Tag Archive: Markets

The Retail Sales Shortage

2018-04-22

Retail sales rose (seasonally adjusted) in March 2018 for the first time in four months. Related to last year’s big hurricanes and the distortions they produced, retail sales had surged in the three months following their immediate aftermath and now appear to be mean reverting toward what looks like the same weak pre-storm baseline. Exactly how far (or fast) won’t be known until subsequent months.

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Bi-Weekly Economic Review

2018-04-20

by Marcelo Perez

2018-04-20

Bi-Weekly Economic Review

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China’s Exports Are Interesting, But It’s Their Imports Where Reflation Lives or Dies

2018-04-19

by Jeffrey P. Snider

2018-04-19

Last month Chinese trade statistics left us with several key questions. Export growth was a clear outlier, with outbound trade rising nearly 45% year-over-year in February 2018. There were the usual Golden Week distortions to consider, made more disruptive by the timing of it this year as different from last year. And then we have to consider possible effects of tariffs and restrictions at the start of what is called a trade war (but isn’t really,...

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Global Asset Allocation Update: The Certainty of Uncertainty

2018-04-18

by Joseph Y. Calhoun

2018-04-18

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%. Stocks continued their erratic ways since the last update with another test of the February lows that are holding – for now. While we believe growth expectations are moderating somewhat (see the Bi-Weekly Economic Review) the change isn’t sufficient to warrant an asset allocation change.

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US Imports Don’t Quite Match Chinese Exports

2018-04-12

by Jeffrey P. Snider

2018-04-12

In early 2015, a contract dispute between dockworkers’ unions and 29 ports on the West Coast of the US escalated into what was a slowdown strike. Cargoes piled up especially at some of the largest facilities like those in Oakland, LA, and Long Beach, threatening substantial economic costs far and away from just those directly involved. Each side predictably blamed the other for it.

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Bi-Weekly Economic Review: Investing Is Not A Game of Perfect

2018-04-11

by Joseph Y. Calhoun

2018-04-11

The market volatility this year has been blamed on a lot of factors. The initial selloff was blamed on a hotter than expected wage number in the January employment report that supposedly sparked concerns about inflation – although a similar number this month wasn’t mentioned as a cause of last Friday’s selling. The unwinding of the short volatility trade exacerbated the situation and voila, 12% came off the market in a matter of days.

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Bi-Weekly Economic Review

2018-04-05

by Marcelo Perez

2018-04-05

Bob Williams and Joseph Y. Calhoun talks about Bi-Weekly Economic Review for April 01, 2018.

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The Best ‘Reflation’ Indicator May Be Japanese

2018-04-04

by Jeffrey P. Snider

2018-04-04

Japan Industrial Production, Jan 2008 - 2018

Japanese industrial production dropped sharply in January 2018, Japan’s Ministry of Economy, Trade, and Industry reported last month. Seasonally-adjusted, the IP index fell 6.8% month-over-month from December 2017. Since the country has very little mining sector to speak of, and Japan’s IP doesn’t include utility output, this was entirely manufacturing in nature (99.79% of the IP index is derived from the manufacturing sector).

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Bi-Weekly Economic Review: Embrace The Uncertainty

2018-03-28

by Joseph Y. Calhoun

2018-03-28

There’s something happening here What it is ain’t exactly clear There’s a man with a gun over there Telling me I got to beware I think it’s time we stop, children, what’s that sound Everybody look what’s going down There’s battle lines being drawn Nobody’s right if everybody’s wrong Young people speaking their minds Getting so much resistance from behind It’s time we stop, hey, what’s that sound Everybody look what’s going...

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Just A Few More Pips

2018-03-25

by Jeffrey P. Snider

2018-03-25

On Page 1, Chapter 1 of the Central Banker Crisis Handbook it states very clearly, “do not make it worse.” It’s something like the Hippocratic oath where monetary authorities must first assess what their actions might do to an already fragile system. It’s why they take great pains to try and maintain composure, appearing calm and orderly while conflagration rages all around. The last thing you want to do is confirm the run.

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The Boom Reality of Uncle He’s Globally Synchronized L

2018-03-21

by Jeffrey P. Snider

2018-03-21

Top Chinese leadership is taking further shape. With Xi Jinping’s continuing consolidation of power going on right this minute, most of the changes aren’t really changes, at least not internally. To the West, and to the mainstream, what the Chinese are doing seems odd, if not more than a little off. Unlike in the West, however, there is determined purpose that is in many ways right out in the open. Many here had been expecting that outgoing PBOC...

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US Industry Experiences The Full 2014 Again in February

2018-03-20

by Jeffrey P. Snider

2018-03-20

US Industrial Production, Jan 2006 - 2018

In February 2018, it was like old times for the US industrial sectors. Prior to the 2015-16 downturn, the otherwise moribund economy did produce two genuine booms. The first in the auto sector, the other in energy. Without them, who knows what the no-recovery recovery would have looked like. They were for the longest time the only bright spots.

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Three Months Now of After-Harvey Retail Sales; or, The Boom Narrative Goes Boom

2018-03-17

by Jeffrey P. Snider

2018-03-17

If indeed this inflation hysteria has passed, its peak was surely late January. Even the stock market liquidations that showed up at that time were classified under that narrative. The economy was so good, it was bad; the Fed would be forced by rapid economic acceleration to speed themselves up before that acceleration got out of hand in uncontrolled consumer price gains. On February 1, the Atlanta Fed’s GDPNow tracking model was moved up to...

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China’s Questionable Start to 2018

2018-03-16

by Jeffrey P. Snider

2018-03-16

China Industrial Production, Feb 1999 - 2018

The Chinese government reported estimates for Industrial Production, Retail Sales, and Fixed Asset Investment (FAI) for both January and February 2018. The National Bureau of Statistics prepares and calculates China’s major economic statistics in this manner at the beginning of each year due to the difficulties created by calendar effects (New Year Golden Week).

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Bi-Weekly Economic Review: The New Normal Continues

2018-03-14

by Joseph Y. Calhoun

2018-03-14

There has been a lot of talk about the economic impact of the recent tax reform. All of it, including the analyses that include lots of fancy math, amounts to nothing more than speculation, usually informed by little more than the political bias of the analyst. I am guilty of that too to some degree but I don’t let my personal political views dictate how I view the economy for purposes of investing.

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China Prices Include Lots of Base Effect, Still Undershoots

2018-03-13

by Jeffrey P. Snider

2018-03-13

By far, the easiest to answer for today’s inflation/boom trifecta is China’s CPI. At 2.9% in February 2018, that’s the closest it has come to the government’s definition of price stability (3%) since October 2013. That, in the mainstream, demands the description “hot” if not “sizzling” even though it still undershoots. The primary reason behind the seeming acceleration was a more intense move in food prices.

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Global Asset Allocation Update: Tariffs Don’t Warrant A Change…Yet

2018-03-12

by Joseph Y. Calhoun

2018-03-12

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%. We have had continued volatility since the last update but the market action so far is pretty mundane. The initial selloff halted at the 200 day moving average and the rebound carried to just over the 50 day moving average.

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China Exports: Trump Tariffs, Booming Growth, or Tainted Trade?

2018-03-11

by Jeffrey P. Snider

2018-03-11

China’s General Administration of Customs reported that Chinese exports to all other countries were in February 2018 an incredible 44.5% more than they were in February 2017. Such a massive growth rate coming now has served to intensify the economic boom narrative.

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China Going Boom

2018-03-08

by Jeffrey P. Snider

2018-03-08

China Gross Domestic Product, Apr 1993 - 2017

For a very long time, they tried it “our” way. It isn’t working out so well for them any longer, so in one sense you can’t blame them for seeking answers elsewhere. It was a good run while it lasted. The big problem is that what “it” was wasn’t ever our way. Not really. The Chinese for decades followed not a free market paradigm but an orthodox Economics one. This is no trivial difference, as the latter is far more easily accomplished in a place...

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Data Distortions One Way Or Another

2018-03-04

by Jeffrey P. Snider

2018-03-04

China Manufacturing PMI, Feb 2007 - 2018

Back in October, we noted the likely coming of two important distortions in global economic data. The first was here at home in the form of Mother Nature. The other was over in China where Communist officials were gathering as they always do in their five-year intervals. That meant, potentially. In the US our economic data for a few months at least will be on shaky ground due to the lingering economic impacts of severe hurricanes.

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