Category Archive: 5) Global Macro

ECB (Data) Independence

Mario Draghi doesn’t have a whole lot going for him, but he is at least consistent – at times (yes, inconsistent consistency). Bloomberg helpfully reported yesterday how the ECB’s staff committee that produces the econometric projections has recommended the central bank’s Governing Council change the official outlook. Since last year, risks have been “balanced” in their collective opinion.

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Europe Starting To Reckon Eurodollar Curve

We’ve been here before. Economists and central bankers become giddy about the prospects for success, meaning actual recovery. For that to happen, reflation must first attain enough momentum. If it does, as is always forecast, reflation becomes recovery. The world then moves off this darkening path toward the unknown crazy.

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The Next Financial Crisis Is Right on Schedule (2019)

Neither small business nor the bottom 90% of households can afford this "best economy ever." After 10 years of unprecedented goosing, some of the real economy is finally overheating: costs are heating up, unemployment is at historic lows, small business optimism is high, and so on--all classic indicators that the top of this cycle is in.

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Global Asset Allocation Update – September 2018

The risk budget is unchanged again this month. For the moderate risk investor, the allocation between bonds and risk assets is 50/50. Decoupling anyone? That’s what the market is whispering right now, that the recent troubles in foreign economies is contained and won’t affect the US. The most obvious example of that trend is the performance of US stocks versus the rest of the world.

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Emerging Markets: What has Changed

Philippine central bank signaled another big hike. Poland central bank appears to be moving its forward guidance out further. Russia officials are sending confusing signals regarding monetary policy. Russia officials stand ready to support the ruble debt market if new US sanctions negatively impact it. South Africa’s African National Congress pledged to undertake land reform responsibly.

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After 10 Years of “Recovery,” What Are Central Banks So Afraid Of?

If the world's economies still need central bank life support to survive, they aren't healthy--they're barely clinging to life. The "recovery"/Bull Market is in its 10th year, and yet central banks are still tiptoeing around as if the tiniest misstep will cause the whole shebang to shatter: what are they so afraid of? 

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The Global Financial System Is Unraveling, And No, the U.S. Is Not immune

Currencies don't melt down randomly. This is only the first stage of a complete re-ordering of the global financial system. Take a look at the Shanghai Stock Market (China) and tell me what you see: A complete meltdown, right? More specifically, a four-month battle to cling to the key technical support of the 200-week moving average (the red line). Once the support finally broke, the index crashed.

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Emerging Market Week Ahead Preview

EM FX ended last week on a firm note, but weakness resumed Monday. Higher than expected Turkish inflation hurt the lira, which in turn dragged down BRL, ARS, ZAR, and RUB. We expect EM to remain under pressure this week when the US returns from holiday Tuesday.

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Emerging Markets: What Changed

China stepped up efforts to attract more foreign inflows to the onshore bond market. Russia has softened its unpopular pension reform proposal. The African National Congress withdrew an existing land expropriation bill. Moody’s downgraded twenty Turkish financial institutions. Turkey central bank Deputy Governor Erkan Kilimci has reportedly resigned.

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‘Mispriced’ Bonds Are Everywhere

The US yield curve isn’t the only one on the precipice. There are any number of them that are getting attention for all the wrong reasons. At least those rationalizations provided by mainstream Economists and the central bankers they parrot. As noted yesterday, the UST 2s10s is now the most requested data out of FRED. It’s not just that the UST curve is askew, it’s more important given how many of them are.

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Why Is Productivity Dead in the Water?

As the accompanying chart shows, productivity in the U.S. has been declining since the early 2000s. This trend mystifies economists, as the tremendous investments in software, robotics, networks and mobile computing would be expected to boost productivity, as these tools enable every individual who knows how to use them to produce more value.

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Here’s How We Ended Up with Predatory, Parasitic Elites

Combine financialization, neoliberalism and moral bankruptcy, and you end up with predatory, parasitic elites. How did our financial and political elites become predatory parasites? Some will answer that elites have always been predatory parasites; as tempting as it may be to offer a blanket denunciation of elites, this overlooks the eras in which elites rose to meet existential crises. Following in Ancient Rome's Footsteps: Moral Decay,...

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To Understand America’s Neofeudal Economy, Start with Extortion

Let's spin the time machine back to the late Middle Ages, at the height of feudalism, and imagine we're trying to get a boatload of goods to the nearest city to sell. As we drift down the river, we're constantly being stopped and charged a fee for transiting one small fiefdom after another. When we finally reach the city, there's an entry fee for bringing our goods to market.

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Emerging Markets: Week Ahead Preview

EM FX was whipsawed last week but ended on a firm note. We look past the noise and believe that the true signals for EM remain higher US interest rates and continued trade tensions, both of which are negative. Turkish markets reopen after a week off. Nothing fundamentally has changed there, and so it still poses some spillover risk to wider EM.

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Global PMI’s Hang In There And That’s The Bad News

At this particular juncture eight months into 2018, the only thing that will help is abrupt and serious acceleration. On this side of May 29, it is way past time for it to get real. The global economy either synchronizes in a major, unambiguous breakout or markets retrench even more.

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How “Wealthy” Would We Be If We Stopped Borrowing Trillions Every Year?

These charts reflect a linear system that is wobbling into the first stages of non-linear destabilization. The widespread presumption is the U.S. is wealthy beyond words, and will remain so as far as the eye can see: wealthy enough to fund trillion-dollar weapons systems, trillion-dollar endless wars, multi-trillion dollar Medicare for all, multi-trillion dollar Universal Basic Income, and so on, in an endless profusion of endless trillions....

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Monthly Macro Monitor – August

Economic thoughts and analysis from Alhambra Investments CEO Joe Calhoun.

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Emerging Markets: Preview of the Week Ahead

EM FX stabilized last week as the situation in Turkey calmed somewhat. Reports Friday that the US and China are hoping to resolve the trade dispute also helped EM FX ahead of the weekend. However, TRY remains vulnerable as the US threatens more sanctions due to the pastor. Both S&P and Moody’s downgraded it ahead of the weekend and our own ratings model points to further downgrades ahead. Turkish markets are closed this week for holiday.

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If You Want to Survive this Election with Your Mental Health Intact, Turn Off the “News” and Social Media Now

If you want to preserve your sanity and avoid unhappy derangement, turn off all corporate and social media from now to Thanksgiving. Since elections are extremely profitable for traditional media / social media corporations, your sanity will gleefully be sacrificed in the upcoming election--if you are gullible enough to watch the "news" and tune into social media.Elections are extremely profitable because candidates spend scads of cash on media...

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What’s Hot Isn’t Retail Sales Growth

Americans are spending more on filling up. A lot more. According the Census Bureau, retail sales at gasoline stations had increased by nearly 20% year-over-year (unadjusted) in both May and June 2018. In the latest figures for July, released today, gasoline station sales were up by more than 21%.

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