Category Archive: Global Macro

Housing Isn’t Just About Real Estate

The National Association of Realtors (NAR) reported today that sales of existing homes (resales) were up slightly in September 2017 on a monthly basis. At a seasonally-adjusted annual rate of 5.39 million last month, that was practically unchanged from the 5.35 million estimate for August that was the lowest in a year.

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The World’s Largest ICO Is Imploding After Just 3 Months

Earlier this summer, Tezos smashed existing sales records in the white-hot IPO market after the company’s pitch to build a better blockchain for cryptocurrencies made it one of the buzziest ICOs in the world. As we noted at the time, the company capitalized on that buzz by courting VC firms and other institutional investors with a $50 million token pre-sale. After the company opened up selling to the broader public, demand soared as investors...

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Le Liban découvre la politique monétaire non conventionnelle

S’il y a une chose que les Libanais savent faire, c’est compter! S’il y a une deuxième chose qu’ils savent faire, c’est oser s’exprimer. C’est exactement ce que le député Georges Adwan a fait: Calculer le manque à gagner généré par la Banque du Liban à travers sa politique monétaire, et en faire part.

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Bi-Weekly Economic Review: Yawn

When I wrote the update two weeks ago I said that we might be nearing the point of maximum optimism. Apparently, there is another gear for optimism in this market as stocks have just continued to slowly but surely reach for the sky.

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Emerging Markets: Week Ahead Preview

EM FX ended the week on a soft note. Indeed, nearly every EM currency was down for the entire week, led by ZAR, BRL, and TRY. While higher US rates will pressure EM FX as a whole, we think heightend political risk will continue to hit these three currencies particularly hard, plus perhaps MXN too.

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Which Rotten Fruit Falls First?

I predict the current investigations will widen and take a variety of twists and turns that surprise all those anticipating a tidy, narrowly focused denouement. The theme this week is The Rot Within. To those of us who understand the entire status quo is rotten and corrupt to its core, the confidence of each ideological camp that their side will emerge unscathed by investigation is a source of amusement.

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GDP Is Bogus: Here’s Why

The rot eating away at our society and economy is typically papered over with bogus statistics that "prove" everything's getting better every day in every way. The prime "proof" of rising prosperity is the Gross Domestic Product (GDP), which never fails to loft higher, with the rare excepts being Spots of Bother (recessions) that never last more than a quarter or two.

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Fraud, Exploitation and Collusion: America’s Pharmaceutical Industry

The rot within manifested by the pharmaceutical industry almost defies description.The theme this week is The Rot Within. America's Pharmaceutical industry takes pride of place in this week's theme of The Rot Within, as the industry has raised fraud, exploitation and collusion to systemic perfection. What other industry can routinely kill hundreds of thousands of Americans and suffer no blowback? Only recently has the toll of needless deaths from...

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Distinct Lack of Good Faith, Part ??

It was a busy weekend in retrospect, starting with Janet Yellen and other central bankers uncomfortably facing a global media that has become (for once) increasingly unconvinced. Reporters, really, don’t have much choice. The Federal Reserve Chairman might not be aware of just how much she has used the “transitory” qualifier since 2015, but others can’t be helped from noticing.

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Broader Slowing in Industrial Production

Industrial Production rose 1.6% year-over-year in September 2017. That’s up from 1.2% growth in August, both months perhaps affected to some degree by hurricanes. The lack of growth and momentum, however, clearly predated the storms. The seasonally-adjusted index for IP peaked in April 2017, and has been lower ever since. This pattern, the disappointment this year is one we see replicated nearly everywhere on both sides (supply as well as demand)...

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Global Inflation Continues To Underwhelm

Chinese producer prices accelerated in September 2017, while consumer price increases slowed. The National Bureau of Statistics reported this weekend that China’s PPI was up 6.9% year-over-year, a quicker pace than the 6.3% estimated for August and a 5.5% rate in July. Earlier in the year producer prices were driven mostly by 2016’s oil rebound, along with those in the rest of the global economy, but in recent months there has been more influence...

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China Exports/Imports: Enforcing A Global Speed Limit

Chinese imports rose 18.7% in September 2017 year-over-year. That’s up from 13.5% growth in August. While near-20% expansion sounds good if not exhilarating, it isn’t materially different from 13.5% or 8% for that matter. In addition, Chinese trade statistics tend to vary month to month.

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The Fading Scent of the American Dream

The theme this week is The Rot Within. It's been 10 years since I devoted a week to the theme of The Rot Within (September 17, 2007). Back in 2007, I listed 16 systemic sources of rot in our society, politics and economy; none have been fixed. Instead, the gaping holes have been filled with Play-Do and hastily painted to create the illusion of shiny solidity.

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About Those “Hedonic Adjustments” to Inflation: Ignoring the Systemic Decline in Quality, Utility, Durability and Service

The quality, durability, utility and enjoyment-of-use of our products and services has been plummeting for years. One of the more mysterious aspects of the official inflation rate is the hedonic quality adjustments that the Bureau of Labor Statistics makes to the components of the Consumer Price Index (CPI). The basic idea is that when innovations improve the utility (and pleasure derived from) a product, the price is adjusted to reflect this...

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US Retail Sales: Retail Storms

Retail sales were added in September 2017 due to the hurricanes in Texas and Florida (and the other states less directly impacted). On a monthly, seasonally-adjusted basis, retail sales were up a sharp 1.7% from August. The vast majority of the gain, however, was in the shock jump in gasoline prices. Retail sales at gasoline stations rose nearly 6% month-over-month, so excluding those sales retail sales elsewhere gained a far more modest 0.6%.

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Emerging Markets: Preview of the Week Ahead

EM FX closed the week on a firm note, as softer than expected US CPI data weighed on the dollar. We continue to believe that investors are underestimating the Fed’s tightening potential. Meanwhile, idiosyncratic political risk remains high for MXN, TRY, and ZAR.

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Migration of the Tax Donkeys

Dear local leadership: here's the formula for long-term success. A Great Migration of the Tax Donkeys is underway, still very much under the radar of the mainstream media and conventional economists. If you are confident no such migration of those who pay the bulk of the taxes could ever occur, please consider the long-term ramifications of these two articles.

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US CPI: Inflation Still Isn’t About Inflation

The US Consumer Price Index (CPI) rose back above 2% in September 2017 for the first time since April. Boosted yet again by energy prices, consumer prices overall still aren’t where the Fed needs them to be (by its own policies, not consumer reality). In fact, despite a 10.2% gain in the energy price index last month, the overall CPI just barely crossed the 2% mark (though for the Fed it really needs to be closer to 3% to match a 2% PCE Deflator).

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Are You Better Off Than You Were 17 Years Ago?

We tend to measure what's easily measured (and supports the status quo) and ignore what isn't easily measured (and calls the status quo into question). If we use gross domestic product (GDP) as a broad measure of prosperity, we are 160% better off than we were in 1980 and 35% better off than we were in 2000. Other common metrics such as per capita (per person) income and total household wealth reflect similarly hefty gains.

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Emerging Markets: What has Changed

Thailand announced general elections will be held in November 2018. Czech police filed criminal charges against ANO leader Andrej Babis. South Africa President Zuma may face corruption charges that were previously dropped. The US suspended visa services for travelers from Turkey. Kenyan opposition candidate Odinga withdrew from a redo of the annulled presidential election. Saudi Arabia will take a more gradual approach to removing fuel subsidies....

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