Category Archive: Global Macro

Same Country, Different Worlds

To my mind, “reflation” has always proceeded under false pretenses. This goes for more than just the latest version, as we witnessed the same incongruity in each of the prior three. The trend is grounded in mere hope more than rational analysis,...

US Trade Skews

US trade statistics dramatically improved in January 2017, though questions remain as to interpreting by how much. On the export side, US exports of goods rose 8.7% year-over-year (NSA). While that was the highest growth rate since 2012, there is part...

China And Reserves, A Straightforward Process Unnecessarily Made Into A Riddle

The fact that China reported a small increase in official “reserves” for February 2017 is one of the least surprising results in all of finance. The gamma of those reserves is as predictable as the ticking clock of CNY, in no small part because what is...

Do Record Eurodollar Balances Matter? Not Even Slightly

The BIS in its quarterly review published yesterday included a reference to the eurodollar market (thanks to M. Daya for pointing it out). The central bank to central banks, as the outfit is often called, is one of the few official institutions that...

Manufacturing Back To 2014

The ISM Manufacturing PMI registered 57.7 in February 2017, the highest value since August 2014 (revised). It was just slightly less than that peak in the 2014 “reflation” cycle. Given these comparisons, economic narratives have been spun further than...

Emerging Market Preview for the Week Ahead

EM FX was mostly softer last week, though it ended the week firmer, buoyed by outsized MXN gains Friday. The Fed is sending very strong signals for a March hike, which should keep EM FX on its back foot. However, with the March 15 FOMC embargo coming...

Bi-Weekly Economic Review

Economic Reports Scorecard. The economic data released since my last update has been fairly positive but future growth and inflation expectations, as measured by our market indicators, have waned considerably. There is now a distinct divergence between...

Emerging Markets: What has Changed?

A Korean special prosecutor indicted Samsung chief Jay Y. Lee on bribery charges. Korean press is reporting that China has told its travel agents to halt sales of holiday packages to South Korea. Bulgaria’s interim government said it may apply to join...

True Cognitive Dissonance

There is gold in Asia, at least gold of the intellectual variety for anyone who wishes to see it. The Chinese offer us perhaps the purest view of monetary conditions globally, where RMB money markets are by design tied directly to “dollar” behavior. It...

Real Disposable Income: Headwinds of the Negative

The PCE Deflator for January 2017 rose just 1.89% year-over-year. It was the 57th consecutive month less than the 2% mandate (given by the Fed itself when in early 2012 it made the 2% target for this metric its official definition of price stability).

Why Is the Cost of Living so Unaffordable?

Strip away the centralized power that protects and funds cartels, and prices would plummet. The mainstream narrative is "the problem is low wages." Actually, the problem is the soaring cost of living. If essentials such as healthcare, housing, higher...

Some Notes On GDP Past And Present

The second estimate for GDP was so similar to the first as to be in all likelihood statistically insignificant. The preliminary estimate for real GDP was given as $16,804.8 billion. The updated figure is now $16,804.1 billion. In nominal terms there...

Durable Goods Groundhog

If the economy is repeating the after-effects of the latest “dollar” events, and it does seem more and more to be that case, then analysis starts with identifying a range for where it might be in the repetition. New orders for durable goods (ex...

Virtue-Signaling the Decline of the Empire

Virtue-signaling doesn't signal virtue--it signals decline and collapse. There are many reasons why Imperial Rome declined, but two primary causes that get relatively little attention are moral decay and soaring wealth inequality. The two are of course...

It Was ‘Dollars’ All Along

Ross Perot famously declared the “giant sucking sound” in the 1992 Presidential campaign. The debate over NAFTA did not end with George H. W. Bush’s defeat, as it simmered in one form or another for much of the 1990’s. Curiously, however, it seemed...

Emerging Markets: Preview of the Week Ahead

EM FX ended last week on a soft note despite lower US rates. The dollar regained some traction that it lost over the course of the week, when markets pushed out Fed tightening beyond March. Treasury Secretary Mnuchin also seemed to push out fiscal...

Emerging Markets: What has Changed

PBOC tweaked its process for determining the yuan reference rate. Singapore is reportedly studying measures to boost revenue, including higher taxes. Moody’s upgraded the outlook on Russia’s Ba1 rating from negative to stable. Nigerian President Buhari...

There’s a Difference: Fake News and Junk News

The mainstream media continues peddling its "fake news" narrative like a desperate pusher whose junkies are dying from his toxic dope. It's slowly dawning on the media-consuming public that the MSM is the primary purveyor of "fake news"--...

Not Recession, Systemic Rupture – Again

For the very few in the mainstream of economics who venture further back in history than October 1929, they typically still don’t go much last April 1925. And when they do, it is only to further bash the gold standard for its presumed role in creating...

The Market Is Not The Economy, But Earnings Are (Closer)

My colleague Joe Calhoun likes to remind me that markets and fundamentals only sound like they should be related, an observation that is a correct one on so many different levels. Stock prices, in general, and GDP growth may seem to warrant some kind...