Category Archive: 5) Global Macro

The Great “American” Divide

Disconnect between Wall Street and Main Street. While asset prices are inflated by continued Fed interventions, boosting profits widening the wealth gap between the top 20% of Americans and the rest.

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Japanese Investors Will Determine Fate of USD/JPY not U.S. Hedge Funds

By Stephen Jen (via Itau Global Connections). Bottom line Now that the Bank of Japan will be led by a team of super-doves, the mechanism through which a more aggressive BOJ could influence the yen is through capital flows. We have used the analogy of a two-stage rocket to describe how USDJPY could be propelled. … Continue reading »

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Global Purchasing Manager Indices

Manufacturing Purchasing Manager Indices (PMIs) are considered to be the leading and most important economic indicators.   August 2013 Update Emerging markets: Years of strong increases in wages combined with tapering fears have taken its toll: Higher costs and lower investment capital available. EM Companies have issues in coping with developed economies. Some of them …

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BoJ: Despite Quantitative and Qualitative Easing No Sign of FX Purchases

The Bank of Japan has introduced the expected “massive” quantitative and qualitative easing programme. “Quantitative” means increase of quantities of JGBs bought, “qualitative” the purchase of more ETFs, REIT and the loan support program.

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The “Sell in May, Come Back in October” Effect and the 19 Fortune-Tellers of the FOMC

The U.S. economy regularly improves between October and April, this year additionally fueled by "unlimited" quantitative easing, weaker gas prices and higher competitiveness thanks to a stronger Chinese yuan and weaker Asian economies.   Update 2013: The Case-Shiller index continued to climb in April 2013; it became clear that this year the "Sell in May" …

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03-19-13 Macro Analytics – PEAK JOBS – w/ Charles Hugh Smith

PEAK JOBS 23 Minutes, 25 Slides Gordon T Long and Charles Hugh Smith raise and debate seven key notions, that along with unsound money, are central to the understanding of the structural economic problems facing the globe today. The world is being brutally impacted by a slowing rate of growth in jobs and is now …

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Why the Yen Is Now Fairly Valued, USD back as Preferred Funding Currency

Producer prices and “real mean reversion” for currencies show that the yen is currently fairly valued. Many momentum factors could, however, speak for some further weakening, while seasonality favours an appreciation. For us, the US dollar is back as the preferred funding currency. The real mean reversion for currencies Some economists, like Goldman’s O’Neill, in the case …

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More About Overheating Emerging Markets: Retail Investors Should not Touch these Bonds

  In our series about emerging markets, we name some that are overheating and could face increases of government bond yields due to higher inflation and weaker current accounts. At the same time, banks are aggressively selling emerging market bonds as possibility to achieve high yields. Tristan Hanson, head of asset allocation at Ashburton Asset …

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When Will Hedge Funds and FX Traders Close their Short Yen Positions?

Hedge Funds have lost their power. This year has shown that their only remaining possibility to gain easy money  is a concerted action with some of their friends manipulating currency markets, calling it “currency wars” and creating an unholy alliance with the dovish prime minister Abe. Some of the biggest U.S. hedge-fund investors have made …

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Is U.S. Housing Really Recovering? Pros and Cons

The U.S. housing market is the main driver for risk on/off movements and therewith implicitly of the gold price. We state charts, e.g. Shiller Home Price Index and U.S. New Home Sales statistics, arguments in favour of a housing recovery and the counter-arguments.

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Is U.S. Housing Really Recovering? A Discussion

Collection of 6 sources showing: Housing Market Index,Home Inventory, S&P/C-Shiller, New Home Sales&Prices and Ratio to Population, MBS Purchases by the Fed, Household Liabilities and Dependency Ratio.

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Is a Liquidity Trap Really a Problem? Yen Debasement Part3 by Noah Smith

Thoughts on the Japanese Currency Debasement (part 3) In previous posts we looked on the following aspects of the recent Japanese currency debasement: Overview: What different leading economists – Paul Krugman, Richard Koo, Adam Posen, Kyle Bass – think about the Japanese currency debasement and the way to more private spending and investing instead of …

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Sell in May, Come Back in October (outdated)

The U.S. economy regularly improves between October and March. This year the improvement was a bit earlier thanks to QE3. By March the economy already weakened according to the latest ISM PMIs.

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Macro Analytics 02-02-13 – RIP: Our Expansionist Central State – w/Charles Hugh Smith

Like the sun coming up in the morning, Central State planning and expansion predictably leads to state spending exceeding the rate of the real growth of the state’s economy. The US Central State has been no exception and has been relentlessly expanding faster than GDP since the 1950s with only two notable exceptions. The dot.com …

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01-05-13 Macro Analytics – 2013 THEMES – Charles Hugh Smith

THE FOLLOWING ARE EXPLORED Rising SYSTEMIC FRAGILITY is increasing the odds of an “unexpected” breakdown. it is now reaching a “Threshold of Vulnerability”. The FED LOSSES POLITICAL CAPITAL in 2013. We are witnessing a reduced impact of each QE version, Expect Hope to Turn to Fear when this occurs. ECONOMIC STAGNATION and PERMANENT ADOLESCENCE Using …

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Global Purchasing Manager Indices, Update January 25

Manufacturing PMIs are considered to be the leading and most important economic indicators.  After a strong slowing in summer 2012 and the Fed’s QE3, this is the fourth month of improvements in global PMIs   January 25th Expansion-contraction ratio: There are 15 countries that show values above 50 and 14 with values under 50. Positive-negative-change ratio: …

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Epic Shift in Monetary Policy: Japan goes SNB, Nuclear Option

According to Bloomberg, at least prime minister Abe is taking the nuclear option and is following the SNB in buying foreign assets. This is a huge change in global monetary policy.

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