Category Archive: 5) Global Macro

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EM Preview for the Week Ahead

2019-10-21

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2019-10-21

We are beginning to become more constructive on EM.  The main trigger for some optimism is the shifting US-China dynamic. In our view, the partial trade deal reveals weakness on the part of the US.  Reports suggest China will begin pushing for all existing tariffs to be dropped as part of Phase 2, which would be very positive for EM.  That is still likely months away but this shifting dynamic bears watching. 

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Could Brexit end London’s financial dominance? | The Economist

2019-10-19

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More than 300 financial organisations have already left the City of London to set up shop in other European capitals. What will this mean for London and the rest of Europe? Read more from The Economist: https://econ.st/2BtsU4A Click here to subscribe to The Economist on YouTube: https://econ.st/2xvTKdy For more from Economist Films visit: http://films.economist.com/ Check …

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Welcome to the USSR: the United States of Suppression and Repression

2019-10-19

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2019-10-19

workers share of national income, 1994-2020
We're all against "fake news," right? Until your content is deemed "fake news" in a "fake news" indictment without any evidence, trial or recourse. When propaganda is cleverly engineered, people don't even recognize it as propaganda: welcome to the USSR, the United States of Suppression and Repression. 

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Economic Decay Leads to Social and Political Decay

2019-10-18

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2019-10-18

Workers share of national income, 1994-2020
If we want to make real progress, we have to properly diagnose the structural sources of the rot that is spreading quickly into every nook and cranny of the society and culture. It seems my rant yesterday (Let Me Know When It's Over) upset a lot of people, many of whom felt I trivialized the differences between the parties and all the reforms that people believe will right wrongs and reduce suffering.

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China’s Dollar Problem Puts the Sync In Globally Synchronized Downturn

2019-10-18

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2019-10-18

China Exports, 2006-2019
Because the prevailing theory behind the global slowdown is “trade wars”, most if not all attention is focused on China. While the correct target, everyone is coming it at from the wrong direction. The world awaits a crash in Chinese exports engineered by US tariffs. It’s not happening, at least according to China’s official statistics.

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How Brexit is changing the EU | The Economist

2019-10-17

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Brexit once seemed to pose an existential threat to the European Union. But Britain’s withdrawal process has had some surprising results—especially when it comes to how other member states view the EU. Read more: https://econ.st/2MmthnW Click here to subscribe to The Economist on YouTube: https://econ.st/2xvTKdy When the UK voted to leave the European Union in …

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Dollar Broadly Weaker as Brexit Deal Takes Shape

2019-10-17

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2019-10-17

The dollar remains under pressure due to weak US retail sales and rising optimism on Brexit and the trade war. Brexit negotiations remain tense and we should expect a higher than usual noise-to-signal ratio at this stage. China said its goal is to stop the trade war and remove all tariffs. US has a full data schedule; we remain constructive on the US economic outlook.

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Let Me Know When It’s Over

2019-10-16

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2019-10-16

Maybe it's my cheap seat or my general exhaustion, but the whole staged spectacle is beyond tiresome; I've had my fill. Let me me know when it's over: yes, all of it: the impeachment, the trade dispute with China, U.S. involvement in Syria, the manic stock market rally and the 2020 election.

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Dollar Resilient as Cracks in Risk-On Appear

2019-10-16

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2019-10-16

Some cracks have appeared in the market’s risk-on sentiment. We continue to believe that recent developments take some pressure off the Fed to cut rates again this month. Our base case for a Brexit delay has been strengthened; UK reported weak labor market data. The situation is Turkey continues to develop negatively for asset prices; trade data out of China once again showed the impact of the trade war and the resulting global slowdown.

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Charles Hugh Smith: Will You Be Richer or Poorer?

2019-10-14

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Much of what we truly value is at risk. Full description and comments at: https://www.peakprosperity.com/charles-hugh-smith-will-you-be-richer-or-poorer/ Prolific and exceptionally perceptive author Charles Hugh Smith returns to discuss the insights in his just-launched book Will You Be Richer Or Poorer? Profit, Power & AI in a Traumatized World (the first chapter of which can be read for …

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EM Preview for the Week Ahead

2019-10-14

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2019-10-14

EM benefited greatly from the improvement in US-China trade relations and quite possibly Brexit.  The dollar is likely to remain under some pressure near-term as a result. Yet we must caution investors against getting too optimistic.  The details of the partial trade deal still need to be worked out, while existing tariffs will still remain in place if the deal is signed next month as most expect.

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The Ultimate Heresy: Technology Can’t Fix What’s Broken

2019-10-14

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2019-10-14

Smartphone Addiction Tightens Its Global Grip, 2012-2016
Technology can't fix what's broken, because what's broken is our entire system.. The ultimate heresy in today's world isn't religious or political: it's refusing to believe that technology can not only solve all our problems, it will do so painlessly and without any sacrifice. Anyone who dares to question this orthodoxy is instantly declared an anti-progress (gasp!) Luddite, i.e. a heretic in league with the Devil.

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Never Attribute To Malice What Is Easily Explained By Those Attributing Anything To Term Premiums

2019-10-13

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2019-10-13

US Treasury CMT Yields, 2017-2019
There will be more opportunities ahead to talk about the not-QE, non-LSAP which as of today still doesn’t have a catchy title. In other words, don’t call it a QE because a QE is an LSAP not an SSAP. The former is a large scale asset purchase plan intended on stimulating the financial system therefore economy. That’s what it intends to do, leaving the issue of what it actually does an open question.

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CPI Changes On Energy: The Inflation Check

2019-10-13

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2019-10-13

CPI Changes on Energy, 1995-2019
After constantly running through what the FOMC gets (very) wrong, let’s give them some credit for what they got right. Though this will end up as a backhanded compliment, still. After having spent all of 2018 forecasting accelerating inflation indices, from around New Year’s Day forward policymakers notably changed their tune.

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Dollar Remains Soft as Risk-On Sentiment Continues

2019-10-12

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2019-10-12

Markets have seized on the possibility of a partial trade deal as well as some hopes that a hard Brexit will be avoided. The main event for the day will be President Trump’s meeting with Vice Premier Liu He. These market movements (if sustained) will take pressure off of the Fed to cut rates this month. The notion of a “pathway” to a Brexit deal continues to capture investors’ imagination.

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Monthly Macro Monitor: Doom & Gloom, Good Grief

2019-10-12

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2019-10-12

Economic Growth & Investment, October 2019
When I first got in this business oh so many years ago, my mentor told me that I shouldn’t waste my time worrying about the things everyone else was worrying about. As I’ve related in these missives before, he called those things “well worried”. His point was that once everyone was aware of something it was priced into the market and not worth your time.

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The Scientism of Trade Wars

2019-10-11

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2019-10-11

Germany Factory Orders, SA 2014-2019
One year ago, last October, the IMF published the update to its World Economic Outlook (WEO) for 2018. Like many, the organization began to talk more about trade wars and protectionism. It had become a topic of conversation more than concern. Couched as only downside risks, the IMF still didn’t think the fuss would amount to all that much. Especially not with world’s economy roaring under globally synchronized growth. Even though there were...

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Will the Clintons Destroy the Democratic Party?

2019-10-11

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2019-10-11

Political Polarization Has Exploded Since 2000
History is full of ironies, and perhaps it will suit the irony gods for The Donald to take down the Republican Party and the Clinton dynasty to destroy the Democratic Party. Let's start by stipulating my bias: I would cheer the collapse of both self-serving, venal political parties, which have stood by for decades as the rich have become immeasurably richer and the politically powerful few have disempowered the many.

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Our Time/Labor Is Finite, But Money Is Infinite

2019-10-10

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2019-10-10

All Sectors; Debt Securities and Loans 1960-2019
Once we understand this mechanism, we understand that labor can never get ahead. I've been pondering a comment longtime correspondent Drew P. emailed me in response to my post, What's Holding Up the Market?: Our time/labor is finite, but money is infinite. Drew explained that creating new fiat currency and injecting it into a closed system (our financial system) controls and restrains the value of our time and labor, past, present and future.

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From JOLTS Series Shift To Series of Rate Cuts

2019-10-10

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2019-10-10

Average Weekly Hours All Employees, 2007-2019
I’ve said all along that they would be dragged into them kicking and screaming. After all, the Federal Reserve undertook its last rate hike in December 2018 – just as the markets were making clear he was completely mistaken in his view of the economy. What followed was the ridiculous “Fed pause” which pretty much everyone outside of the central bank and the Economics profession knew wasn’t the end of it.

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