Tag Archive: Markets

Global Asset Allocation Update

2018-05-17

The risk budget changes this month as I add back the 5% cash raised in late October. For the moderate risk investor, the allocation to bonds is still 50% while the risk side now rises to 50% as well. I raised the cash back in late October due to the extreme overbought nature of the stock market and frankly it was a mistake. Stocks went from overbought to more overbought and I missed the rally to all time highs in January.

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All The World’s A (Imagined) Labor Shortage

2018-05-16

by Jeffrey P. Snider

2018-05-16

Last year’s infatuation with globally synchronized growth was at least understandable. From a certain, narrow point of view, Europe’s economy had accelerated. So, too, it seemed later in the year for the US economy. The Bank of Japan was actually talking about ending QQE with inflation in sight, and the PBOC was purportedly tightening as China’s economy appeared to many ready for its rebound.

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What China’s Trade Conditions Say About The Right Side Of ‘L’

2018-05-12

by Jeffrey P. Snider

2018-05-12

Chinese exports rose 12.9% year-over-year in April 2018. Imports were up 20.9%. As always, both numbers sound impressive but they are far short of rates consistent with a growing global economy. China’s participation in global growth, synchronized or not, is a must. The lack of acceleration on the export side tells us a lot about what to expect on the import side.

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Watching Imports

2018-05-11

by Jeffrey P. Snider

2018-05-11

The US trade deficit, a sensitive political topic these days, declined sharply in March. It had expanded significantly (more deficit) in January and February, reaching nearly -$76 billion (seasonally adjusted) in the latter month, before posting -$68 billion in the latest figures. Exports rose while imports fell in March, making for the largest single month change in the trade condition in many years.

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What Really Happened In Europe

2018-05-10

by Jeffrey P. Snider

2018-05-10

Europe Real Gross Domestic Product, Jan 1995 - May 2018

The primary example of globally synchronized growth has been Europe. Nowhere has more hope been attached to shifting fortunes. The Continent, buoyed by the persistence of central bankers like Mario Draghi, has not just accelerated it is actually booming. Or so they say.

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Bi-Weekly Economic Review: Oil, Interest Rates & Economic Growth

2018-05-09

by Joseph Y. Calhoun

2018-05-09

The yield on the 10 year Treasury note briefly surpassed the supposedly important 3% barrier and then….nothing. So, maybe, contrary to all the commentary that placed such importance on that level, it was just another line on a chart and the bond bear market fear mongering told us a lot about the commentators and not a lot about the market or the economy.

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Transitory’s Japanese Cousin

2018-05-01

by Jeffrey P. Snider

2018-05-01

Thomas Hoenig was President of the Federal Reserve’s Kansas City branch for two decades. He left that post in 2011 to become Vice Chairman of the FDIC. Before that, Mr. Hoenig as a voting member of the FOMC in 2010 cast the lone dissenting vote in each of the eight policy meetings that year (meaning he was against QE2, too). This makes him, apparently, the hawk of all hawks.

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The Science of Japanification

2018-04-28

by Jeffrey P. Snider

2018-04-28

Rational Expectations Science of Monetary Policy

The term itself gives it away. They called it quantitative easing for a specific reason. Both words mean to convey substantial concepts. The first part, quantitative, was used because it sounds deliberate, even scientific. It implies a program where great care and study was employed to come up with the exact right amount. It’s downright formulaic, where you intend that by doing X you can predictably create Y.

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Bi-Weekly Economic Review: Interest Rates Make Their Move

2018-04-27

by Joseph Y. Calhoun

2018-04-27

How quickly things change in these markets. In the report two weeks ago, the markets reflected a pretty obvious slowing in the global economy. In the course of two weeks, what seemed obvious has been quickly reversed. The 10-year yield moved up a quick 20 basis points in just a week, a rise in nominal growth expectations that was mostly about inflation fears.

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Why The Last One Still Matters (IP Revisions)

2018-04-26

by Jeffrey P. Snider

2018-04-26

US Industrial Production, Jan 2006 - 2018

Beginning with its very first issue in May 1915, the Federal Reserve’s Bulletin was the place to find a growing body of statistics on US economic performance. Four years later, monthly data was being put together on the physical volumes of trade. From these, in 1922, the precursor to what we know today as Industrial Production was formed. The index and its components have changed considerably over its near century of operative history.

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The Retail Sales Shortage

2018-04-22

by Jeffrey P. Snider

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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