Category Archive: 5) Global Macro

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China in Continuous PPI Deflation and No Depression In Sight?

Both Chinese PMI and the producer price index (PPI) are in deflation since 2012. This opens a lot of questions about the sustainability of Chinese economic growth, but also about the certain economic theories that consider deflation as a precursor of depression, as it did in the early 1930s. China's speed of economic growth simply slows, recently to 7%, according to China statistics "China’s Economy Showed Moderate but Steady Growth".

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Will wage inflation stop the stock market rallye?

Stock markets can only improve if sales increase more than the costs of the companies. Wage inflation describes the development of the major component of company costs. Torsten Sløk of Deutsche Bank describes the development of American wages

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The Self-Employed Middle Class Hardly Exists Anymore

The revenue breakdown of non employer businesses in 2011

It's sobering that in a nation of 317 million people (of which 145 million people file tax returns), only 3% of all those reporting income are self-employed people earning enough to support a middle class life without the additional income earned by a working spouse. Many people rightly aspire to improve their household's state of resilience through actions such as storing emergency supplies, starting a vegetable garden, and learning basic...

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Endangered Species: The Self-Employed Middle Class

Including the professional class, perhaps 3% of the workforce is truly independent. Being self-employed (i.e. owning your own small business that does not require employees) is an integral part of the American Dream. Many start out dreaming of a corner office in Corporate America, but as they move up the ladder, many become disillusioned by the process and the goal: do I really want to spend my life making big-shots even wealthier?

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Neofeudalism 101: Strip-Mining the Upper Middle Class

This Neofeudal structure is unstable by its very nature. I have often examined the Neofeudalist structure of the U.S. economic hierarchy, and the many social and financial fault lines running through this creaking structure.

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How Many Slots Are Open in the Upper Middle Class? Not As Many As You Might Think

Even the most educated workers have declining wages

Not only are there not that many slots in the upper middle class, the number of open slots is considerably lower. If America is the Land of Opportunity, why are so many parents worried that their princeling/princess might not get into the "right" pre-school, i.e. the first rung on the ladder to the Ivy League-issued "ticket to the upper middle class"? The obsessive focus on getting your kids into the "right" pre-school, kindergarten and prep...

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US Economic Indicators

US Recession Indicators Concurrent Indicators

The four best US economic indicators, in form of concurrent indicators, can be seen at Doug Short, here in detail.

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2014 Posts on Global Macro

Place of Birth of New Ukrainian Leaders Cement the Country’s Move to the West and the EU

2014-10-27

by George Dorgan

2014-10-27

The place of birth of the Ukrainian leaders give us hints where the country is headed. Most of them come from the very West of Ukraine, from places that formerly were part of the Austrian-Hungarian empire, of Poland or Romania.

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The Dollar, the ISM, Buy American and Irrational Exuberance

2014-09-09

by George Dorgan

2014-09-09

In this Cross Asset Global Macro Analysis we name our reasons for the current dollar strength. The main causes are ECB’s euro “downtalk”, tight monetary policy in Emerging Markets, rising savings of the aging populations. This leads to weak global spending and growth. With the help of Fed-financed higher asset prices and falling gasoline prices, …

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Stock Indices and Exposure to Emerging Markets

Monetary policy is and remains tight in Emerging Markets, in particular since many of their currencies collapsed in summer 2013. This created inflation and led to lower spending. We want to find out which stock indices in the developed world have which exposure to Emerging Markets.

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The Best Contrarian Macro Investment: Russia?

2014-08-09

by George Dorgan

2014-08-09

We name thirteen macro-economic reasons why Russia is currently the best place for contrarian investments.

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Can Sanctions Stop Putin? Russian Resource Rent versus Declining Oil Price

Malaysian MH17: Ukrainian&Western Propaganda against Russian Propaganda. Who is Best?

2014-07-19

by George Dorgan

2014-07-19

strong suspicion that Ukrainian air control deliberately facilitated and enabled the shot-down. Combining Western and Ukrainian propaganda with pro-Russian propaganda helps. In each piece of "manufactured or exaggerated news" there might be a bit of truth. Still there is only one party to this conflict that has to gain from a deliberate blowing up of MH17, this is not Russia or the so-called "Donezk People's Republic".

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Will the Dollar Appreciate on higher U.S. Savings and a Smaller Trade Deficit?

2014-07-12

by George Dorgan

2014-07-12

In summer 2013, even the sceptical and "gold-friendly" economist John Mauldin followed the mainstream thinking that fracking and other technology could reduce OPEC's and the Chinese advantage in global trade and reduce the U.S. trade deficit. Recently both claims got refuted: the first with WTI crude oil prices rising to nearly 108$ despite enhanced supply. Detailed data showed that rising U.S. industrial production was not caused by more...

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Global Inflation Spikes Up, Are You Sure About What You Are Doing Mr Draghi?

2014-06-04

by George Dorgan

2014-06-04

The European Central Bank (ECB) has the habit of reacting late. As seen in July 2008 and July 2011, the ECB is often the last major central bank to hike rates. They hike rates at the moment when others prepare for a recession or a significant slowing. Currently we are witnessing the opposite movement: The world is getting … Continue...

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Labor Participation Rates: Falling in the Ageing U.S., Rising in Ageing Germany and Crisis-Hit Italy

The most effective ways of measuring employment is by looking at the Labor Participation Rate. We compare the participation rates of the United States, Canada, the U.K., Germany and Italy.

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Stagnating Salaries as Main Reason for the British Home Price Boom

2014-05-21

by George Dorgan

2014-05-21

The major reason for rising British and American home prices is for us the relatively new phenomenon that they are to able to finance at cheap rates. Swiss or Germans have seen relatively low mortgage rates for more than three decades (with a short exception in the mid 1990s after the German reunification). The main driver of low rates …

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The Decline of Small Business and the Middle Class

The U.S. economy has become less entrepreneurial over time

The only way to not just survive but thrive as an entrepreneurial enterprise is to destroy fixed costs and labor overhead. It is not coincidental that the middle class and small business are both in decline.

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America’s Nine Classes: The New Class Hierarchy

Eight of the nine classes are hidebound by conventions, neofeudal and neocolonial arrangements and a variety of false choices. There are many ways to slice and dice America's power/wealth hierarchy. The conventional class structure is divided along the lines of income, i.e. the wealthy, upper middle class, middle class, lower middle class and the poor.

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