Tag Archive: economy

The Risen (euro)Dollar

2019-12-05

by

2019-12-05

India Real GDP, 1997-2019
Back in April, while she was quietly jockeying to make sure her name was placed at the top of the list to succeed Mario Draghi at the ECB, Christine Lagarde detoured into the topic of central bank independence. At a joint press conference held with the Governor of the Reserve Bank of South Africa, Lesetja Kganyago, as the Managing Director of the IMF Lagarde was asked specifically about President Trump’s habit of tweeting disdain in the direction...

Read More »

Nothing Good From A Chinese Industrial Recession

2019-11-30

by

2019-11-30

China Industry, 2001-2019
October 2017 continues to show up as the most crucial month across a wide range of global economic data. In the mainstream telling, it should have been a very good thing, a hugely positive inflection. That was the time of true inflation hysteria around the globe, though it was always presented as a rationally-determined base case rather than the unsupported madness it really was.

Read More »

The Big One, The Smoking Gun

2019-11-29

by

2019-11-29

Potential Real GDP, 2005-2019
It wasn’t just the unemployment rate which was one of the key reasons why Economists and central bankers (redundant) felt confident enough to inspire 2017’s inflation hysteria. There was actually another piece to it, a bigger piece potentially complimentary and corroborative bit of conjecture. I write “conjecture” because despite how all this is presented in the media there’s very little precision to any of it.

Read More »

China’s Financial Stability: A Squeeze and a Strangle

2019-11-27

by

2019-11-27

PBOC Balance Sheet, 2006-2019
I do get a big kick out of the way Communists over in China announce how they are dealing with their enormous problems especially as they may be getting worse. Each month, for example, the country’s National Bureau of Statistics (NBS) will publish figures on retail sales or industrial production at record lows but in the opening paragraphs the text will be full of praise for how the economy is being handled.

Read More »

Seriously, Good Luck Dethroning the (euro)Dollar

2019-11-24

by

2019-11-24

US TIC, 1996-2018
Scarcely a week will go by without some grand prediction of the dollar being dethroned. Set aside how if anything is to be deposed it would have to be the eurodollar, these stories typically follow the same formulaic approach: Country X is moving away from dollar reserves, “diversifying” its holdings because of the geopolitics of Y.

Read More »

More (Badly Needed) Curve Comparisons

2019-11-23

by

2019-11-23

US Treasury Yield Curve, 2000-2001
Even though it was a stunning turn of events, the move was widely celebrated. The Federal Reserve’s Open Market Committee, the FOMC, hadn’t been scheduled to meet until the end of that month. And yet, Alan Greenspan didn’t want to wait. The “maestro”, still at the height of his reputation, was being pressured to live up to it.

Read More »

QE’s and Rate Cuts: Two Very Different Sets of Sentiment Drawn From Them

2019-11-17

by

2019-11-17

IFO World Economic Climate Index, 2007-2019
The stock market’s dichotomy grows ever wider. On the one side, record high prices which are being set by the expectations of a trade deal plus renewed worldwide “stimulus.” Sure, officials everywhere were late to see the downturn coming, but they’ve since woken up and went to work.

Read More »

For Labor And Recession, The Bad One

2019-11-12

by

2019-11-12

Nonfarm Business Sector: Unit Labor Costs 1983-2019
There’s a couple of different ways that Unit Labor Costs can rise. Or even surge. The first is the good way, the one we all want to see because it is consistent with the idea of an economy that is actually booming. If workers have become truly scarce as macro forces sustain actual growth such that all labor market slack is absorbed, then businesses have to compete for them bidding up the price of marginal labor.

Read More »

The Real Boom Potential

2019-11-12

by

2019-11-12

China Exports, 1998-2019
For the last five years Larry Summers has called it secular stagnation. It’s the right general idea as far as the result, if totally wrong as to its cause. Alvin Hansen, who first coined the term and thought up the thesis in the thirties, was thoroughly disproved by the fifties. Some, perhaps many Economists today believe it was WWII which actually did the disproving.

Read More »

Red Flags Over Labor

2019-11-10

by

2019-11-10

Establishment Survey; Payrolls 2010-2019
Better-than-expected is the new strong. Even I’m amazed at the satisfaction being taken with October’s payroll numbers. While you never focus too much on one monthly estimate, this time it might be time to do so. But not for those other reasons. Sure, GM caused some disruption and the Census is winding down, both putting everyone on edge. The whisper numbers were low double digits, maybe even a negative headline estimate.

Read More »

A Perfect Example of the Euro$ Squeeze

2019-11-10

by

2019-11-10

Europe Industrial Production, 2007-2019
Germany’s vast industrial sector continued in the tank in September. According to new estimates from deStatis, that country’s government agency responsible for maintaining economic data, Industrial Production dropped by another 4% year-over-year during the month of September 2019. It was the fifth consecutive monthly decline at around that alarming rate.

Read More »

Still Stuck In Between

2019-11-09

by

2019-11-09

IHS Markit U.S. Manufacturing, 2012-2019
There wasn’t much by way of the ISM’s Manufacturing PMI to allay fears of recession. Much like the payroll numbers, an uncolored analysis of them, anyway, there was far more bad than good. For the month of October 2019, the index rose slightly from September’s decade low. At 48.3, it was up just half a point last month from the month prior

Read More »

The Sudden Need For A Trade Deal

2019-11-09

by

2019-11-09

US Imports of Goods from China, NSA 1989-2019
Talk of trade deals is everywhere. Markets can’t get enough of it, even the here-to-fore pessimistic bond complex. Rates have backed up as a few whispers of BOND ROUT!!! reappear from their one-year slumber. If Trump broke the global economy, then his trade deal fixes it. There’s another way of looking at it, though. Why did the President go spoiling for trouble with China in 2018?

Read More »

From Friends to Nemeses: JO and Jay

2019-11-08

by

2019-11-08

JOLTS - Job Openings, SA 2017-2019
It was one of the first major speeches of his tenure. Speaking to the Economic Club of Chicago in April 2018, newly crowned Federal Reserve Chairman Jerome Powell was full of optimism. At that time, however, optimism was being framed as some sort of bad thing. This was the height of inflation hysteria, where any sort of official upgrade to the economic condition was taken as further “hawkishness.”

Read More »

You Have To Try Really Hard Not To See It

2019-11-07

by

2019-11-07

ISM Purchasing Managers Indexes, 2017-2019
In early September, the Institute for Supply Management (ISM) released figures for its non-manufacturing PMI that calmed nervous markets. A few weeks before anyone would start talking about repo, repo operations, and not-QE asset purchases, recession and slowdown fears were already prevalent.

Read More »

More Synchronized, More Downturn, Still Global

2019-11-03

by

2019-11-03

China GDP, 2007-2019
China was the world economy’s best hope in 2017. Like it was the only realistic chance to push out of the post-2008 doldrums, a malaise that has grown increasingly spasmatic and dangerous the longer it goes on. Communist authorities, some of them, anyway, reacted to Euro$ #3’s fallout early on in 2016 by dusting off their Keynes. A stimulus panic that turned out to be more panic than stimulus.

Read More »

The Inventory Context For Rate Cuts and Their Real Nature/Purpose

2019-11-02

by

2019-11-02

Case Study In Inventory, 2006-2019
What typically distinguishes recessions from downturns is the inventory cycle. Even in 2008, that was the basis for the Great “Recession.” It was distinguished most prominently by the financial conditions and global-reaching panic, true, but the effects of the monetary crash registered heaviest in the various parts of that inventory process. An economy for whatever reasons slows down.

Read More »

Three (Rate Cuts) And GDP, Where (How) Does It End?

2019-11-01

by

2019-11-01

The Real GDP Problem,1988-2018
The Federal Reserve has indicated that it will now pause – for a second time, supposedly. Remember the first: after raising its benchmark rates apparatus in December while still talking about an inflationary growth acceleration requiring even more hikes throughout 2019, in a matter of weeks that was transformed into a temporary suspension of them.

Read More »

The Inventory Context For Rate Cuts And Their Real Nature/Purpose

2019-11-01

by

2019-11-01

Case Study in Inventory, 2006-2019
What typically distinguishes recessions from downturns is the inventory cycle. Even in 2008, that was the basis for the Great “Recession.” It was distinguished most prominently by the financial conditions and global-reaching panic, true, but the effects of the monetary crash registered heaviest in the various parts of that inventory process.

Read More »

The Big Risks Left (and Right) In Europe

2019-10-30

by

2019-10-30

Central Bank Failure, 1999-2019
Another local election in Germany, another stunning defeat for the ruling center. How many more of these does anyone need before they realize the electorate is going to keep migrating toward the poles? And it all stems from the one reason; there is no and has been no economic growth. But because the so-called establishment has insisted the economy is booming, or it was, people are doing what people always do.

Read More »