Tag Archive: economy

“This Is A Crisis Greater Than Any Government Can Handle”: The $400 Trillion Global Retirement Gap

2017-10-03

Size of the retirement savings gap, 2015 - 2050

Today we’ll continue to size up the bull market in governmental promises. As we do so, keep an old trader’s slogan in mind: “That which cannot go on forever, won’t.” Or we could say it differently: An unsustainable trend must eventually stop. Lately I have focused on the trend in US public pension funds, many of which are woefully underfunded and will never be able to pay workers the promised benefits, at least without dumping a huge and unwelcome...

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Eurozone: Distinct Lack of Good Faith

2017-10-03

by Jeffrey P. Snider

2017-10-03

European Growth Baseline, Jan 1995 - 2017

The erosion of social order in any historical or geographic context is gradual; until it isn’t. Germany has always followed a keen sense of this process, having experienced it to every possible extreme between the World Wars. Hyperinflationary collapse doesn’t happen overnight; it took three years for the Weimar mark to disintegrate, and then Weimar Germany. Even Nazism wasn’t all it once. What was required was continued denial especially on the...

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Here Are The Cities Of The World Where “The Rent Is Too Damn High”

2017-10-01

by Tyler Durden

2017-10-01

In ancient times, like as far back as the 1990s, housing prices grew roughly inline with inflation rates because they were generally set by supply and demand forces determined by a market where buyers mostly just bought houses so they could live in them. Back in those ancient days, a more practical group of world citizens saw their homes as a place to raise a family rather that just another asset class that should be day traded to satisfy their...

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Not Political Risk For China, But Unwelcome Reality

2017-10-01

by Jeffrey P. Snider

2017-10-01

China’s Communist Party concluded the Third Plenum of its 18th Congress in November 2013. It was the much-discussed reform mandate that many in the West took to mean another positive step toward neo-liberal reform. At its center was supposed to be a greater role for markets particularly in the central task of resource allocation. In some places, the Party’s General Secretary Xi Jinping was hailed as the great Chinese reformer.

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Location Transformation or HIBORMania

2017-10-01

by Jeffrey P. Snider

2017-10-01

The Communist Chinese established their independence on September 21, 1949. The grand ceremony commemorating the political change was held in Tiananmen Square on October 1 that year. The following day, October 2, the Resolution on the National Day of the People’s Republic of China was passed making October 1to be China’s National holiday. It typically kicks off the second of China’s Golden Week holidays. The first relates to the Chinese New Year...

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The Global Housing Bubble Is Biggest In These Cities

2017-09-30

by Tyler Durden

2017-09-30

Two years ago, when UBS looked at the world's most expensive housing markets, it found that London and Hong Kong were the only two areas exposed to bubble risk.What a difference just a couple of years makes, because in the latest report by UBS wealth Management, which compiles the bank's Global Real Estate Bubble Index, it found that eight of the world's largest cities are now subject to a massive speculative housing bubble.

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It Was Collateral, Not That We Needed Any More Proof

2017-09-30

by Jeffrey P. Snider

2017-09-30

Eleven days ago, we asked a question about Treasury bills and haircuts. Specifically, we wanted to know if the spike in the 4-week bill’s equivalent yield was enough to trigger haircut adjustments, and therefore disrupt the collateral chain downstream. Within two days of that move in bills, the GC market for UST 10s had gone insane.To be honest, it was a rhetorical exercise.

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The Real Estate View For A Second Lost Decade

2017-09-29

by Jeffrey P. Snider

2017-09-29

US Existing Home Sales, Jan 2011 - Jul 2017

The National Association of Realtor (NAR) reports today that sales of existing homes in the US were down 1.7% in August 2017 from July. At a seasonally-adjusted annual rate of 5.35 million, that’s the lowest pace for resales since July 2016. It is yet another data point reflecting the almost certain end of “reflation” in the economic sense.

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Little Behind CNY

2017-09-28

by Jeffrey P. Snider

2017-09-28

The framing is a bit clumsy, but the latest data in favor of the artificial CNY surge comes to us from Bloomberg. The mainstream views currency flows as, well, flows of currency. That’s what makes their description so maladroit, and it can often lead to serious confusion. A little translation into the wholesale eurodollar reality, however, clears it up nicely.

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Why The Fed’s Balance Sheet Reduction Is As Irrelevant As Its Expansion

2017-09-27

by Jeffrey P. Snider

2017-09-27

Japan Monetary Base, Jan 2013 - 2017, US Versus Canada Real GDP, 2007 - 2017

The FOMC is widely expected to vote in favor of reducing the system’s balance sheet this week. The possibility has been called historic and momentous, though it may be for reasons that aren’t very kind to these central bankers. Having started to swell almost ten years ago, it’s a big deal only in that after so much time here they still are having these kinds of discussions.

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PBOC RMB Restraint Derives From Experience Plus ‘Dollar’ Constraint

2017-09-27

by Jeffrey P. Snider

2017-09-27

Given that today started with a review of the “dollar” globally as represented by TIC figures and how that is playing into China’s circumstances, it would only be fitting to end it with a more complete examination of those. We know that the eurodollar system is constraining Chinese monetary conditions, but all through this year the PBOC has approached that constraint very differently than last year.

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Bi-Weekly Economic Review: As Good As It Gets

2017-09-26

by Joseph Y. Calhoun

2017-09-26

The incoming economic data hasn’t changed its tone all that much in the last several years. The US economy is growing but more slowly than it once did and we hope it does again. It is frustrating for economic bulls and bears, never fully satisfying either. Probably more important is the frustration of the average American, a dissatisfaction with the status quo that permeates the national debate. The housing bubble papered over the annoying lack of...

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Swimming The ‘Dollar’ Current (And Getting Nowhere)

2017-09-26

by Jeffrey P. Snider

2017-09-26

The People’s Bank of China reported this week that its holdings of foreign assets fell slightly again in August 2017. Down about RMB 21 billion, almost identical to the RMB 22 billion decline in July, the pace of forex withdrawals is clearly much preferable to what China’s central bank experienced (intentionally or not) late last year at ten and even twenty times the rate of July and August.

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Global Asset Allocation Update: Step Away From The Portfolio

2017-09-25

by Joseph Y. Calhoun

2017-09-25

There is no change to the risk budget this month. For the moderate risk investor, the allocation between risk assets and bonds is unchanged at 50/50. There are no changes to the portfolios this month. The post Fed meeting market reaction was a bit surprising in its intensity. The actions of the Fed were, to my mind anyway, pretty much as expected but apparently the algorithms that move markets today were singing from a different hymnal.

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Is The Swiss National Bank A Fraud?

2017-09-24

by Tyler Durden

2017-09-24

The price of shares in The Swiss National Bank is up 11 days in a row, soaring 150% in the last two months. That sounds like a 'tulip' bubble-like 'fraud'... The SNB is up over 120% in Q3 so far - more than double 'bubble' Bitcoin...

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Fed’s Asset Bubbles Now At The Mercy Of The Rest Of The World’s Central Bankers

2017-09-23

by Tyler Durden

2017-09-23

"Like watching paint dry," is how The Fed describes the beginning of the end of its experiment with massively inflating its balance sheet to save the world. As former fund manager Richard Breslow notes, however, Yellen's decision today means the risk-suppression boot is on the other foot (or feet) of The SNB, The ECB, and The BoJ; as he writes, "have no fear, The SNB knows what it's doing."

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Expectations and Acceptance of Potential

2017-09-23

by Jeffrey P. Snider

2017-09-23

University of Michigan Consumer Confidence, Jan 1997 - 2017

The University of Michigan reports that consumer confidence in September slipped a little from August. Their Index of Consumer Sentiment registered 95.3 in the latest month, down from 96.8 in the prior one. Both of those readings are in line with confidence estimates going back to early 2014 when consumer sentiment supposedly surged.

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IP Weathers Storms But Not Cars

2017-09-23

by Jeffrey P. Snider

2017-09-23

US Industrial Production, Jan 2010 - Jul 2017

In late August 2006, ABC News asked more than a dozen prominent economists to evaluate the impacts of hurricane Katrina on the US economy. The cataclysmic storm made landfall on August 29, 2005, devastating the city of New Orleans and the surrounding Gulf coast. The cost in human terms was unthinkable, and many were concerned, as people always are, that in economic terms the country might end up in similar devastation.

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Swiss National Bank Bubble Regains Lead Over Bitcoin

2017-09-22

by Tyler Durden

2017-09-22

But as Bitcoin rebounded from its China challenges, it overtook The SNB once again as bubbliest bubble. However, a 13% spike in the share price of The Swiss National Bank today has put an end to that leaving the central bank back in first place among the melter-uppers...

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Swiss Mystery: Someone Keeps Flushing €500 Bank Notes Down The Toilet

2017-09-22

by Tyler Durden

2017-09-22

While there are several comments one can make here, “dirty money”, “flush with cash” and “flushing money down the toilet” certainly coming to mind, perhaps the ECB was on to something when it warned that €500 “Bin Laden” bills (which it has since discontinued to print) tend to be used by criminals. The reason for … Continue reading »

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