Tag Archive: currencies

Shoe V arning

It’s no wonder we’re obsessed with shoes these days. Even the V-people, as I’ll call them, keep one wary eye glued looking behind them. Survivor’s euphoria means a lot of potentially bad things, only beginning with a false sense of survivor-hood.

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Purchasing Managers Indigestion

There’s already doubt given how the two major series supposedly measuring the same thing seemingly can’t agree. If the rebound was truly robust, it would show up unambiguously everywhere. But IHS Markit’s purchasing managers indices struggled to get back above 50 in July, barely getting there, suggesting the economy might be slowing or even stalling way too close to the bottom.

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Accusing the Accused of Excusing the Mountain of Evidence

Why not let the accused also sit in the jury box? The answer seems rather obvious. While maybe the truly honest man accused of a crime he did commit would vote for his own conviction, the world seems a bit short on supply of those while long and deep offering up practitioners of pure sophistry in their stead.

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That’s Probably Why Only Half a “V”

Why only half a “V?” If the latest PMI’s are anywhere close to accurate, and they don’t have to be all that close, then the production side of the economy may have stalled out somewhere nearer the trough of this contraction. The promise of May’s big payroll report surprise has dissipated in more than just the bond market.

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US Stall? Only Half The Imagined “V” May Indicate One, Too

These are not numbers that are consistent with a robust rebound. In fact, they don’t indicate very much of one at all. IHS Markit’s flash PMI’s for July 2020 instead look way too much like the sentiment indicators in Germany and Japan. Though they are now back near 50, both services and manufacturing, that doesn’t actually indicate what everyone seems to think it does.

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The (Other) Shoe Of Unemployment

After raising the specter of a rebound stall, the idea before limited to Japan and Germany was abruptly given further weight today by US jobless claims numbers. For the first time since the peak at the end of March, the weekly tally of initial filings increased from the prior week.

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A Japanese Stall?

In sharp contrast to the sentimental deference towards central bank stimulus exhibited by Germany’s ZEW, for example, similar Japanese surveys are starting to describe potential trouble developing. Like Germany, Japan is a bellwether country and a pretty reliable indicator of global economy performance.

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Of Incomplete Plans and Recoveries

At the monthly press conference China’s National Bureau of Statistics (NBS) now regularly gives whenever the Big Three economic accounts are updated (this time along with quarterly GDP), spokesman Liu Aihua was asked by a reporter from Reuters to comment on how the global economic recession might impact the Communist government’s long range goal of reaching its assigned GDP target.

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Transitory, The Other Way

After a record three straight months of decline for the seasonally-adjusted core CPI March through May 2020, it turned upward again in June. Buoyed by a partially reopened economy, the price discounting (prerequisite to the Big D) took at least one month off.

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Wait A Minute, The Dollar And The Fed’s Bank Reserves Are Directly Not Inversely Related

One small silver lining to the current situation, while Jay Powell is busily trying to sell you his inflation fantasy, he’s actually undermining it at the very same time. No mere challenge to his own “money printing” fiction, either, the Fed’s Chairman is actively disproving the entire enterprise. While he says what he says, pay close attention instead to what he’s done.

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Second Wave Global Trade

Unlike some sentiment indicators, the ISM Non-manufacturing, in particular, actual trade in goods continued to contract in May 2020. Both exports and imports fell further, though the rate of descent has improved. In fact, that’s all the other, more subdued PMI’s like Markit’s have been suggesting.

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Monthly Market Monitor – July 2020

Most Long-Term Trends Have Not Changed. A lot has changed over the last 4 months since the COVID virus started to impact the global economy. Asia was infected first with China at ground zero. Their economy succumbed first with a large part of the country shut down to a degree that can only be accomplished in an authoritarian regime.

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Gratuitously Impatient (For a) Rebound

Jay Powell’s 2018 case for his economic “boom”, the one which was presumably behind his hawkish aggression, rested largely upon the unemployment rate alone. A curiously thin roster for a period of purported economic acceleration, one of the few sets joining that particular headline statistic in its optimism resides in the lower tiers of all statistics.

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Reality Beckons: Even Bigger Payroll Gains, Much Less Fuss Over Them

What a difference a month makes. The euphoria clearly fading even as the positive numbers grow bigger still. The era of gigantic pluses is only reaching its prime, which might seem a touch pessimistic given the context. In terms of employment and the labor market, reaction to the Current Employment Situation (CES) report seems to indicate widespread recognition of this situation. And that means how there are actually two labor markets at the moment.

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What The PMIs Aren’t Really Saying, In China As Elsewhere

China’s PMI’s continue to impress despite the fact they continue to be wholly unimpressive. As with most economic numbers in today’s stock-focused obsessiveness, everything is judged solely by how much it “surprises.” Surprises who? Doesn’t matter; some faceless group of analysts and Economists whose short-term modeling has somehow become the very standard of performance.

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Looking Ahead Through Japan

After the Diamond Princess cruise ship docked in Tokyo with tales seemingly spun from some sci-fi disaster movie, all eyes turned to Japan. Cruisers had boarded the vacation vessel in Yokohama on January 20 already knowing that there was something bad going on in China’s Wuhan. The big ship would head out anyway for a fourteen-day tour of Vietnam, Taiwan, and, yes, China.

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Wait A Minute, What’s This Inversion?

Back in the middle of 2018, this kind of thing was at least straight forward and intuitive. If there was any confusion, it wasn’t related to the mechanics, rather most people just couldn’t handle the possibility this was real. Jay Powell said inflation, rate hikes, and accelerating growth. Absolutely hawkish across-the-board.And yet, all the way back in the middle of June 2018 the eurodollar curve started to say, hold on a minute.

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Not COVID-19, Watch For The Second Wave of GFC2

I guess in some ways it’s a race against the clock. What the optimists are really saying is the equivalent of the old eighties neo-Keynesian notion of filling in the troughs. That’s what government spending and monetary “stimulus” intend to accomplish, to limit the downside in a bid to buy time. Time for what? The economy to heal on its own.

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The Smallness of the Most Gigantic

These numbers do seem epic, don’t they? It’s hard to ignore when you have the greatest percentage increase in the history of a major economic account. Just writing that sentence it’s difficult to deny the power of those words. Which is precisely the point: we already know ahead of time how the biggest economic holes in history are going to produce the biggest positives coming out of them.

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Monthly Macro Monitor – June 2020

The stock market has recovered most of its losses from the March COVID-19 induced sell-off and the enthusiasm with which stocks are being bought – and sold but mostly bought – could lead one to believe that the crisis is over, that the economy has completely or nearly completely recovered. Unfortunately, other markets do not support that notion nor does the available economic data.

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