Category Archive: 5) Global Macro

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Emerging Market: Preview for the Week Ahead

2017-04-03

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2017-04-03

EM FX was mixed last week. The rebound in oil helped some, such as COP, RUB, and MXN. On the other hand, idiosyncratic political risks weighed on South Africa. This week could pose a challenge to EM, with lots of Fed speakers, FOMC minutes, and US jobs data.

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The Power of Oil

2017-04-02

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2017-04-02

Oil Prices WTI, May 2007 - 2017
For the first time in 57 months, a span of nearly five years, the Fed’s preferred metric for US consumer price inflation reached the central bank’s explicit 2% target level. The PCE Deflator index was 2.12% higher in February 2017 than February 2016. Though rhetoric surrounding this result is often heated, the actual indicated inflation is decidedly not despite breaking above for once.

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Do the Roots of Rising Inequality Go All the Way Back to the 1980s?

2017-04-02

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2017-04-02

US Household Wealth, 1917 - 2017
Unless we change the fundamental structure of the economy so that actually producing goods and services and hiring people is more profitable than playing financial games with phantom assets, the end-game of financialization is financial collapse. I presented this chart of rising wealth inequality a number of times over the past year. Do you notice something peculiar about the inflection points in the 1980s?

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Ending The Fed’s Drug Problem

2017-04-02

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2017-04-02

GDP Corp Profits After Tax, Jan 2010 - 2017
Gross Domestic Product was revised slightly higher for Q4 2016, which is to say it wasn’t meaningfully different. At 2.05842%, real GDP projects output growing for one quarter close to its projected potential, a less than desirable result. It is fashionable of late to discuss 2% or 2.1% as if these are good numbers consistent with a healthy economy.

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Emerging Markets: What has Changed

2017-03-31

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2017-03-31

Former Korean President Park was arrested. Hungary’s central bank was more dovish than expected. South African President Zuma finally fired Finance Minister Gordhan. Brazil’s meat industry may have seen the worst of the scandal. Banco de Mexico slowed the pace of tightening.

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India: The next Pakistan?

2017-03-29

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2017-03-29

The Modimobile is making the rounds amid a flower shower. [PT] Photo credit: PTI Photo
India’s Rapid Degradation. This is Part XI of a series of articles (the most recent of which is linked here) in which I have provided regular updates on what started as the demonetization of 86% of India’s currency. The story of demonetization and the ensuing developments were merely a vehicle for me to explore Indian institutions, culture and society.

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Bi-Weekly Economic Review

2017-03-28

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2017-03-28

B-weekly
The Fed did, as expected, hike rates at their last meeting. And interestingly, interest rates have done nothing but fall since that day. As I predicted in the last BWER, Greenspan’s conundrum is making a comeback. The Fed can do whatever it wants with Fed funds – heck, barely anyone is using it anyway – but they can’t control what the market does with long term rates.

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The aquanauts who journey to the bottom of the ocean

2017-03-28

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Ever wondered what it is like to descend in a submersible into the deepest ocean? Check out Economist Films: http://films.economist.com/ Check out The Economist’s full video catalogue: http://econ.st/20IehQk Like The Economist on Facebook: https://www.facebook.com/TheEconomist/ Follow The Economist on Twitter: https://twitter.com/theeconomist Follow us on Instagram: https://www.instagram.com/theeconomist/ Follow us on LINE: http://econ.st/1WXkOo6...

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Diving down to the deep ocean

2017-03-27

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Even in the perpetual darkness of the deepest ocean, scientists discover the discarded rubbish of modern life. Check out Economist Films: http://films.economist.com/ Check out The Economist’s full video catalogue: http://econ.st/20IehQk Like The Economist on Facebook: https://www.facebook.com/TheEconomist/ Follow The Economist on Twitter: https://twitter.com/theeconomist Follow us on Instagram: https://www.instagram.com/theeconomist/ Follow us on...

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Forget ObamaCare, RyanCare, and any Future ReformCare-the Healthcare System Is Completely Broken

2017-03-27

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2017-03-27

U.S. Healthcare System
It's time to start planning for what we'll do when the current healthcare system implodes. As with many other complex, opaque systems in the U.S., only those toiling in the murky depths of the healthcare system know just how broken the entire system is.

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Emerging Markets: Week Ahead Preview

2017-03-27

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2017-03-27

EM FX ended the week on a firm note. Indeed, virtually all of EM was up against the dollar last week, led by ZAR and MXN. BRL and PHP were the laggards. It remains to be seen how markets react to the failure to pass the health care reform in the US. Will Trump move on the tax reform? Can the Republicans proceed with its agenda in light of the fissures within the party?

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The Inverse of Keynes

2017-03-26

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2017-03-26

S&P 500 EPS Q4 2016
With nearly all of the S&P 500 companies having reported their Q4 numbers, we can safely claim that it was a very bad earnings season. It may seem incredulous to categorize the quarter that way given that EPS growth (as reported) was +29%, but even that rate tells us something significant about how there is, actually, a relationship between economy and at least corporate profits.

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Renters Now Rule Half of U.S. Cities

2017-03-26

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2017-03-26

The American Dream increasingly involves a lease, not a mortgage. Detroit was once known as a city where a working-class family could afford to own a home. Now it’s a city of renters. Just 49 percent of Motor City households were homeowners in 2015, down from 55 percent in 2009 and the lowest percentage in more than 50 years.

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The Deep State’s Dominant Narratives and Authority Are Crumbling

2017-03-26

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2017-03-26

boris and natasha
This is why the Deep State is fracturing: its narratives no longer align with the evidence. As this chart from Google Trends illustrates, interest in the Deep State has increased dramatically in 2017. The term/topic has clearly moved from the specialist realm to the mainstream. I've been writing about the Deep State, and specifically, the fractures in the Deep State, for years.

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All In The Curves

2017-03-26

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2017-03-26

Notable events in the 2003 deflation scare
If the mainstream is confused about exactly what rate hikes mean, then they are not alone. We know very well what they are supposed to, but the theoretical standards and assumptions of orthodox understanding haven’t worked out too well and for a very long time now. The benchmark 10-year US Treasury is today yielding less than it did when the FOMC announced their second rate hike in December.

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Emerging Markets: What has Changed

2017-03-25

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2017-03-25

Reserve Bank of India will introduce a new monetary policy tool. Moody’s raised the outlook on Russia’s Ba1 rating from stable to positive. Fitch cut Saudi Arabia’s rating a notch to A+. Moody’s cut the outlook on Turkey’s Ba1 rating from stable to negative. China has temporarily suspended beef imports from Brazil.

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TIC Analysis of Selling

2017-03-25

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2017-03-25

When the Treasury Department released its Treasury International Capital (TIC) data for December, what was a somewhat obscure report suddenly found mainstream attention. Private foreign investors had sold tens of billions in US securities primarily US Treasury bonds and notes which the media then made into some kind of warning to then-incoming President Trump. It was supposed to be a big deal, the kind of rebuke reserved for disreputable leaders of...

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Central Bankers Are Creating A World Where We Are All Serfs: Charles Hugh Smith

2017-03-25

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Today’s Guest: Charles Hugh Smith Websites: Of Two Minds http://www.oftwominds.com Books: Get a Job, Build a Real Career… Why Things Are Falling Apart and What We Can Do About It A Radically Beneficial World http://amzn.com/1517160960 Most of artwork that are included with these videos have been created by X22 Report and they are used as …

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Durable Goods After Leap Year

2017-03-25

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2017-03-25

Durable Goods New Orders, NSA 1993-2017
New orders for durable goods (not including transportation orders) were up 1% year-over-year in February. That is less than the (revised) 4.4% growth in January, but as with all comparisons of February 2017 to February 2016 there will be some uncertainty surrounding the comparison to the leap year version.

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What could threaten Amazon’s empire? | The Economist

2017-03-24

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Amazon accounts for more than half of every dollar spent online in America and is the world’s leading provider of cloud computing. But can the company avoid the attention of the regulators? Click here to subscribe to The Economist on YouTube: http://econ.trib.al/rWl91R7 This week we put Amazon on the cover. Amazon is a remarkable company …

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