Tag Archive: currencies

Just A Few More Pips

2018-03-25

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2018-03-25

Hong Kong HKD, Jul 2014 - Mar 2018
On Page 1, Chapter 1 of the Central Banker Crisis Handbook it states very clearly, “do not make it worse.” It’s something like the Hippocratic oath where monetary authorities must first assess what their actions might do to an already fragile system. It’s why they take great pains to try and maintain composure, appearing calm and orderly while conflagration rages all around. The last thing you want to do is confirm the run.

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The Boom Reality of Uncle He’s Globally Synchronized L

2018-03-21

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2018-03-21

China GDP, Apr 1993 - Mar 2018
Top Chinese leadership is taking further shape. With Xi Jinping’s continuing consolidation of power going on right this minute, most of the changes aren’t really changes, at least not internally. To the West, and to the mainstream, what the Chinese are doing seems odd, if not more than a little off. Unlike in the West, however, there is determined purpose that is in many ways right out in the open. Many here had been expecting that outgoing PBOC...

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US Industry Experiences The Full 2014 Again in February

2018-03-20

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2018-03-20

US Industrial Production, Jan 2006 - 2018
In February 2018, it was like old times for the US industrial sectors. Prior to the 2015-16 downturn, the otherwise moribund economy did produce two genuine booms. The first in the auto sector, the other in energy. Without them, who knows what the no-recovery recovery would have looked like. They were for the longest time the only bright spots.

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Three Months Now of After-Harvey Retail Sales; or, The Boom Narrative Goes Boom

2018-03-17

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2018-03-17

US Retail Sales, Jan 2014 - Mar 2018
If indeed this inflation hysteria has passed, its peak was surely late January. Even the stock market liquidations that showed up at that time were classified under that narrative. The economy was so good, it was bad; the Fed would be forced by rapid economic acceleration to speed themselves up before that acceleration got out of hand in uncontrolled consumer price gains. On February 1, the Atlanta Fed’s GDPNow tracking model was moved up to...

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China’s Questionable Start to 2018

2018-03-16

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2018-03-16

China Industrial Production, Feb 1999 - 2018
The Chinese government reported estimates for Industrial Production, Retail Sales, and Fixed Asset Investment (FAI) for both January and February 2018. The National Bureau of Statistics prepares and calculates China’s major economic statistics in this manner at the beginning of each year due to the difficulties created by calendar effects (New Year Golden Week).

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Bi-Weekly Economic Review: The New Normal Continues

2018-03-14

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2018-03-14

There has been a lot of talk about the economic impact of the recent tax reform. All of it, including the analyses that include lots of fancy math, amounts to nothing more than speculation, usually informed by little more than the political bias of the analyst. I am guilty of that too to some degree but I don’t let my personal political views dictate how I view the economy for purposes of investing.

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China Prices Include Lots of Base Effect, Still Undershoots

2018-03-13

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2018-03-13

China Price Stability, Feb 1996 - 2018
By far, the easiest to answer for today’s inflation/boom trifecta is China’s CPI. At 2.9% in February 2018, that’s the closest it has come to the government’s definition of price stability (3%) since October 2013. That, in the mainstream, demands the description “hot” if not “sizzling” even though it still undershoots. The primary reason behind the seeming acceleration was a more intense move in food prices.

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Global Asset Allocation Update: Tariffs Don’t Warrant A Change…Yet

2018-03-12

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2018-03-12

Moderate Allocation
There is no change to the risk budget this month. For the moderate risk investor the allocation to bonds is 50%, risk assets 45% and cash 5%. We have had continued volatility since the last update but the market action so far is pretty mundane. The initial selloff halted at the 200 day moving average and the rebound carried to just over the 50 day moving average.

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China Exports: Trump Tariffs, Booming Growth, or Tainted Trade?

2018-03-11

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2018-03-11

China Exports, Jan 2008 - Jan 2018
China’s General Administration of Customs reported that Chinese exports to all other countries were in February 2018 an incredible 44.5% more than they were in February 2017. Such a massive growth rate coming now has served to intensify the economic boom narrative.

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China Going Boom

2018-03-08

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2018-03-08

China Gross Domestic Product, Apr 1993 - 2017
For a very long time, they tried it “our” way. It isn’t working out so well for them any longer, so in one sense you can’t blame them for seeking answers elsewhere. It was a good run while it lasted. The big problem is that what “it” was wasn’t ever our way. Not really. The Chinese for decades followed not a free market paradigm but an orthodox Economics one. This is no trivial difference, as the latter is far more easily accomplished in a place...

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Data Distortions One Way Or Another

2018-03-04

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2018-03-04

China Manufacturing PMI, Feb 2007 - 2018
Back in October, we noted the likely coming of two important distortions in global economic data. The first was here at home in the form of Mother Nature. The other was over in China where Communist officials were gathering as they always do in their five-year intervals. That meant, potentially. In the US our economic data for a few months at least will be on shaky ground due to the lingering economic impacts of severe hurricanes.

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Durable and Capital Goods, Distortions Big And Small

2018-03-04

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2018-03-04

US Durable Goods Orders, Jan 2013 - 2018
New orders for durable goods, excluding transportation industries, rose 9.1% year-over-year (NSA) in January 2018. Shipments of the same were up 8.8%. These rates are in line with the acceleration that began in October 2017 coincident to the aftermath of hurricanes Harvey and Irma. In that way, they are somewhat misleading.

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Bi-Weekly Economic Review: One Down, Three To Go

2018-03-01

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2018-03-01

US Leading Index, 1984 - 2018
We pay particular attention to broad based indicators of growth. The Chicago Fed National Activity Index and the Conference Board’s Leading Economic Indicators are examples. We watch them because we are mostly interested in identifying inflection points in the broad economy and aren’t as interested in the details. Why? Because, while bear markets do happen outside of recession, it is rare and unpredictable.

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New Home Sales (Predictably) Fall Out of the Boom, Too

2018-02-28

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2018-02-28

US Housing Construction, Jan 1985 - Jan 2018
New home sales were down sharply again in January 2018. For the second straight month, the level of purchase activity fell substantially despite what are otherwise always described as robust or even booming economic conditions. Like the sales of existing homes, the sales of newly constructed units should be both moving upward as well as being significantly more than stuck at this low level.

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US IP On The Other Side of Harvey and Irma

2018-02-19

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2018-02-19

US Industrial Production, Jan 1995 - 2018
Industrial Production in the US was revised to a lower level for December 2017, and then was slightly lower still in the first estimates for January 2018. Year-over-year, IP was up 3.7%. However, more than two-thirds of the gain was registered in September, October, and November (and nearly all the rest in just the single month of April 2017).

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China: Inflation? Not Even Reflation

2018-02-16

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2018-02-16

China Price Stability, Jan 1997 - 2018
The conventional interpretation of “reflation” in the second half of 2016 was that it was simply the opening act, the first step in the long-awaiting global recovery. That is what reflation technically means as distinct from recovery; something falls off, and to get back on track first there has to be acceleration to make up that lost difference.

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Bi-Weekly Economic Review

2018-02-14

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2018-02-14

Personal income for December was better than expected at up 0.4% on the month and 4.11% year over year. Wages and salaries were up 0.5%. Unfortunately, that rate of rise is not even up to the lower end of the range we’ve seen in past expansions when 5% income growth was a precursor to recession. Still, it is, sadly, about average for this expansion.

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China: CNY, Not Imports

2018-02-11

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2018-02-11

China Imports, Jan 2011 - 2018
In February 2013, the Chinese Golden Week fell late in the calendar. The year before, 2012, New Year was January 23rd, meaning that the entire Spring festival holiday was taken with the month of January. The following year, China’s New Year was placed on February 10, with the Golden Week taking up the entire middle month of February.

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COT Blue: Interest In Open Interest

2018-02-10

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2018-02-10

US Treasury Bond Futures, Jan 1993 - 2018
For me, the defining characteristic of the late nineties wasn’t the dot-coms. Most people were exposed to the NASDAQ because, frankly, at the time there was no getting away from it. It had seeped into everything, transforming from a financial niche bleeding eventually into the entire worldwide culture. We all remember the grocery clerks who became day traders.

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Global Asset Allocation Update:

2018-02-09

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2018-02-09

Moderate Allocation
There is no change to the risk budget this month. For the moderate risk investor the allocation to bonds is 50%, risk assets 45% and cash 5%. Despite the selloff of the last week I don’t believe any portfolio action is warranted. While the overbought condition has largely been corrected now, the S&P 500 is far from the opposite condition, oversold. At the lows this morning, the S&P 500 was officially in correction territory, down 10% from the...

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