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Category Archive: 5) Global Macro

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Drivers for the Week Ahead

2019-09-30

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2019-09-30

We continue to think that the US economy is in better shape than most appreciate, and that underpins our strong dollar call. Tensions are likely to remain high after reports emerged last week that the US will look into limiting capital flows into China. US September jobs data Friday will be the data highlight of the week; there is a heavy slate of Fed speakers this week.

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Dollar Firm as US Economy Continues to Outperform

2019-09-29

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2019-09-29

Political uncertainty is likely to persist in the US; the big unknown is whether this will impact the US economy. US core PCE reading will be of particular interest and is expected to rise 1.8% y/y; Quarles (voter) and Harker (non-voter) speak. Dovish BOE comments are weighing on sterling; France reported weak CPI and consumer spending data.

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Pets Are Now as Unaffordable As College, Housing and Healthcare

2019-09-28

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2019-09-28

Price Changes, 1996-2016
Like so many other things that were once affordable, owning pets is increasingly pricey. One of the few joys still available to the average household is a pet. At least this is what I thought until I read 5 money-saving tips people hate, which included the lifetime costs of caring for a pet. It turns out Poochie and Kittie are as unaffordable as college, housing and healthcare (and pretty much everything else).

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Dollar Firm Despite Rising US Political Uncertainty

2019-09-27

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2019-09-27

The dollar continues to benefit despite US political uncertainty President Trump claimed to be getting “closer and closer” to a trade deal with China; we are very skeptical. There is a lot of US data to be reported and a heavy slate of Fed speakers today.

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Here’s How We Are Silenced by Big Tech

2019-09-27

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2019-09-27

This is how they silence us: your content has been secretly flagged as being "unsafe," i.e. "guilty of anti-Soviet thoughts;" poof, you're gone. Big Tech claims it isn't silencing skeptics, dissenters and critics of the status quo, but it is silencing us. Here's how it's done. Let's start with Twitter.

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Waiting on the Calvary

2019-09-26

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2019-09-26

WTO Global Trade, 2007-2019
Engaged in one of those protectionist trade spats people have been talking about, the flow of goods between South Korea and Japan has been choked off. The specific national reasons for the dispute are immaterial. As trade falls off everywhere, countries are increasingly looking to protect their own. Nothing new, this is a feature of when prolonged stagnation turns to outright contraction.

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Dollar Firm as Risk-Off Impulses Return

2019-09-25

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2019-09-25

Markets have moved into risk-off mode from a confluence of events emanating from the US. Speaker of the House Pelosi formally launched a formal impeachment inquiry; DOJ inserted itself into Trump’s fight with New York state. Trump’s speech to the UN General Assembly yesterday was noteworthy for its belligerence.

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Financial Storm Clouds Gather

2019-09-25

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2019-09-25

Concentration of Stock Ownership by Wealth Bracket
The price of this "solution"--the undermining of the financial system--will eventually be paid in full. The financial storm clouds are gathering, and no, I'm not talking about impeachment or the Fed and repo troubles--I'm talking about much more serious structural issues, issues that cannot possibly be fixed within the existing financial system.

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No Longer Hanging In, Europe May Have (Been) Broken Down

2019-09-24

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2019-09-24

Central Bank Failure, 1999-2017
Mario Draghi can thank Jay Powell at his retirement party. The latter being so inept as to allow federal funds, of all things, to take hold of global financial attention, everyone quickly shifted and forgot what a mess the ECB’s QE restart had been. But it’s not really one or the other, is it? Once it actually finishes, the takeaway from all of September should be the world’s two most important central banks each botching their...

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Automation and the Crisis of Work

2019-09-23

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2019-09-23

Workers share of national income, 1994-2020
Technology, like natural selection, has no goal. When it comes to the impact of automation (robots, AI, etc.) on jobs, there are two schools of thought: one holds that technology has always created more and better jobs than it destroys, and this will continue to be the case.

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EM Preview for the Week Ahead

2019-09-22

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2019-09-22

We think the Fed has signaled that the bar to another cut is high.  Unless the US data weakens considerably, we see rates on hold for now and this means the liquidity story for EM has worsened.  Elsewhere, US-China trade talks appear to be going nowhere.  With no end in sight to the trade war, we remain negative on EM.

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What’s The Verdict On This Week?

2019-09-21

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2019-09-21

Money Markets Equivalents, 2009-2019
Jay Powell’s disastrous week is coming to a close, not yet his long nightmare. He has been battling fed funds (meaning repo) for his entire tenure dating back to February 2018. This week wasn’t the conclusion to the contest, just the latest and biggest round of it.

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Dollar Mixed on Central Bank Thursday

2019-09-20

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2019-09-20

As expected, the Fed cut rates by 25 bp; the dollar firmed after the decision but has since given back some gains. During the North American session, there will be a fair amount of US data. BOE is expected to keep rates steady; UK reported August retail sales. SNB and BOJ kept rates steady, as expected; Norges Bank unexpectedly hiked 25 bp.

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The New Orthodoxy: Blasphemy, Heresy and the New Inquisition

2019-09-20

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2019-09-20

A corrupt Orthodoxy devoid of new ideas, an Orthodoxy devoted to maintaining the wealth, status and power of insiders regardless of cost, is a brittle, fragile, unstable system. When the ruling Elites sense their control of the populace is waning, they seek to regain full control via the imposition of a strict Orthodoxy, enforced by an Inquisition. We are living in just such an era.

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Markets That Live by the Fed, Die by the Fed

2019-09-19

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2019-09-19

S&P 500, 2000-2015
The "everything bubble" is not permanent. All eyes are again on the Federal Reserve, as everyone understands that the Fed is the market-- the stock market, the bond market, the art market, the housing market, etc. All markets have been driven higher by one force: central bank money creation and distribution to the financial sector of financiers and corporations, the richest of the rich.

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Some Thoughts on the Fed and Oil Shocks

2019-09-18

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2019-09-18

U.S. GDP Growth, Q1 1973-Q1 1982
Oil prices have spiked after the weekend attack on Saudi oil facilities.  Will it impact the Fed tomorrow?  No.  We compare the current (but still unfolding) situation to past oil shocks from the 1970s and discuss the policy responses taken.  

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Focus Is On The Pre-recession Condition

2019-09-18

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2019-09-18

Industrial Production, SA 2016-2019
Before the Great “Recession” ended the business cycle as we once knew it, there was a widely accepted concept known as stall speed. In the US, if GDP growth decelerated down to around 2% it suggested the system had reached a danger zone of sorts. In a such a weakened state, one good push, or shock, could send the economy plunging into recession.

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Where The Global Squeeze Is Unmasked

2019-09-17

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2019-09-17

US Exports of Goods, NSA 1989-2019
Trade between Asia and Europe has dimmed considerably. We know that from the fact Germany and China are the two countries out of the majors struggling the most right now. As a consequence of the slowing, shipping companies have had to make adjustments to their fleet schedules over and above normal seasonal variances.

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Stuck at A: Repo Chaos Isn’t Something New, It’s The Same Baseline

2019-09-17

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2019-09-17

Money Markets Equivalent, 2017-2019
Finally, finally the global bond market stopped going in a straight line. I write often how nothing ever does, but for almost three-quarters of a year the guts of the financial system seemed highly motivated to prove me wrong. Yields plummeted and eurodollar futures prices soared. It is only over the past few weeks that rates have backed up in what has been the first real selloff since last year.

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Dollar Mixed, Oil Spikes as Markets Digest Saudi Attack

2019-09-16

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2019-09-16

The weekend bombing of Saudi oil facilities continue to reverberate across global markets. The currencies of the oil producing nations are likely to outperform near-term. US rates continue to adjust ahead of the FOMC. UK Prime Minister Johnson is in Luxembourg today to meet with EC President Juncker. China reported weak August IP and retail sales.

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