Tag Archive: economy

Wasting the Middle: Obsessing Over Exits

2018-12-28

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2018-12-28

NYMEX WTI Futures 2016-2018
What was the difference between Bear Stearns and Lehman Brothers? Well, for one thing Lehman’s failure wasn’t a singular event. In the heady days of September 2008, authorities working for any number of initialism agencies were busy trying to put out fires seemingly everywhere. Lehman had to compete with an AIG as well as a Wachovia, already preceded by a Fannie and a Freddie.

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Just In Time For The Circus

2018-12-26

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2018-12-26

Eurozone Markit Composite PMI and GDP, Jul 2012 - Nov 2018
Just in time to follow closely upon yesterday’s European circus, IHS Markit piles on with more of the same forward-looking indications looking forward the wrong way. Mario Draghi says the ECB is ending QE, good for him. The central bank will do this despite balanced risks rebalancing in a different place. The more bad news and numbers stack up the more “they” say it’s nothing just transitory roughness.

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Xi Jinping’s Pretty Consistent Message

2018-12-24

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2018-12-24

China Industry Drives its Consumers, May 2011 - Nov 2018
It seems many were disappointed by the speech delivered by Xi Jinping. China’s supreme leader spoke at the Great Hall of the People in Beijing today on the 40th anniversary of his country’s first embrace of economic reform. Commentators had been expecting Xi to use the occasion to recommit to liberalization, further opening China to free market forces.

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Powell: Still Strong; Markets: AYFKM

2018-12-21

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2018-12-21

Global Systematically Important Banks 2017-2018
The official statement that accompanies each every FOMC policy action is by nature bland and sterile. Still, despite the sparseness of printed words those that are included can say a lot. Here’s its essence for what just wrapped up in December 2018: The Committee judges that some further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions,...

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Industrial Fading

2018-12-19

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2018-12-19

Federal Reserve Empire State Manu. Index 2001-2018
It is time to start paying attention to PMI’s again, some of them. There are those like the ISM’s Manufacturing Index which remains off in a world of its own. The version of the goods economy suggested by this one index is very different than almost every other. It skyrocketed in late summer last year way out of line (highest in more than a decade) with any other economic account.

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The Relevant Word Is ‘Decline’

2018-12-18

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2018-12-18

China Industrial Production, Nov 1998 - 2018
The English language headline for China’s National Bureau of Statistics’ press release on November 2018’s Big 3 was, National Economy Maintained Stable and Sound Momentum of Development in November. For those who, as noted yesterday, are wishing China’s economy bad news so as to lead to the supposed good news of a coordinated “stimulus” response this was itself a bad news/good news situation.

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Sometimes Bad News Is Just Right

2018-12-16

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2018-12-16

China Imports 2008-2018
There is some hope among those viewing bad news as good news. In China, where alarms are currently sounding the loudest, next week begins the plenary session for the State Council and its working groups. For several days, Communist authorities will weigh all the relevant factors, as they see them, and will then come up with the broad strokes for economic policy in the coming year (2019).

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US Banks Haven’t Behaved Like This Since 2009

2018-12-14

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2018-12-14

Total Credit Market Assets 1953 Q1 - 2018 Q1
If there is one thing Ben Bernanke got right, it was this. In 2009 during the worst of the worst monetary crisis in four generations, the Federal Reserve’s Chairman was asked in front of Congress if we all should be worried about zombies. Senator Bob Corker wasn’t talking about the literal undead, rather a scenario much like Japan where the financial system entered a period of sustained agony – leading to the same in the real economy, one lost...

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China Going Back To 2011

2018-12-13

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2018-12-13

China PBOC Balance Sheet and CPI, Nov 2006 - 2018
The enormous setback hadn’t yet been fully appreciated in March 2012 when China’s Premiere Wen Jiabao spoke to and on behalf of the country’s Communist governing State Council. Despite it having been four years since Bear Stearns had grabbed the whole world’s attention (for reasons the whole world wouldn’t fully comprehend, specifically as to why the whole world would need to care about the shadow “dollar” business of one US investment “bank”) the...

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‘Paris’ Technocrats Face Another Drop

2018-12-12

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2018-12-12

Eurozone Industrial Production, Jan 2013 - Nov 2018
How quickly things change. Only a few days ago, a fuel tax in France was blamed for widespread rioting. Today, Emmanuel Macron’s government under siege threatens to break its fiscal budget. Having given up on gasoline and diesel, the French government now promises wage increases and tax cuts.

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Economics Is Easy When You Don’t Have To Try

2018-12-11

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2018-12-11

Japan GDP, Quantitative and Qualitative Easing, Jan 2008 - Mar 2018
The real question is why no one says anything. They can continue to make these grossly untrue, often contradictory statements without fear of having to explain themselves. Don’t even think about repercussions. Even in front of politicians ostensibly being there on behalf of the public, pedigree still matters more than results.

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Converging Views Only Starts With Fed ‘Pause’

2018-12-08

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2018-12-08

US Trade, SA 2014-2018
There’s no sign of inflation, markets are unsettled, and now new economic data keeps confirming that dark side. Forget each month, every day there is something else suggesting a slowdown. That much had been evident across much of the global economy, but this is now different. The US has apparently been infected, too, not that that is any surprise.

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China’s Global Slump Draws Closer

2018-12-04

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2018-12-04

China Manufacturing PMI, Caixin and Non-Manufacturing PMI, May 2010 - Nov 2018
By the time things got really bad, China’s economy had already been slowing for a long time. The currency spun out of control in August 2015, and then by November the Chinese central bank was in desperation mode. The PBOC had begun to peg SHIBOR because despite so much monetary “stimulus” in rate cuts and a lower RRR banks were hoarding RMB liquidity.

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Monthly Macro Monitor – November 2018

2018-11-30

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2018-11-30

Economic Growth & Investment
Is the Fed’s monetary tightening about over? Maybe, maybe not but there does seem to be some disagreement between Jerome Powell and his Vice Chair, Richard Clarida. Powell said just a little over a month ago that the Fed Funds rate was still “a long way from neutral” and that the Fed may ultimately need to go past neutral.

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The Direction Is (Globally) Clear

2018-11-29

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2018-11-29

US Composite PMI and GDP, Jul 2012 - Nov 2018
It is definitely one period that they got wrong. Still, IHS Markit’s Composite PMI for the US economy has been one of the better forward-looking indicators around. Tying to real GDP, this blend of manufacturing and services sentiment has predicted the general economic trend in the United States pretty closely. The latter half of 2015 was the big exception.

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Eurodollar Futures: Powell May Figure It Out Sooner, He Won’t Have Any Other Choice

2018-11-20

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2018-11-20

Eurodollar Futures Curve, May - Sep 2018
For Janet Yellen, during her somewhat brief single term she never made the same kind of effort as Ben Bernanke had. Her immediate predecessor, Bernanke, wanted to make the Federal Reserve into what he saw as the 21st century central bank icon. Monetary policy wouldn’t operate on the basis of secrecy and ambiguity. Transparency became far more than a buzzword.

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Retail Sales Marked By Revisions

2018-11-16

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2018-11-16

U.S. Retail Sales, NSA 2011-2018
Retail sales rebounded 0.8% in October 2018 from September 2018, but it’s the downward revisions to the prior months that are cause for attention. The estimates for particularly September were moved sharply lower. Total retail sales two months ago had been figured last month at $485.8 billion (unadjusted) originally, but are now believed to have been just $483.0 billion.

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China’s Pooh Lesson

2018-11-14

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2018-11-14

Chinese Money 2001-2018
It’s one of those “nothing to see here” moments for Economists trying not to appreciate what’s really going on in China therefore the global economy. The slump in China’s automotive sector dragged on through October, with year-over-year sales down for the fourth straight month.

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Harmful Modern Myths And Legends

2018-11-08

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2018-11-08

Germany Real GDP, Q3 2018
Loreley Rock near Sankt Goarshausen sits at a narrow curve on the Rhine River in Germany. The shape of the bluff produces a faint echo in the wind, supposedly the last whispers of a beautiful maiden who threw herself from it in despair once spurned by her paramour. She was transformed into a siren, legend says, a tantalizing wail which cries out and lures fishermen and tradesmen on the great river to their death.

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China Now Japan; China and Japan

2018-11-03

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2018-11-03

Japan Industrial Production, NSA 2000-2018
Trade war stuff didn’t really hit the tape until several months into 2018. There were some noises about it back in January, but there was also a prominent liquidation in global markets in the same month. If the world’s economy hit a wall in that particular month, which is the more likely candidate for blame? We see it register in so many places. Canada, Europe, Brazil, etc.

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