Category Archive: 5) Global Macro

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Where To Invest When (Almost) Everything’s in a Bubble

2017-11-02

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2017-11-02

S&P 500 and US Home Price Index, 1980 - 2017
Many things that are scarce and thus valuable cannot be bought on the global marketplace. Now that almost every asset class is in a bubble, the question of where to invest one's capital has become particularly vexing. The ashes of wealth consumed by the 2008-09 Global Financial Meltdown are still warm, at least to those who never recovered, and so buying assets at nosebleed valuations in the hopes of earning another 5% aren't very compelling to...

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What Could Pop The Everything Bubble?

2017-11-01

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2017-11-01

Selected Consumer Goods and Services Price Changes, 1996 - 2016
As central bank policies are increasingly fingered by the mainstream as the source of soaring wealth-income inequality, policies supporting credit/asset bubbles will either be limited or cut off, and at that point all the credit/asset bubbles will pop.

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Subject To Gradation

2017-10-31

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2017-10-31

US Durable Goods Shipments, Jan 2010 - Jul 2017
Economic growth is subject to gradation. There is almost no purpose in making such a declaration, for anyone with common sense knows intuitively that there is a difference between robust growth and just positive numbers. Yet, the biggest mistake economists and policymakers made in 2014 was to forget that differences exist between even statistics all residing on the plus side.

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Emerging Markets: What has Changed

2017-10-30

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2017-10-30

EM FX gained some limited traction Friday but still capped off another awful week. So far this quarter, the worst EM performers are TRY (-6%), MXN (-5%), ZAR (-4%), COP, and BRL (both -2.5%). We expect these currencies to remain under pressure as political concerns are unlikely to dissipate anytime soon.

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Stagnation Nation: Middle Class Wealth Is Locked Up in Housing and Retirement Funds

2017-10-30

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2017-10-30

Percent of Total Assets and Liabilities
The majority of middle class wealth is locked up in unproductive assets or assets that only become available upon retirement or death. One of my points in Why Governments Will Not Ban Bitcoin was to highlight how few families had the financial wherewithal to invest in bitcoin or an alternative hedge such as precious metals.

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An Unexpected (And Rotten) Branch of the Maestro’s Legacy

2017-10-29

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2017-10-29

China Fixed Asset Investment, March 1998 - Sep 2017
The most significant part of China’s 19th Party Congress ended in the usual anticlimactic fashion. These events are for show, not debate. Like any good trial lawyer will tell you, you never ask a question in court that you don’t already know the answer to. For China’s Communists, that meant nominating Xi Jinping’s name to be written into the Communist constitution with the votes already tallied.

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Japan Is Booming, Except It’s Not

2017-10-29

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2017-10-29

Japan Household Spending, May 2012 - Aug 2017
Japan is hot, really hot. Stocks are up to level not seen since 1996 (Nikkei 225). Prime Minister Shinzo Abe called snap elections in Parliament to secure a supermajority and it worked. Things seem to be sparkling all over the place, with the arrow pointing up: “Hopes for a global economic recovery and US shares’ strength are making fund managers generous on Japanese stocks,” said Chihiro Ohta, general manager of investment research at SMBC Nikko...

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Emerging Markets: What has Changed

2017-10-28

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2017-10-28

President Xi Jinping’s concepts of socialist thinking were written into China’s constitution. Malaysia Prime Minister Najib presented an expansionary budget for 2018 ahead of elections. Czech billionaire Andrej Babis’ ANO party won the elections. South Africa's mid-term budget statement acknowledged the deteriorating outlook but offered little in the way of solutions. Press reports suggest Germany is working to cut funding for Turkish banks.

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Why Governments Will Not Ban Bitcoin

2017-10-28

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2017-10-28

Value of Financial Assets for Families with holdings, 1989 - 2016
Those who see governments banning ownership of bitcoin are ignoring the political power and influence of those who are snapping up most of the bitcoin. To really understand an asset, we have to examine not just the asset itself but who owns it, and who can afford to own it. These attributes will illuminate the political and financial power wielded by the owners of the asset class.

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Political Economics

2017-10-28

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2017-10-28

US Real Gross Domestic Product, Jan 1993 - 2017
Who President Trump ultimately picks as the next Federal Reserve Chairman doesn’t really matter. Unless he goes really far afield to someone totally unexpected, whoever that person will be will be largely more of the same. It won’t be a categorical change, a different philosophical direction that is badly needed. Still, politically, it does matter to some significant degree. It’s just that the political division isn’t the usual R vs. D, left vs....

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Housing Isn’t Just About Real Estate

2017-10-27

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2017-10-27

US Existing Home Sales, Jan 2011 - Jul 2017
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

2017-10-26

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2017-10-26

Tezos Change for October 2017
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

2017-10-25

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2017-10-25

Banque
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

2017-10-24

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2017-10-24

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

2017-10-23

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2017-10-23

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?

2017-10-23

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2017-10-23

US Gross Domestic Product, 1940 - 2017
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

2017-10-22

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2017-10-22

US Real GDP, 1940 - 2017
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

2017-10-22

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2017-10-22

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 ??

2017-10-21

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2017-10-21

European Growth Baseline, Jan 1995 - 2017
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

2017-10-20

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2017-10-20

US Industrial Production, Jan 1995 - Jul 2017
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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