Tag Archive: currencies

China’s Global Slump Draws Closer

2018-12-04

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2018-12-04

China Manufacturing PMI, Caixin and Non-Manufacturing PMI, May 2010 - Nov 2018
By the time things got really bad, China’s economy had already been slowing for a long time. The currency spun out of control in August 2015, and then by November the Chinese central bank was in desperation mode. The PBOC had begun to peg SHIBOR because despite so much monetary “stimulus” in rate cuts and a lower RRR banks were hoarding RMB liquidity.

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Monthly Macro Monitor – November 2018

2018-11-30

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2018-11-30

Economic Growth & Investment
Is the Fed’s monetary tightening about over? Maybe, maybe not but there does seem to be some disagreement between Jerome Powell and his Vice Chair, Richard Clarida. Powell said just a little over a month ago that the Fed Funds rate was still “a long way from neutral” and that the Fed may ultimately need to go past neutral.

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The Direction Is (Globally) Clear

2018-11-29

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2018-11-29

US Composite PMI and GDP, Jul 2012 - Nov 2018
It is definitely one period that they got wrong. Still, IHS Markit’s Composite PMI for the US economy has been one of the better forward-looking indicators around. Tying to real GDP, this blend of manufacturing and services sentiment has predicted the general economic trend in the United States pretty closely. The latter half of 2015 was the big exception.

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Eurodollar Futures: Powell May Figure It Out Sooner, He Won’t Have Any Other Choice

2018-11-20

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2018-11-20

Eurodollar Futures Curve, May - Sep 2018
For Janet Yellen, during her somewhat brief single term she never made the same kind of effort as Ben Bernanke had. Her immediate predecessor, Bernanke, wanted to make the Federal Reserve into what he saw as the 21st century central bank icon. Monetary policy wouldn’t operate on the basis of secrecy and ambiguity. Transparency became far more than a buzzword.

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Retail Sales Marked By Revisions

2018-11-16

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2018-11-16

U.S. Retail Sales, NSA 2011-2018
Retail sales rebounded 0.8% in October 2018 from September 2018, but it’s the downward revisions to the prior months that are cause for attention. The estimates for particularly September were moved sharply lower. Total retail sales two months ago had been figured last month at $485.8 billion (unadjusted) originally, but are now believed to have been just $483.0 billion.

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China’s Pooh Lesson

2018-11-14

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2018-11-14

Chinese Money 2001-2018
It’s one of those “nothing to see here” moments for Economists trying not to appreciate what’s really going on in China therefore the global economy. The slump in China’s automotive sector dragged on through October, with year-over-year sales down for the fourth straight month.

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Harmful Modern Myths And Legends

2018-11-08

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2018-11-08

Germany Real GDP, Q3 2018
Loreley Rock near Sankt Goarshausen sits at a narrow curve on the Rhine River in Germany. The shape of the bluff produces a faint echo in the wind, supposedly the last whispers of a beautiful maiden who threw herself from it in despair once spurned by her paramour. She was transformed into a siren, legend says, a tantalizing wail which cries out and lures fishermen and tradesmen on the great river to their death.

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China Now Japan; China and Japan

2018-11-03

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2018-11-03

Japan Industrial Production, NSA 2000-2018
Trade war stuff didn’t really hit the tape until several months into 2018. There were some noises about it back in January, but there was also a prominent liquidation in global markets in the same month. If the world’s economy hit a wall in that particular month, which is the more likely candidate for blame? We see it register in so many places. Canada, Europe, Brazil, etc.

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Bloomberg Interview with Jeffrey Snider

2018-11-02

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2018-11-02

Why Eurodollars Might Be Key to the Market Sell-Off (Podcast). There’s a huge market out there that doesn’t get much attention: Eurodollars. These have nothing to do with the euro-dollar exchange rate. Instead, eurodollars are U.S. dollar-denominated deposits at foreign banks and overseas branches of American banks.

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Another ‘Highest In Ten Years’

2018-11-01

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2018-11-01

ECI, Jan 2001 - Oct 2018
Upon the precipice of the Great “Recession”, US workers were cushioned to some extent by what economists call sticky wages. Before the Great Depression, as well as during it, companies would attempt to deal with looming economic contraction by cutting pay rates before workers.

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No Such Thing As An 80 percent Boom

2018-10-26

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2018-10-26

Payrolls LF Participation, Jan 1995 - 2018
Many attribute the saying “a rising tide lifts all boats” to President John Kennedy. He may have been the man who brought it into the mainstream but as his former speechwriter Ted Sorenson long ago admitted it didn’t originate from his or the President’s imagination. Instead, according to Sorenson, it was a phrase borrowed from the New England Chamber of Commerce or some such.

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Monthly Macro Monitor – October 2018

2018-10-24

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2018-10-24

Economic Growth & Investment
Stocks have stumbled into October with the S&P 500 down about 6% as I write this. The source of equity investors’ angst is always hard to pinpoint and this is no exception but this correction doesn’t seem to be due to concerns about economic growth. At least not directly.

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Raining On Chinese Prices

2018-10-20

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2018-10-20

China Price Stability 2007-2018
It was for a time a somewhat curious dilemma. When it rains it pours, they always say, and for China toward the end of 2015 it was a real cloudburst. The Chinese economy was slowing, dangerous deflation developing around an economy captured by an unseen anchor intent on causing havoc and destruction. At the same time, consumer prices were jumping where they could do the most harm.

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Just The One More Boom Month For IP

2018-10-18

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2018-10-18

Industrial Production, SA 1995-2018
The calendar last month hadn’t yet run out on US Industrial Production as it had for US Retail Sales. The hurricane interruption of 2017 for industry unlike consumer spending extended into last September. Therefore, the base comparison for 2018 is against that artificial low. As such, US IP rose by 5.1% year-over-year last month. That’s the largest gain since 2010.

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Now Back To Our Regularly Scheduled Economy

2018-10-17

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2018-10-17

Retail Sales, Gasoline 2011-2018
The clock really was ticking on this so-called economic boom. A product in many economic accounts of Keynesian-type fantasy, the destructive effects of last year’s hurricanes in sharp contrast to this year’s (which haven’t yet registered a direct hit on a major metropolitan area or areas, as was the case with Harvey and Irma) meant both a temporary rebound birthed by rebuilding as well as an expiration date for those efforts.

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A Few Questions From Today’s BOND ROUT!!!!

2018-10-05

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2018-10-05

Benchmark 10-year UST 2017-2018
On April 2, the benchmark 10-year US Treasury yield traded below 2.75%. It had been as high as 2.94% in later February at the tail end of last year’s inflation hysteria. But after the shock of global liquidations in late January and early February, liquidity concerns would override again at least for a short while. After April 2, the BOND ROUT!!!! was re-energized and away went interest rates.

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China’s Industrial Dollar

2018-10-03

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2018-10-03

China Industry Revenue, Aug 2008 - 2018
In December 2006, just weeks before the outbreak of “unforeseen” crisis, then-Federal Reserve Chairman Ben Bernanke discussed the breathtaking advance of China’s economy. He was in Beijing for a monetary conference, and the unofficial theme of his speech, as I read it, was “you can do better.” While economic gains were substantial, he said, they were uneven.

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Make Your Case, Jay

2018-09-28

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2018-09-28

Eurodollar Futures June 2020
June 13 sticks out for both eurodollar futures as well as IOER. On the surface, there should be no bearing on the former from the latter. They are technically unrelated; IOER being a current rate applied as an intended money alternative. Eurodollar futures are, as the term implies, about where all those money rates might fall in the future. Still, the eurodollar curve inverted conspicuously starting June 13. That was the day of the prior “rate...

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Monthly Macro Monitor – September

2018-09-20

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2018-09-20

Economic Growth & Investment September 20
This has already been one of the longest economic expansions on record for the US and there is little in the data or markets to indicate that is about to come to an end. Current levels of the yield curve are comparable to late 2005 in the last cycle. It was almost two years later before we even had an inkling of a problem and even in the summer of 2008 – nearly three years later – there was still a robust debate about whether the US could avoid...

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Downslope CPI

2018-09-16

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2018-09-16

CPI Expectations vs. Movement 1995-2018
Cushing, OK, delivered what it could for the CPI. The contribution to the inflation rate from oil prices was again substantial in August 2018. The energy component of the index gained 10.3% year-over-year, compared to 11.9% in July. It was the fourth straight month of double digit gains.

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