Tag Archive: currencies

Industrial production: The Chinese Appear To Be Rushed

2018-01-04

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2018-01-04

All China's Dollars, Aug 2016 - Jan 2018
While the Western world was off for Christmas and New Year’s, the Chinese appeared to have taken advantage of what was a pretty clear buildup of “dollars” in Hong Kong. Going back to early November, HKD had resumed its downward trend indicative of (strained) funding moving again in that direction (if it was more normal funding, HKD wouldn’t move let alone as much as it has). China’s currency, however, was curiously restrained during that...

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Bi-Weekly Economic Review: Housing Market Accelerates

2018-01-03

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2018-01-03

The economy ended 2017 with current growth just slightly above trend. In general the reports of the last two weeks of the year were pretty good with housing a standout performer going into the new year. We are still trying to get past the impact – positive and negative – from the hurricanes a few months ago though so it is probably prudent to wait for more evidence before making any definitive pronouncements about the economy.

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The Economy Likes Its IP Less Lumpy

2017-12-23

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2017-12-23

US Industrial Production, Jan 2011 - Dec 2017
Industrial Production rose 3.4% year-over-year in November 2017, the highest growth rate in exactly three years. The increase was boosted by the aftermath of Harvey and Irma, leaving more doubt than optimism for where US industry is in 2017. For one thing, of that 3.4% growth rate, more than two-thirds was attributable to just two months.

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Chinese Are Not Tightening, Though They Would Be Thrilled If You Thought That

2017-12-22

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2017-12-22

RMB Money, Jan - Dec 2017
The PBOC has two seemingly competing objectives that in reality are one and the same. Overnight, China’s central bank raised two of its money rates. The rate it charges mostly the biggest banks for access to the Medium-term Lending Facility (MLF) was increased by 5 bps to 3.25%. In addition, its reverse repo interest settings were also moved up by 5 bps each at the various tenors (to 2.50% for the 7-day, 2.80% for the 28-day).

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Retail Sales Bounce (Way) Too Much

2017-12-21

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2017-12-21

US Retail Sales, Jun 2011 - Nov 2017
Retail sales had a good month of November, or at least what counts as decent over the last five and a half years. Total retail sales (unadjusted) rose 6.35% last month, up from 4.9% (revised higher) in October. It was the highest rate of growth since the 29-day month of February 2016. For retailers, what matters is that it comes at the start of the Christmas shopping season.

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Bi-Weekly Economic Review: Animal Spirits Haunt The Market

2017-12-20

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2017-12-20

The economic data over the last two weeks continued the better than expected trend. Some of the data was quite good and makes one wonder if maybe, just maybe, we are finally ready to break out of the economic doldrums. Is it possible that all that new normal, secular stagnation stuff was just a lack of animal spirits?

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Chart of the Week: Collateral

2017-12-16

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2017-12-16

US Treasuries, Jan 2017 - Dec 2017
It’s been a week of quite righteous focus on collateral. The 4-week bill equivalent yield closes it at just 114 bps, with only three days left before the RRP “floor” is moved up by the FOMC to 125 bps. That’s too much premium in price, though we know why given what FRBNY reported for repo fails last week.

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China Exports and Industrial Production: Revisiting Once More The True Worst Case

2017-12-16

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2017-12-16

Labor Market Growth, 1968 - 2017
As weird as it may seem at first, the primary economic problem right now is that the global economy looks like it is growing again. There is no doubt that it continues on an upturn, but the mere fact that whatever economic statistic has a positive sign in front of it ends up being classified as some variant of strong. That’s how this works in mainstream analysis, this absence of any sort of gradation where if it’s negative it’s bad (though in 2015...

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Defining The Economy Through Payrolls

2017-12-15

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2017-12-15

Labor Market Growth, 1968 - 2017
The year 2000 was a transition year in a lot of ways. Though Y2K amounted to mild mass hysteria, people did have to get used to writing the date with 20 in front of the year rather than 19. It was a new millennium (depending on your view of Year 0) that seemed to have started off under the best possible terms. Not only were stocks on fire at the outset, the economy was, too.

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A Race To The Potential Behind Bitcoin

2017-12-13

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2017-12-13

The timing just never seems to fall in our favor. If we had had this conversation ten years ago as would have been appropriate, then this evolution might have fell perfectly in our collective laps. Just as the global financial system, really the international, interbank monetary system of the eurodollar, was crashing all around us, the genesis block of the Bitcoin blockchain was hard coded.

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Three Years Ago QE, Last Year It Was China, Now It’s Taxes

2017-12-13

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2017-12-13

China Manufacturing PMI, May 2007 - Nov 2017
China’s National Bureau of Statistics reported last week that the official manufacturing PMI for that country rose from 51.6 in October to 51.8 in November. Since “analysts” were expecting 51.4 (Reuters poll of Economists) it was taken as a positive sign. The same was largely true for the official non-manufacturing PMI, rising like its counterpart here from 54.3 the month prior to 54.8 last month.

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Giant Sucking Sound Sucks (Far) More Than US Industry Now

2017-12-11

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2017-12-11

Case Study in Conundrum, Jan 1997 - 2004
There are two possibilities with regard to stubbornly weak US imports in 2017. The first is the more obvious, meaning that the domestic goods economy despite its upturn last year isn’t actually doing anything positive other than no longer being in contraction. The second would be tremendously helpful given the circumstances of American labor in the whole 21st century so far. In other words, perhaps US consumers really are buying at a healthy pace,...

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Reduced Trade Terms Salute The Flattened Curve

2017-12-10

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2017-12-10

US Imports, Jan 2007 - 2017
The Census Bureau reported earlier today that US imports of foreign goods jumped 9.9% year-over-year in October. That is the second largest increase since February 2012, just less than the 12% import growth recorded for January earlier this year.

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Fading Black Friday

2017-11-29

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2017-11-29

NRF Holiday Season Estimates, 2013 - 2017
Black Friday was once the king of all shopping. A retailer could make its year up on that one day, often by gimmicking its way to insane single-day volume. Those days, however, are certainly over. Though the day after Thanksgiving still means a great deal, as the annual flood of viral consumer brawl videos demonstrate, it’s just not what it once was.

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Durable Goods Only About Halfway To Real Reflation

2017-11-25

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2017-11-25

US Core Durable Goods Orders, Jan 1993 - Jan 2017
Durable goods were boosted for a second month by the after-effects of Harvey and Irma. New orders excluding those from transportation industries rose 8.5% year-over-year in October 2017, a slight acceleration from the 6.5% average of the four previous months. Shipments of durable goods (ex transportation) also rose by 8% last month.

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Bi-Weekly Economic Review: A Whirlwind of Data

2017-11-22

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2017-11-22

The economic data of the last two weeks was generally better than expected, the Citigroup Economic Surprise index near the highs of the year. Still, as I’ve warned repeatedly over the last few years, better than expected should not be confused with good. We go through mini-cycles all the time, the economy ebbing and flowing through the course of a business cycle.

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Industrial Production Still Reflating

2017-11-20

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2017-11-20

US Industrial Production, Jan 1995 - Nov 2017
Industrial Production benefited from a hurricane rebound in October 2017, rising 2.9% above October 2016. That is the highest growth rate in nearly three years going back to January 2015. With IP lagging behind the rest of the manufacturing turnaround, this may be the best growth rate the sector will experience. Production overall was still contracting all the way to November 2016, providing the index favorable base comparisons that won’t last past...

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Can’t Hide From The CPI

2017-11-19

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2017-11-19

US Consumer Price Index, Jan 2016 - Oct 2017
On the vital matter of missing symmetry, consumer price indices across the world keep suggesting there remains none. Recoveries were called “V” shaped for a reason. Any economy knocked down would be as intense in getting back up, normal cyclical forces creating momentum for that to (only) happen. In the context of the past three years, symmetry is still nowhere to be found.

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Retail Sales (US) Are Exhibit #1

2017-11-19

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2017-11-19

U.S. Retail Sales, June 2011 - October 2017
In January 2016, everything came to a head. The oil price crash (2nd time), currency chaos, global turmoil, and even a second stock market liquidation were all being absorbed by the global economy. The disruptions were far worse overseas, thus the global part of global turmoil, but the US economy, too, was showing clear signs of distress.

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What Central Banks Have Done Is What They’re Actually Good At

2017-11-18

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2017-11-18

Full Employment Slack, Jan 1994 - 2017
As a natural progression from the analysis of one historical bond “bubble” to the latest, it’s statements like the one below that ironically help it continue. One primary manifestation of low Treasury rates is the deepening mistrust constantly fomented in markets by the media equivalent of the boy who cries recovery.

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