Category Archive: Global Macro

Forced Finally To A Binary Labor Interpretation

JOLTS figures for the month of April 2017, released today, highlight what is in the end likely to be a more positive outcome for them. It has very little to do with the economy itself, as what we are witnessing is the culmination of extreme positions...

Emerging Markets: Preview of the Week Ahead

EM FX was mixed last week but in general held up well in the aftermath of Super Thursday. The global backdrop seems relatively benign right now despite the FOMC meeting this week. We still think investors have to be picky. TRY, ZAR, and BRL at...

Signs of Something, Just Not Wage Acceleration

I have been writing for many years that they really don’t know what they are doing. I only wish it was that simple. There has been developing another layer or dimension to that condition, a second derivative of stupid, whereby when faced with this now...

Emerging Markets: What has Changed

The Reserve Bank of India cut its inflation forecast for FY2017/18. South Korean President Moon suspended the installation of the remaining components of the THAAD missile shield. S&P cut Qatar one notch to AA-. Turkey looks likely to get caught up in...

The Anti-Perfect Jobs Condition

The irony of the unemployment rate for the Federal Reserve is that the lower it gets now the bigger the problem it is for officials. It has been up to this year their sole source of economic comfort. Throughout 2015, the Establishment Survey improperly...

Dollars And Sent(iment)s

Both US manufacturing PMI’s underwhelmed just as those from China did. The IHS Markit Index was lower than the flash reading and the lowest level since last September. For May 2017, it registered 52.7, down from 52.8 in April and a high of 55.0 in...

Pay No Attention To 50

China’s PMI’s were uniformly disappointing with respect to what Moody’s was on about last week. Chinese authorities expended great effort and resources to get the economy moving forward again after several years of “dollar”-driven deceleration. here...

Bi-Weekly Economic Review: The Return of Economic Ennui

The economic reports released since the last of these updates was generally not all that bad but the reports considered more important were disappointing. And it should be noted that economic reports lately have generally been worse than expected...

Emerging Markets: Preview of the Week Ahead

EM FX closed last week on a firm note as weak US jobs data supported the notion that the Fed will find it hard to tighten in H2. No major US data will be reported this week and the FOMC embargo for the June 14will be in effect. As such, there is little...

How Debt-Asset Bubbles Implode: The Supernova Model of Financial Collapse

Gravity eventually overpowers financial fakery. When debt-asset bubbles expand at rates far above the expansion of earnings and real-world productive wealth, their collapse is inevitable. The Supernova model of financial collapse is one way to...

Emerging Markets: What has Changed

The Indonesian cabinet is discussing revisions to the 2017 state budget. The Thai central bank plans to reform some FX rules. South African President Zuma survived the no confidence vote within his own ANC. Brazil’s central bank signaled a slower pace...

Will the Crazy Global Debt Bubble Ever End?

We've been playing two games to mask insolvency: one is to pay the costs of rampant debt today by borrowing even more from future earnings, and the second is to create wealth out of thin air via asset bubbles. The two games are connected: asset bubbles...

Simple (economic) Math

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...

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

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...

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

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...

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

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...

Emerging Markets: Week Ahead Preview

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...

Suddenly Impatient Sentiment

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,...

Emerging Markets: What has Changed

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....

Global Asset Allocation Update

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...