and bonds. Bond yields, both real and nominal, have fallen recently even as stocks continue their relentless march higher.

Read More »

Economic Dissonance, Too

2017-03-04

by

2017-03-04

Germany Industrial Production, SA 1997-2016
Germany is notoriously fickle when it comes to money, speaking as much of discipline in economy or industry as central banking. If ever there is disagreement about monetary arrangements, surely the Germans are behind it. Since ECB policy only ever attains the one direction, so-called accommodation, there never seems to be harmony.

Read More »

Emerging Markets: What has Changed?

2017-03-04

by

2017-03-04

A Korean special prosecutor indicted Samsung chief Jay Y. Lee on bribery charges. Korean press is reporting that China has told its travel agents to halt sales of holiday packages to South Korea. Bulgaria’s interim government said it may apply to join the eurozone within a month. South Africa’s main labor union Cosatu accepted a government-proposed minimum wage.

Read More »

True Cognitive Dissonance

2017-03-04

by

2017-03-04

Inflation In Japan 2011-2016
There is gold in Asia, at least gold of the intellectual variety for anyone who wishes to see it. The Chinese offer us perhaps the purest view of monetary conditions globally, where RMB money markets are by design tied directly to “dollar” behavior. It is, in my view, enormously helpful to obsess over China’s monetary system so as to be able to infer a great deal about the global monetary system deep down beyond the “event horizon.”

Read More »

Real Disposable Income: Headwinds of the Negative

2017-03-03

by

2017-03-03

PCE Chain-type Price Index 2008-2017
The PCE Deflator for January 2017 rose just 1.89% year-over-year. It was the 57th consecutive month less than the 2% mandate (given by the Fed itself when in early 2012 it made the 2% target for this metric its official definition of price stability).

Read More »

Why Is the Cost of Living so Unaffordable?

2017-03-03

by

2017-03-03

US Health care 1960-2010
Strip away the centralized power that protects and funds cartels, and prices would plummet. The mainstream narrative is "the problem is low wages." Actually, the problem is the soaring cost of living. If essentials such as healthcare, housing, higher education and government services were as cheap as they once were, a wage of $10 or $12 an hour would be more than enough to maintain a decent everyday life.

Read More »

Some Notes On GDP Past And Present

2017-03-01

by

2017-03-01

GDP PCE Deflator QQ YY, January 2009 - April 2016
The second estimate for GDP was so similar to the first as to be in all likelihood statistically insignificant. The preliminary estimate for real GDP was given as $16,804.8 billion. The updated figure is now $16,804.1 billion. In nominal terms there was more variation, where the preliminary estimate of $18,860.8 billion is now replaced by one for $18,855.5 billion.

Read More »

Durable Goods Groundhog

2017-02-28

by

2017-02-28

Durable Goods New Orders, NSA 1993-2017
If the economy is repeating the after-effects of the latest “dollar” events, and it does seem more and more to be that case, then analysis starts with identifying a range for where it might be in the repetition. New orders for durable goods (ex transportation) rose 4.3% year-over-year in January 2017 (NSA, only 2.4% SA), the highest growth rate since September 2014 (though not meaningfully faster than the 3.9% rate in November 2016).

Read More »

Virtue-Signaling the Decline of the Empire

2017-02-28

by

2017-02-28

Top 1% US Pre-Tax Income Share, 1913-2012
Virtue-signaling doesn't signal virtue--it signals decline and collapse. There are many reasons why Imperial Rome declined, but two primary causes that get relatively little attention are moral decay and soaring wealth inequality. The two are of course intimately connected: once the morals of the ruling Elites degrade, the status quo seeks to mask its self-serving rot behind high-minded "virtue-signaling" appeals to past glories and cost-free...

Read More »

It Was ‘Dollars’ All Along

2017-02-28

by

2017-02-28

Giant Sucking Sound 1960 - 2015
Ross Perot famously declared the “giant sucking sound” in the 1992 Presidential campaign. The debate over NAFTA did not end with George H. W. Bush’s defeat, as it simmered in one form or another for much of the 1990’s. Curiously, however, it seemed almost perfectly absent during the 2000’s, the very decade in which Perot’s prophecy came true. Americans didn’t notice because there was a bubble afoot.

Read More »

Emerging Markets: Preview of the Week Ahead

2017-02-27

by

2017-02-27

EM FX ended last week on a soft note despite lower US rates. The dollar regained some traction that it lost over the course of the week, when markets pushed out Fed tightening beyond March. Treasury Secretary Mnuchin also seemed to push out fiscal stimulus. There is a full slate of Fed speakers this week, and Wednesday sees the release of the Fed’s Beige book that was prepared for the March 15 FOMC meeting.

Read More »