Category Archive: 5) Global Macro

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Why we should talk to strangers, according to Malcolm Gladwell | The Economist Podcast

2019-09-07

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Malcolm Gladwell is a prolific author and thought leader. He talks to Anne McElvoy about his latest book “Talking to Strangers” and why we should adjust the way we interact with people we don’t know. Click here for the full interview: https://econ.st/2ZYUkcM Click here to subscribe to The Economist on YouTube: https://econ.st/2xvTKdy 00:09 – What …

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Just Who Was The Intended Audience For The Rate Cut?

2019-09-07

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2019-09-07

Federal Reserve Beige Book, December 2010 - September 2019
Federal Reserve policymakers appear to have grown more confident in their more optimistic assessment of the domestic situation. Since cutting the benchmark federal funds range by 25 bps on July 31, in speeches and in other ways Chairman Jay Powell and his group have taken on a more “hawkish” tilt. This isn’t all the way back to last year’s rate hikes, still a pronounced difference from a few months ago.

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CHARLES HUGH SMITH – Having A Recession Is Healthy For Us

2019-09-06

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Will Everything Change in 2020-2025 or Will Nothing Change?

2019-09-06

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2019-09-06

Rising Wedge Model of Breakdown
Any domino-like expanding crisis will unfold in a status quo lacking any coherent response. Longtime readers know I've often referenced The Fourth Turning, the book that makes the case for an 80-year cycle of existential crisis in U.S. history.

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The internet’s second revolution | The Economist

2019-09-05

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The second half of humanity is joining the internet. People in countries like India will change the internet, and it will change them. Read more from The Economist here: https://econ.st/2zVWeQQ Click here to subscribe to The Economist on YouTube: https://econ.st/2xvTKdy L.O. Two simple letters that marked one of the biggest changes in human history. In …

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United States: The ISM Conundrum

2019-09-05

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2019-09-05

U.S. ISM Manufacturing PMI, Markit Manufacturing PMI and GDP, July 2012 - August 2019
Bond yields have tumbled this morning, bringing the 10-year US Treasury rate within sight of its record low level. The catalyst appears to have been the ISM’s Manufacturing PMI. Falling below 50, this widely followed economic indicator continues its rapid unwinding.

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Copper Confirmed

2019-09-04

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2019-09-04

Copper NBS, August 2016 - 2019
Copper prices behave more deliberately than perhaps prices in other commodity markets. Like gold, it is still set by a mix of economic (meaning physical) and financial (meaning collateral and financing). Unlike gold, there doesn’t seem to be any rush to get to wherever the commodity market is going. Over the last several years, it has been more long periods of sideways.

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Latest Thoughts on the US Economic Outlook

2019-09-04

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2019-09-04

US GDP, Q1 2012 - 2019
The US economy is starting to show cracks from the ongoing trade war. While we do not want to make too much from one data point, we acknowledge that headwinds are building whilst US recession risks are rising.

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Big Difference Which Kind of Hedge It Truly Is

2019-09-03

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2019-09-03

PCE Deflator, January 20 15 - July 2019
It isn’t inflation which is driving gold higher, at least not the current levels of inflation. According to the latest update from the Bureau of Economic Analysis, the Federal Reserve’s preferred inflation calculation, the PCE Deflator, continues to significantly undershoot. Monetary policy explicitly calls for that rate to be consistent around 2%, an outcome policymakers keep saying they expect but one that never happens.

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Drivers for the Week Ahead

2019-09-02

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2019-09-02

Emerging Markets Currencies
We remain dollar bulls; this is an important data week for the US. Final August eurozone manufacturing PMIs will be reported Monday; UK reports August PMIs this week. RBA meets Tuesday and is expected to keep rates steady at 1.0%; BOC meets Wednesday and is expected to keep rates steady at 1.75%.

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Labor Day Reflections on Retirement and Working for 49 Years

2019-09-02

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2019-09-02

SPX Everything Bubble, 2000 - 2019
What happens when these monstrous speculative bubbles pop? Let's start by stipulating that if I'd taken a gummit job right out of college, I could have retired 19 years ago. Instead, I've been self-employed for most of the 49 years I've been working, and I'm still grinding it out at 65.

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GDP Profits Hold The Answers To All Questions

2019-09-01

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2019-09-01

GDP Corporate Profits from Current Production, Jan 2010 - 2019
Revisions to second quarter GDP were exceedingly small. The BEA reduced the estimate by a little less than $800 million out of nearly $20 trillion (seasonally-adjusted annual rate). The growth rate therefore declined from 2.03502% (continuously compounded annual rate) to 2.01824%.

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Dear Trump Advisors: Prop the Market Up Now and Lose in 2020, or Let the Market Crash and Win in 2020

2019-08-31

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2019-08-31

SPX Everything Bubble, 2000 - 2019
One of the more reliable truisms is that Americans vote their pocketbook: if their wallets are being thinned (by recession, stock market declines, high inflation/stagnant wages, etc.), they throw the incumbent out, even if they loved him the previous year when their wallets were getting fatter. (Think Bush I, who maintained high approval ratings but ended up losing the 1992 election due to a dismal economic mood.)

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Monthly Macro Monitor: Market Indicators Review

2019-08-30

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2019-08-30

US 10 Year Treasury Yield Index, Sep 2017 - Aug 2019
The Treasury market continues to price in lower nominal and real growth. The stress, the urgency, I see in some of these markets is certainly concerning and consistent with what we have seen in the past at the onset of recession. The move in Treasuries is by some measures, as extreme as the fall of 2008 when we were in a full blown panic.

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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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