Category Archive: The United States

The World Economy’s Industrial Downswing

As economic data for 2019 comes in, the numbers continue to suggest more slowing especially in the goods economy. Perhaps what happened during that October-December window was a soft patch. Even if that was the case, we should still expect second and third order effects to follow along from it.

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Chart(s) of the Week: Reviewing Curve Warnings

Quick review: stocks hit a bit of a rough patch right during the height of inflation hysteria. At the end of January 2018, just as the US unemployment rate had finally achieved the very center of attention, global markets were rocked by instability. Unexpectedly, of course.

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The Coming Crisis the Fed Can’t Fix: Credit Exhaustion

Having fixed the liquidity crisis of 2008-09 and kept a perversely unequal "recovery" staggering forward for a decade, central banks now believe there is no crisis they can't defeat: Liquidity crisis? Flood the global financial system with liquidity. Interest rates above zero? Create trillions out of thin air and use the "free money" to buy bonds. Mortgage and housing markets shaky?

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Monthly Macro Chart Review – March (VIDEO)

Alhambra CEO discusses the most important economic reports from the past month.

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What Sort of “Democracy” Do We Have If Everyone’s Goal Is Maximizing Their Government Swag?

A democratic republic is a government in which power flows from citizens to their elected representatives. The American revolutionaries did not make a big distinction between republic and democracy, for in the context of the late 1700s, the dominant political structure was monarchy, and democracy meant the people have the final say via elections.

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How States/Empires Collapse in Four Easy Steps

There is a grand, majestic tragedy in the inevitable collapse of once-thriving states and empires: it all seemed so permanent at its peak, so godlike in its power, and then slowly but surely, too many grandiose, unrealistic promises were made to too many elites and constituencies, and then as growth decays to stagnation, the only way to maintain the status quo is to appear to meet all the promises by creating money out of thin air, i.e. debauching...

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Downturn Rising, No ‘Glitch’ In Retail Sales

You just don’t see $4 billion monthly retail sales revisions, in either direction. Advance estimates are changed all the time, each monthly figure will be recalculated twice after its initial release. Typically, though, the subsequent revisions are minor rarely amounting to a billion. Four times that?

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Here’s The Problem: The Pie Is Shrinking

Scrape away the churn and distraction and the problem is simple: the pie of prosperity is shrinking, and the "fixes" are failing. The status quo arrangement is based on the endless expansion of "growth" and debt, which is the monetary fuel of more, more, more of everything: money, energy, resources, goods, services, jobs, wealth and income, all of which make up the elixir of prosperity.

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The Source of Killer Inflation: Services

The soaring cost of services is driven by a number of factors. What will the future bring: fire (inflation) or ice (deflation)? The short answer: both, but in very different doses. Goods that are tradeable and exposed to technologically driven commodification will decline in price (deflation) while untradeable services that are difficult to commoditize will increase in price (inflation), generating a self-reinforcing feedback loop of wage-price...

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What If Politics Can’t Fix What’s Broken?

This is the politics of decline and collapse. The unspoken assumption of the modern era is that politics can fix whatever is broken: whatever is broken in society or the economy can be fixed by some political policy or political process-- becoming more inclusionary, seeking non-partisan middle ground, etc.

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Monthly Macro Chart Review – March

We’re changing the format on our Macro updates, breaking the report into two parts. This is part one, a review of the data released the previous month with charts to highlight the ones we deem important. We’ll post another one next week that will be more commentary and the market based indicators we use to monitor recession risk.

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Labor Shortage America has been Canceled

The holiday season was shaping up to be a good one, perhaps a very good one. All the signs seemed to be pointing in that direction, especially if you were a worker. All throughout last year, beginning partway through 2017, there wasn’t a day that went by without some mainstream story “reporting” on America’s labor shortage.

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The Fed’s “Wealth Effect” Has Enriched the Haves at the Expense of the Young

The Fed is the mortal enemy of the young generations, and thus of the nation itself. The wealth effect" generated by rising stock and housing prices has long been a core goal of the Federal Reserve and other central banks. As Lance Roberts noted in his recent commentary So, The Fed Doesn't Target The Market, Eh?

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What Killed the Middle Class?

Rounding up the usual suspects won't restore a vibrant middle class. What killed the middle class? The answer may well echo an Agatha Christie mystery: rather than there being one guilty party, it may be that each of the suspects participated in the demise of the middle class.

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Meanwhile, Over In Asia

While Western markets breathed a sigh of relief that US GDP didn’t confirm the global slowdown, not yet, what was taking place over in Asia went in the other direction. There has been a sense, a wish perhaps, that if the global economy truly did hit a rough spot it would be limited to just the last three months of 2018. Hopefully Mario Draghi is on to something.

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The Doomsday Scenario for the Stock and Housing Bubbles

It was always folly to believe that inflating asset bubbles could solve the structural problems of a post-industrial economy. The Doomsday Scenario for the stock and housing bubbles is simple: the Fed's magic fails. When dropping interest rates to zero and flooding the financial sector with loose money fail to ignite the economy and reflate the deflating bubbles, punters will realize the Fed's magic only worked the first three times: three bubbles...

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The Fate of Real Estate

For years, realtors have been waiting for more housing inventory. It had become an article of faith, what was restraining a full-blown recovery was the lack of units available. The level of resales like construction was up, but still way, way less than it was now fourteen years past the prior peak despite sufficient population growth to have absorbed the previous bubble’s overbuilding.

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Now that Housing Bubble #2 Is Bursting…How Low Will It Go?

There are two generalities that can be applied to all asset bubbles: 1. Bubbles inflate for longer and reach higher levels than most pre-bubble analysts expected. 2. All bubbles burst, despite mantra-like claims that "this time it's different".

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Sinking Shippers Signal Global Goods Troubles

It infects every boardroom across the world. Big business requires decent forecasting, yet time and again it seems they are deprived of what they desperately need. Instead, even after this last decade, the world’s largest companies continue to be surprised by weakness that is far more prevalent than strength.

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Homeless Encampments and Luxury Apartments: Our Long Strange Boom

It's been a long, strange economic boom since the nadir of the Global Financial Meltdown in 2009. A 10-year long boom that saw the S&P 500 rise from 666 in early 2009 to 2,780 and GDP rise by 43% has been slightly more uneven for most participants.

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