Tag Archive: currencies

ECB (Data) Independence

2018-09-15

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2018-09-15

ECB Real GDP Projections 2016-2018
Mario Draghi doesn’t have a whole lot going for him, but he is at least consistent – at times (yes, inconsistent consistency). Bloomberg helpfully reported yesterday how the ECB’s staff committee that produces the econometric projections has recommended the central bank’s Governing Council change the official outlook. Since last year, risks have been “balanced” in their collective opinion.

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Europe Starting To Reckon Eurodollar Curve

2018-09-14

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2018-09-14

Europe Industrial Production 2016-2018
We’ve been here before. Economists and central bankers become giddy about the prospects for success, meaning actual recovery. For that to happen, reflation must first attain enough momentum. If it does, as is always forecast, reflation becomes recovery. The world then moves off this darkening path toward the unknown crazy.

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‘Mispriced’ Bonds Are Everywhere

2018-09-02

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2018-09-02

Canada BoC ON Target, August 2018
The US yield curve isn’t the only one on the precipice. There are any number of them that are getting attention for all the wrong reasons. At least those rationalizations provided by mainstream Economists and the central bankers they parrot. As noted yesterday, the UST 2s10s is now the most requested data out of FRED. It’s not just that the UST curve is askew, it’s more important given how many of them are.

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Anticipating How Welcome This Second Deluge Will Be

2018-08-29

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2018-08-29

US Treasuries, Jan 2018 - Aug 2018
Effective federal funds (EFF) was 1.92% again yesterday. That’s now eight in a row just 3 bps underneath the “technically adjusted” IOER. If indeed the FOMC has to make another one to this tortured tool we know already who will be blamed for it.

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Global PMI’s Hang In There And That’s The Bad News

2018-08-25

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2018-08-25

Dollar Cycles General, June 2018
At this particular juncture eight months into 2018, the only thing that will help is abrupt and serious acceleration. On this side of May 29, it is way past time for it to get real. The global economy either synchronizes in a major, unambiguous breakout or markets retrench even more.

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Monthly Macro Monitor – August 2018

2018-08-17

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2018-08-17

US Real GDP, Q1 2013 - Q1 2018
The Q2 GDP report (+4.1% from the previous quarter, annualized) was heralded by the administration as a great achievement and certainly putting a 4 handle on quarter to quarter growth has been rare this cycle, if not unheard of (Q4 ’09, Q4 ’11, Q2 & Q3 ’14). But looking at the GDP change year over year shows a little different picture (2.8%).

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What Chinese Trade Shows Us About SHIBOR

2018-08-10

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2018-08-10

China Exports, Jan 2008 - Jul 2018
Why is SHIBOR falling from an economic perspective? Simple again. China’s growth both on its own and as a reflection of actual global growth has stalled. And in a dynamic, non-linear world stalled equals trouble. Going all the way back to early 2017, there’s been no acceleration (and more than a little deceleration). The reflation economy got started in 2016 but it never went anywhere. For most of last year, optimists were sure that it was just the...

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Global Asset Allocation Update

2018-08-02

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2018-08-02

Moderate Allocation 50-50 risk budget
The risk budget is unchanged again this month. For the moderate risk investor, the allocation between bonds and risk assets is evenly split. The only change to the portfolio is the one I wrote about last week, an exchange of TIP for SHY.

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The Top of GDP

2018-07-26

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2018-07-26

US GDP and PMI, Feb 2011 - Jul 2018
In 1999, real GDP growth in the United States was 4.69% (Q4 over Q4). In 1998, it was 4.9989%. These were annual not quarterly rates, meaning that for two years straight GDP expanded by better than 4.5%. Individual quarters within those years obviously varied, but at the end of the day the economy was clearly booming.

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Bi-Weekly Economic Review

2018-07-20

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2018-07-20

Economic Growth & Investment
This will be a fairly quick update as I just posted a Mid-Year Review yesterday that covers a lot of the same ground. There were, as you’ll see below, some fairly positive reports since the last update but the markets are not responding to the better data. Markets seem to be more focused on the trade wars and the potential fallout. I would also note that at least some of the recent strength in the data is related to the tariffs.

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Buybacks Get All The Macro Hate, But What About Dividends?

2018-07-13

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2018-07-13

S&P500 Stock Repurchases 2000-2018
When it comes to the stock market and the corporate cash flow condition, our attention is usually drawn to stock repurchases. With good reason. These controversial uses of scarce internal funds are traditionally argued along the lines of management teams identifying and correcting undervalued shares. History shows, conclusively, that hasn’t really been true.

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China’s Seven Years Disinflation

2018-07-11

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2018-07-11

Chinese Money 2009-2014
In early 2011, Chinese consumer prices were soaring. Despite an official government mandate for 3% CPI growth, the country’s main price measure started out the year close to 5% and by June was moving toward 7%. It seemed fitting for the time, no matter how uncomfortable it made PBOC officials. China was going to be growing rapidly even if the rest of the world couldn’t.

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Gold’s Price Performance: Beyond the US Dollar

2018-07-04

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2018-07-04

With the first half of 2018 now drawn to a close, much of the financial medias’ headlines and commentary relating to the gold market has been focusing on the fact that the US dollar gold price has moved lower year-to-date. Specifically, from a US dollar price of $1302.50 at close on 31 December 2017, the price of gold in US dollar terms has slipped by approximately 3.8% over the last six months to around $1252.50, a drop of US $50.

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Revisiting The Revised Revisions

2018-06-30

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2018-06-30

Revisions Durable Goods SA, 2006-2018
I missed durable goods last month for scheduling reasons, which was a shame given that May is the month each year for benchmark revisions to the series. Since new estimates under the latest revisions were released today, it seems an appropriate time to revisit the topic of data bias, and why that matters. What happens with durable goods (or any data for that matter, the process is largely the same) is that the Census Bureau conducts smaller surveys...

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There Isn’t Supposed To Be The Two Directions of IP

2018-06-20

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2018-06-20

U.S. Industrial Production, SA 1995-2018
US Industrial Production dipped in May 2018. It was the first monthly drop since January. Year-over-year, IP was up just 3.5% from May 2017, down from 3.6% in each of prior three months. The reason for the soft spot was that American industry is being pulled in different directions by the two most important sectors: crude oil and autos.

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Recent Concerning Consumer Credit Trends Carry On Into April

2018-06-16

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2018-06-16

Consumer-Credit Revolving Monthly Change 2012-2018
US consumers continue to recover from their debt splurge at the end of last year. Combined with still weaker income growth, the Federal Reserve estimates that aggregate revolving credit balances grew only marginally for the fourth straight month in April 2018. To put it in perspective, the total for revolving credit (seasonally adjusted) is up a mere $2.2 billion for all four months of this year combined, compared to +$5.2 billion in December 2017...

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Chinese Inflation And Money Contributions To EM’s

2018-06-15

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2018-06-15

China CPI PBOC Bank Reserves, May 2007 - 2018
The People’s Bank of China won’t update its balance sheet numbers for May until later this month. Last month, as expected, the Chinese central bank allowed bank reserves to contract for the first time in nearly two years. It is, I believe, all part of the reprioritization of monetary policy goals toward CNY. How well it works in practice remains to be seen. Authorities are not simply contracting one important form of base money in China (bank...

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A Slight Hint Of A 2011 Feel

2018-06-13

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2018-06-13

Deutsche Bank
Whenever a big bank is rumored to be in unexpected merger talks, that’s always a good sign, right? The name Deutsche Bank keeps popping up as it has for several years now, this is merely representative of what’s wrong inside of a global system that can’t ever get fixed. In this one case, we have a couple of perpetuated conventional myths colliding into what is still potentially grave misfortune.

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US Trade Settles Down Again

2018-06-08

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2018-06-08

U.S. Trade Trade Balance, Import, Export, Jan 2014 - May 2018
US trade is further leveling off after several months of artificial intrusions. On the import side, in particular, first was a very large and obvious boost following last year’s big hurricanes along the Gulf Coast. Starting in September 2017, for four months the value of imported goods jumped by an enormous 8.3% (revised, seasonally-adjusted). Most of the bump related to consumer and capital goods.

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