Category Archive: 5) Global Macro

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Simple (economic) Math

2017-06-02

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2017-06-02

Average Weekly Earnings Production And Nonsupervisory, January 2007 - May 2017
The essence of capitalism is not strictly capital. In the modern sense, the word capital has taken on other meanings, often where money is given as a substitute for it. When speaking about things like “hot money”, for instance, you wouldn’t normally correct someone referencing it in terms of “capital flows.” Someone that “commits capital” to a project is missing some words, for in the proper sense they are “committing funds to...

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Inflation Isn’t Evenly Distributed: The Protected Are Fine, the Unprotected Are Impoverished Debt-Serfs

2017-06-01

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2017-06-01

US Health Care, 1960 - 2010
The Consumer Price Index (CPI) measure of inflation is bogus on a number of fronts, a reality I've covered a number of times: though the heavily gamed official CPI is under 2% for the past four years, the real rate is 7% to 12%, depending on whether you happen to live in locales with soaring rents/housing and healthcare costs.

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The Keynesian Cult Has Failed: “Emergency” Stimulus Is Now Permanent

2017-05-31

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2017-05-31

Total Public Debt, 1970 - 2017
Can we finally admit that eight years of following the Keynesian coloring-book have not just failed, but failed spectacularly? What do we call a status quo in which & emergency measures" have become permanent props? A failure. The "emergency" responses to the Global Financial Meltdown of 2008-09 are, eight years on, permanent fixtures.

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Not Do We Need One, But Do We Need A Different One

2017-05-30

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2017-05-30

Chinese Money, Oil Prices And Asian "Dollars" , January 2006 - July 2009
On March 24, 2009, then US President Barack Obama gave a prime time televised press conference whose subject was quite obviously the economy and markets. The US and global economy was at that moment trying to work through the worst conditions since the 1930’s and nobody really had any idea what that would mean.

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Jean-Marie Guéhenno’s talking points on running a UN peacekeeping mission

2017-05-29

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The United Nations deploys over 100,000 personnel across 16 peacekeeping operations. On the International Day of UN peacekeepers, Jean-Marie Guéhenno, a former head of UN peacekeeping, on how to run a successful mission. Click here to subscribe to The Economist on YouTube: http://econ.trib.al/rWl91R7 Daily Watch: mind-stretching short films throughout the working week. For more from …

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Emerging Markets: Week Ahead Preview

2017-05-29

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2017-05-29

EM FX closed last week on a mixed note, with markets struggling to find a compelling investment theme. The US jobs data this week could provide some more clarity on Fed policy. We still think markets are still underestimating political risk in the big EM countries, including Brazil (Moody’s outlook moved to negative), Mexico (election in state of Mexico), South Africa (ANC debates Zuma’s fate), and Turkey (ongoing crackdown on opposition).

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Suddenly Impatient Sentiment

2017-05-28

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2017-05-28

Fed Fifth District Survey Of Manufacturing, January 2014 - May 2017
Two more manufacturing surveys suggest sharp deceleration in momentum, or, more specifically, the momentum of sentiment (if there is such a thing). The Federal Reserve’s 5th District Survey of Manufacturing (Richmond branch) dropped to barely positive, calculated to be just 1.0 in May following 20.0 in April and 22.0 in March.

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RMR: Exclusive Interview with Charles Hugh Smith (05/27/2017)

2017-05-27

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“V” welcomes back Charles for an in-depth discussion regarding Charles’s blogs: TINA’s Legacy: Free Money, Bread and Circuses and Collapse, How Higher Education Became an Obscenely Profitable Racket That Enriches the Few at the Expense of the Many (Student Debt-Serfs) and Want to Understand Rising Wealth Inequality? Look at Debt and Interest. Charles’s website: http://www.oftwominds.com/ …

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Emerging Markets: What has Changed

2017-05-27

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2017-05-27

Moody's downgraded China's rating from Aa3 to A1 with stable outlook. Reports suggest that the PBOC has informed local banks that it is changing the way it sets the daily fix. Moody's downgraded Hong Kong’s rating to Aa2 from Aa1 with stable outlook. Philippine President Duterte declared martial law on Mindanao island. Egypt's central bank unexpectedly hiked rates by 200 bp. S&P moved the outlook on Bolivia’s BB rating from stable to negative....

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Global Asset Allocation Update

2017-05-27

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2017-05-27

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, however, changes within the asset classes. We are reducing the equity allocation and raising the allocation to REITs. 

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After a terrorist attack: a survivor’s view on how to move forward

2017-05-26

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In 2011, Bjorn Ihler survived a horrific terrorist attack in Norway. Since then he’s worked as a peace activist and dedicated his life to countering terrorism. He offers his perspective after the bombing in Manchester. Click here to subscribe to The Economist on YouTube: http://econ.trib.al/rWl91R7 22 people died in the Manchester attack on May 22nd …

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State of Denial: The Economy No Longer Works As It Did in the Past

2017-05-26

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2017-05-26

U.S. Productivity Growth, 1980 - 2017
If there is one reality that is denied or obscured by the Status Quo, it is that the economy no longer works as it did in the past. This is the fundamental economic context of our current slide into political-social disintegration.

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Less Than Nothing

2017-05-25

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2017-05-25

Eurodollar Futures Dimensions, 2005 - 2007
As I so often write, we still talk about 2008 because we aren’t yet done with 2008. It doesn’t seem possible to be stuck in a time warp of such immense proportions, but such are the mistakes of the last decade carrying with them just these kinds of enormous costs.

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Commodity and Oil Prices: Staying Suck

2017-05-24

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2017-05-24

U.S. Industrial Production, 2006-2017
The rebound in commodity prices is not difficult to understand, perhaps even sympathize with. With everything so depressed early last year, if it turned out to be no big deal in the end then there was a killing to be made. That’s what markets are supposed to do, entice those with liquidity to buy when there is blood in the streets. And if those speculators turn out to be wrong, then we are all much the wiser for their pain.

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Bi-Weekly Economic Review

2017-05-23

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2017-05-23

The economic data releases since the last update were generally upbeat but markets are forward looking and the future apparently isn’t to their liking. Of course, it is hard to tell sometimes whether bonds, the dollar and stocks are responding to the real economy or the one people hope Donald Trump can deliver when he isn’t busy contradicting his communications staff.

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How to survive an earthquake through clever engineering

2017-05-22

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When earthquakes strike, the most dangerous aspect is not the shaking ground, but the risk posed by falling debris. So how do you make a structure earthquake-resistant? Click here to subscribe to The Economist on YouTube: http://econ.trib.al/rWl91R7 More than a million people have died in earthquakes in the past two decades. But earthquakes don’t pose …

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Emerging Markets: Preview of the Week Ahead

2017-05-22

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2017-05-22

EM FX ended last week on a firm note, shrugging off political risk that consumed markets earlier in the week. With US rates remaining low, the dollar remains under pressure against the majors, and so EM FX is likely to benefit also. Yet we warn investors not to jump back into EM countries that are inherently riskier, such as Brazil, South Africa, and Turkey. We continue to favor Asia in the current environment.

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Trying To Reconcile Accounts; China

2017-05-21

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2017-05-21

China Fixed Asset Investment, April 2013 - April 2017
Chinese economic data for April 2017 has been uniformly disappointing. External trade numbers resembled too much commodity prices, leaving an emphasis on them rather than actual economic forces. The latest figures for the Big 3, Industrial Production, Retail Sales, and Fixed Asset Investment, unfortunately also remained true to the pattern.

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Emerging Markets: What Has Changed

2017-05-20

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2017-05-20

Stock Markets Emerging Markets, May 17
China’s government approved the creation of a bond link between Hong Kong and the mainland. S&P upgraded Indonesia one notch to investment grade BBB- with stable. Fitch revised the outlook on Vietnam’s BB- rating from stable to positive. Egypt will announce a package of social spending soon. Moody's changed the outlook on Poland's A2 rating from negative to stable.

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Reasonable Retail (Therefore Consumer) Expectations

2017-05-20

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2017-05-20

Transitory Retail Sales, January 2013 - May 2017
Retail sales estimates are not adjusted for inflation, but even so whenever they get down toward the 3% growth level you can be sure there is serious economic trouble. The 6-month average for overall retail sales dropped below 3% in March 2001, the month that marked the start of the official dot-com recession (though that is not the official name for the cyclical peak, it probably should be).

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