Tag Archive: economy

Bubble Watch: Warning Signs That The Everything Bubble Will Burst in 2018

2017-12-20

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2017-12-20

Producer Price Indexes, Dec 2000 - 2017
I believe 2018 will be the year inflation arrives. The reason, as I’ve noted throughout mid-2017, is that multiple Central Banks, particularly the European Central Bank (ECB), Bank of Japan (BoJ) and Swiss National Bank (SNB) have maintained emergency levels of QE and money printing, despite the fact that globally the economy is performing relatively well.

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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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Jim Grant: “Markets Trust Too Much In The Presence Of Central Banks”

2017-12-15

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2017-12-15

James Grant, Wall Street expert and editor of the renowned investment newsletter «Grant’s Interest Rate Observer», warns of the unseen consequences of super low interest rate and questions the extraordinary actions of the Swiss National Bank. Nearly ten years after the financial crisis, extraordinary monetary policy has become the norm.

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Year-end Rate Hike Once Again Proves To Be Launchpad For Gold Price

2017-12-15

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2017-12-15

Year-end rate hike once again proves to be launchpad for gold price. FOMC follows through on much anticipated rate-hike of 0.25%. Spot gold responds by heading for biggest gain in three weeks, rising by over 1%. Final meeting for Federal Reserve Chair Janet Yellen. Yellen does not expect Trump's tax-cut package to result in significant, strong growth for US economy. No concern for bitcoin which 'plays a very small role in the payment system'.

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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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The Latte Index: Using The Impartial Bean To Value Currencies

2017-12-09

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2017-12-09

The Impartial Bean
Like any other market, there are many opinions on what a currency ought to be worth relative to others. With certain currencies, that spectrum of opinions is fairly narrow. As an example, for the world’s most traded currency – the U.S. dollar – the majority of opinions currently fall in a range from the dollar being 2% to 11% overvalued, according to organizations such as the Council of Foreign Relations, the Bank of International Settlements, the...

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Bi-Weekly Economic Review: Who You Gonna Believe?

2017-12-07

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2017-12-07

We’ve had a pretty good run of data recently and with the tax bill passing the Senate one would expect to see markets react positively, to reflect renewed optimism about economic growth. We have improving economic data on pretty much a global basis. It isn’t a boom by any stretch of the imagination but there is no doubt that the rate of change has recently been more positive.

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Global Asset Allocation Update

2017-12-02

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2017-12-02

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%. The extreme overbought condition of the US stock market did not correct since the last update and so I will continue to hold a modest amount of cash.

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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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For The First Time Ever, The “1 percent” Own More Than Half The World’s Wealth: The Stunning Chart

2017-11-21

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2017-11-21

Today Credit Suisse released its latest annual global wealth report, which traditionally lays out what has become the single biggest reason for the recent "anti-establishment" revulsion: an unprecedented concentration of wealth among a handful of people, as shown in Swiss bank's infamous global wealth pyramid, an arrangement which as observed by the "shocking" political backlash of the past year, suggests that the lower 'levels' of the pyramid are...

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SNB: It’s A Bonfire Of The Absurdities

2017-11-21

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2017-11-21

Fire
This week’s letter will take a look at the growing number of ridiculous, inane, and otherwise nonsensical absurdities that fill the daily economic headlines. I have gone from the occasional smile to scratching my head now and then to “WTF” moments several times a week.

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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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