Category Archive: 5) Global Macro

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Global Asset Allocation Update: Step Away From The Portfolio

2017-09-25

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2017-09-25

Moderate Allocation
There is no change to the risk budget this month. For the moderate risk investor, the allocation between risk assets and bonds is unchanged at 50/50. There are no changes to the portfolios this month. The post Fed meeting market reaction was a bit surprising in its intensity. The actions of the Fed were, to my mind anyway, pretty much as expected but apparently the algorithms that move markets today were singing from a different hymnal.

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Abe and BOJ

2017-09-24

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2017-09-24

BOJ is unlikely to change policy. A snap election suggests continuity of policy. US 10-year yield remains one of most important drivers of the exchange rate.

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Expectations and Acceptance of Potential

2017-09-23

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2017-09-23

University of Michigan Consumer Confidence, Jan 1997 - 2017
The University of Michigan reports that consumer confidence in September slipped a little from August. Their Index of Consumer Sentiment registered 95.3 in the latest month, down from 96.8 in the prior one. Both of those readings are in line with confidence estimates going back to early 2014 when consumer sentiment supposedly surged.

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IP Weathers Storms But Not Cars

2017-09-23

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2017-09-23

US Industrial Production, Jan 2010 - Jul 2017
In late August 2006, ABC News asked more than a dozen prominent economists to evaluate the impacts of hurricane Katrina on the US economy. The cataclysmic storm made landfall on August 29, 2005, devastating the city of New Orleans and the surrounding Gulf coast. The cost in human terms was unthinkable, and many were concerned, as people always are, that in economic terms the country might end up in similar devastation.

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Angela Merkel’s rise to power, in five steps | The Economist

2017-09-22

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Angela Merkel is expected to win her fourth term as German Chancellor. In doing so she would become Europe’s most successful elected female politician. Her biographer, Jacqueline Boysen, tells us why Mrs Merkel is a political force with staying power. Click here to subscribe to The Economist on YouTube: http://econ.trib.al/rWl91R7 How do you survive in …

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Retail Sales and the End of ‘Reflation’

2017-09-22

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2017-09-22

US Retail Sales, Jun 2011 - Aug 2017
There will be an irresistible urge to the make this about the weather, but more and more data shows it’s not any singular instance. Nor is it transitory. What does prove to be temporary time and again is the upside. The economy gets hit (by “dollar” events), bounces back a little, and then goes right back into the dumps. This, it seems, is the limited extent of cyclicality in these times.

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The CPI Comes Home

2017-09-22

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2017-09-22

US Consumer Price Index, Jan 2016 - Aug 2017
There seems to be an intense if at times acrimonious debate raging inside the Federal Reserve right now. The differences go down to its very core philosophies. Just over a week ago, Vice Chairman Stanley Fischer abruptly resigned from the Board of Governors even though many believed he was a possible candidate to replace Chairman Yellen at the end of her term next year. His letter of resignation only cited “personal reasons.”

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A Clear Anchor

2017-09-21

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2017-09-21

China Fixed Asses Investment, 2014 - 2016
All the way back in January I calculated the total size of China’s 2016 fiscal “stimulus.” Starting in January 2016, authorities conducted what was an enormous spending program. As it had twice before, the government directed increased “investment” from State-owned Enterprises (SOE). By my back-of-the-envelope numbers, the scale of this fiscal side program was about RMB 1.45 trillion, or nearly 2% of GDP

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Elon Musk’s hyperloop could revolutionise public transport | The Economist

2017-09-20

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Elon Musk’s Hyperloop technology has the potential to revolutionise the way we travel. In a contest he held in Los Angeles, some of the world’s brightest engineers gathered to find the best way to make this billionaire’s pipe dream a reality. Click here to subscribe to The Economist on YouTube: http://econ.trib.al/rWl91R7 Elon Musk, the billionaire …

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Dear Jamie Dimon: Predict the Crash that Takes Down Your Produces-Nothing, Parasitic Bank and We’ll Listen to your Bitcoin “Prediction”

2017-09-20

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2017-09-20

Central Bank balance sheet, 2006 - 2017
This is the begging-for-the-overthrow-of-a-corrupt-status-quo economy we have thanks to the Federal Reserve giving the J.P. Morgans and Jamie Dimons of the world the means to skim and scam the bottom 95%. Dear Jamie Dimon: quick quiz: which words/phrases are associated with you and your employer, J.P. Morgan?

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Harvey’s Muted (Price) Impact On Oil

2017-09-19

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2017-09-19

US Crude Oil Stocks, Nov 2016 - Sep 2017
The impact of Hurricane Harvey on the Gulf energy region is becoming clear. There have been no surprises to date, even though the storm did considerable damage and shuttered or disrupted significant capacity. Most of that related to gasoline, which Americans have been feeling in pump prices.

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RMR: Exclusive Interview with Charles Hugh Smith (09/18/2017)

2017-09-18

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Returning guest Charles Hugh Smith delivers a great interview discussing cryptocurrencies, the concern over Google and Facebook and the truth about digital advertising and data mining. We are political scientists, editorial engineers, and radio show developers drawn together by a shared vision of bringing Alternative news through digital mediums that evangelize our civil liberties. Please …

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Yes, This Time It Is Different: But Not in Good Ways

2017-09-18

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2017-09-18

Central Bank balance sheet, 2006 - 2017
Yes, this time it's different: all the foundations of a healthy economy are crumbling into quicksand. The rallying cry of Permanent Bulls is this time it's different. That's absolutely true, but it isn't bullish--it's terrifically, terribly bearish. Why is this time it's different bearish going forward? The basic answer is that nothing that is structurally broken has actually been fixed, and the policy "fixes" have fatally weakened the global...

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When You Are Prevented From Connecting The Dots That You See

2017-09-18

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2017-09-18

US Real Personal Income, Jan 2010 - Jul 2017
In its first run, the Federal Reserve was actually two distinct parts. There were the twelve bank branches scattered throughout the country, each headed by almost always a banker of local character. Often opposed to them was the Board in DC. In those early days the policy establishment in Washington had little active role. Monetary policy was itself a product of the branches, the Discount Rate, for example, often being different in each and every...

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The JOLTS of Drugs

2017-09-17

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2017-09-17

US Overdose Deaths Involving Opioids, 2000 - 2015
Princeton University economist Alan Krueger recently published and presented his paper for Brookings on the opioid crisis and its genesis. Having been declared a national emergency, there are as many economic as well as health issues related to the tragedy. Economists especially those at the Federal Reserve are keen to see this drug abuse as socio-demographic in nature so as to be absolved from failing in their primary task should it be found...

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Housing Bubble Symmetry: Look Out Below

2017-09-17

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2017-09-17

U.S. National Home Price Index, 1980 - 2017
Housing markets are one itsy-bitsy recession away from a collapse in domestic and foreign demand by marginal buyers. There are two attractive delusions that are ever-present in financial markets:One is this time it's different, because of unique conditions that have never ever manifested before in the history of the world, and the second is there are no cycles, they are illusions created by cherry-picked data; furthermore, markets are now...

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Emerging Markets: What has Changed

2017-09-16

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2017-09-16

China plans to issue its first USD-denominated bond since 2004. China’s largest banks banned North Koreans from opening new accounts. The UN Security Council approved new sanctions on North Korea. Relations between Poland and the European Commission remain tense. Brazil’s central bank appears to be signaling discomfort with ongoing BRL strength.

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The Real Reason Wages Have Stagnated: Our Economy is Optimized for Financialization

2017-09-16

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2017-09-16

US Wages & Salaries as GDP, 1960 - 2017
Labor's share of the national income is in freefall as a direct result of the optimization of financialization. The Achilles Heel of our socio-economic system is the secular stagnation of earned income, i.e. wages and salaries. Stagnating wages undermine every aspect of our economy: consumption, credit, taxation and perhaps most importantly, the unspoken social contract that the benefits of productivity and increasing wealth will be distributed...

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Les «diamants de sang» zimbabwéens circulent librement sur les marchés internationaux. La Tribune

2017-09-15

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2017-09-15

Marange Diamant
L’ONG britannique Global Witness vient de publier ce 11 septembre un rapport explosif qui met à nu des opérations de détournement des revenus du secteur minier zimbabwéen par l’élite militaire et politique du pays pour financer les opérations répressives du régime du président Mugabe.

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Is the High Cost of Housing Crushing Wages?

2017-09-15

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2017-09-15

Top 5% Spending, 1990 - 2012
The authors' thesis doesn't explain the 47-year downtrend of labor's share of the economy. A provocative essay, Don't Blame the Robots, makes the bold claim that "Housing Prices and Market Power Explain Wage Stagnation." (Foreign Affairs) In other words, the stagnation of the bottom 95% of wages isn't caused by automation or offshoring, but by the crushingly high cost of housing:

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