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Category Archive: 5) Global Macro

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The Global Engine Is Still Leaking

2020-04-16

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2020-04-16

Federal Reserve: Liabilities & Capital, 1984-2019
An internal combustion engine that is leaking oil presents a difficult dilemma. In most cases, the leak itself is obscured if not completely hidden. You can only tell that there’s a problem because of secondary signs and observations.If you find dark stains underneath your car, for example, or if your engine smells of thick, bitter unpleasantness, you’d be wise to consider the possibility.

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Dollar Firm in Thin Holiday Trading

2020-04-15

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2020-04-15

The virus news stream is mostly positive today; yet risk assets are starting the week under some modest pressure. The dollar took a hit last week but we think it will recover; some US data releases from Good Friday are worth repeating. With most of Europe closed today, the news stream from the region is very light; oil prices could not extend their gains today after OPEC+ finalized output cuts over the weekend.

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Dollar Under Modest Pressure as Europe Returns from Holiday

2020-04-15

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2020-04-15

Coronavirus Daily Change, 2020
The tug of war between extending vs. softening lockdowns continues. The dollar remains under modest pressure but we think it will eventually recover; Bernie Sanders has endorsed Joe Biden. Europe reopens from holiday today but the news stream remains light; South Africa surprised with an emergency 100 bp rate cut.

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There’s No Going Back, We Can Only Go Forward

2020-04-14

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2020-04-14

US financial assets now 5.6 times GDP
What I see is a global collapse of intangible capital that is invisible to most people. It's only natural that the conventional expectation is a return to the pre-pandemic world is just a matter of time. Whether it's three months or six months or 18 months, "the good old days" will return just as if we turned back the clock.

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Buy The Tumor, Sell the News

2020-04-13

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2020-04-13

Apple Monthly, 2005-2021
The fictitious valuation of the stock market will eventually re-connect with reality in a violent decline. No, buy the tumor, sell the news (tm) is not a typo: the stock market is a lethal tumor in our economy and society. 

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The Real Diseased Body

2020-04-12

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2020-04-12

CES: Civilian Labor Force Level, 2007-2020
Another day, another new Federal Reserve “bailout.” As these things go by, quickly, the details become less important. What is the central bank doing today? Does it really matter?For me, twice was enough. All the way back in 2010 I had expected other people to react as I did to QE2. If you have to do it twice, it doesn’t work.

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The World Has Changed More Than We Know

2020-04-11

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2020-04-11

Put another way: eras end. While the mainstream media understandably focuses on the here and now of the pandemic, some commentators are looking at the long-term consequences. Here is a small sampling: While each of these essays offers a different perspective, let's focus on the last two: Ugo Bardi's essay on Hyperspecialization and the technological responses described in the MIT Technology Review essay.

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How to treat covid-19 | The Economist

2020-04-10

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A vaccine for covid-19 is a long way off. In the meantime, could existing drugs be used to treat the novel coronavirus? Read more here: https://econ.st/2wtEOgf Click here to subscribe to The Economist on YouTube: https://econ.st/2xvTKdy Further reading: Sign up to The Economist’s daily newsletter to keep up to date with our latest covid-19 coverage: …

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Lessons from Singapore?

2020-04-10

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2020-04-10

Singapore has been hailed for its quick response to the coronavirus that limited initial infections, but the outlook is shifting.  Despite their early success, they will have to revert to a lockdown.  Can Singapore’s experience offer any lessons for European and the US policymakers?

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Dollar Firm as Europe Fails to Deliver

2020-04-09

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2020-04-09

The dollar is stabilizing; reports suggest the White House is developing a plan to reopen the US economy sooner rather than later. Both Hong Kong and Singapore just tightened restrictions on gathering and movement. FOMC minutes for the March 15 decision will be released today.

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Fragile, Not Fortified

2020-04-09

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2020-04-09

Credit Spreads, 2017-2020
On Sunday, Argentina’s government announced it was postponing payment on any domestically-issued debt instruments denominated in foreign currencies. That means dollars, just not Eurobonds. At least not yet. In response, ratings agencies such as Fitch declared the maneuver a distressed debt exchange.In other words, technically a default.

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What Will The Post-Coronavirus World Look Like? (Martenson, Rubino, Smith & Taggart)

2020-04-08

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If covid-19 is indeed hastening the permanent disruption of the status quo, what will life in a post-coronavirus world look like? This prognosticating session builds on last week’s Economic Shockwaves roundtable: https://www.peakprosperity.com/economic-shockwaves/ This time, John Rubino, Charles Hugh Smith and Adam Taggart — also joined by Chris Martenson this time — discuss the myriad ways …

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Restricted Market Trading Comments

2020-04-08

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2020-04-08

With many markets still under lockdown and some going out on Easter holidays this week, we continue to see amended trading hours. The most notable change has been in India with a reduction in trading hours, while in Nigeria we saw a small amount of liquidity being released by the Central Bank of Nigeria (CBN). Below are our updates for the week.

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How Africa could one day rival China | The Economist

2020-04-07

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Africa is changing so fast, it is becoming hard to ignore. In the short term the continent faces many problems, including covid-19, but in the long term it could rival China’s economic might. Read more here: https://econ.st/2V8HGY9 doc See the UN’s World Population Prospects 2019 here: https://econ.trib.al/ClGiknr Read about covid-19 in African countries: https://econ.trib.al/LDMdqwr Click …

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It’s Hard To See Anything But Enormous Long-term Cost

2020-04-07

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2020-04-07

The unemployment rate wins again. In a saner era, back when what was called economic growth was actually economic growth, this primary labor ratio did a commendable job accurately indicating the relative conditions in the labor market. You didn’t go looking for corroboration because it was all around; harmony in numbers for a far more peaceful and serene period.

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Dollar Mixed, Equities Higher as Virus News Stream Improves

2020-04-07

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2020-04-07

It was a relatively good weekend in virus-related news; measures of implied volatility continue to trend lower. The dollar is trying to build on its recent gains; investors continue to try and gauge just how bad the US economy will get hit. The outlook for oil prices remains highly uncertain and volatile.

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If Lockdown Is a Needless Over-Reaction, Then Why Did China Lockdown Half its Economy?

2020-04-06

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2020-04-06

Exponential growth and the expansion of the coronavirus
Recall that the initial deaths and related costs are only the first-order effects; policy makers have to consider the second-order effects. Everyone who reckons that the lockdown is needless and more destructive than the pandemic that triggered it has to answer this question: then why did China lockdown half its economy?

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EM Preview for the Week Ahead

2020-04-06

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2020-04-06

EM may get a little support from a potential OPEC+ deal to limit oil.  Even if a deal is struck, the impact is likely to be fleeting as the global growth outlook remains terrible.  We remain negative on EM for the time being.

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When Bulls Are Over-Anxious to Catch the Rocketship Higher, This Isn’t the Bottom

2020-04-05

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2020-04-05

Apple operating income, 2006-2019
Everyone with any position in today's market will be able to say they lived through a real Bear Market. In the echo chamber of a Bull Market, there's always a reason to get bullish: the consumer is spending, housing is strong, the Fed has our back, multiples are expanding, earnings are higher, stock buybacks will push valuations up, and so on, in an essentially endless parade of self-referential reasons to buy, buy, buy and ride the rocketship...

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Covid-19: how bad will it be for the economy? | The Economist

2020-04-03

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The coronavirus pandemic has killed thousands of people, crashed stockmarkets around the world, driven 10m Americans to claim unemployment and caused businesses to haemorrhage money. With economies in turmoil, how bad will the damage be? Sign up to The Economist’s daily newsletter to keep up to date with our latest covid-19 coverage: https://econ.trib.al/StVR1bU Find The …

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