Tag Archive: recession

Green Shoot or Domestic Stall?

2019-04-17

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2019-04-17

U.S. Industrial Production, SA 2007-2019
According to revised figures, things were really looking up for US industry. For the month of April 2018, the Federal Reserve’s Diffusion Index (3-month) for Industrial Production hit 68.2. Like a lot of other sentiment indicators, this was the highest in so long it had to be something. For this particular index, it hadn’t seen better than 68 since way back in March 2010, back when the economy looked briefly like it might actually recover.

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External Demand, Global Means Global

2019-04-07

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2019-04-07

Germany Factory Orders, SA 2014-2019
The Reserve Bank of India (RBI) cut its benchmark money rate for the second straight meeting. Reducing its repo rate by 25 bps, down to 6%, the central bank once gripped by political turmoil has certainly shifted gears. Former Governor Urjit Patel was essentially removed (he resigned) in December after feuding with the federal government over his perceived hawkish stance.

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Retail Sales In Bad Company, Decouple from Decoupling

2019-04-04

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2019-04-04

Retail Sales, NSA 2011-2018
In a way, the government shutdown couldn’t have come at a more opportune moment. As workers all throughout the sprawling bureaucracy were furloughed, markets had run into chaos. Even the seemingly invincible stock market was pummeled, a technical bear market emerged on Wall Street as people began to really consider increasingly loud economic risks.

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Monthly Macro Monitor: Well Worried

2019-03-28

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2019-03-28

Yield Curve and Lending Standards 1990-2018
Don’t waste your time worrying about things that are well worried. Well worried. One of the best turns of phrase I’ve ever heard in this business that has more than its fair share of adages and idioms. It is also one of the first – and best – lessons I learned from my original mentor in this business. The things you see in the headlines, the things everyone is already worried about, aren’t usually worth fretting over.

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Slump, Downturn, Recession; All Add Up To Sideways

2019-03-22

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2019-03-22

Germany ZEW Financial Market Survey 2007-2019
According to Germany’s Zentrum für Europäische Wirtschaftsforschung, or ZEW, the slump in the country’s economy has now reached its fourteenth month. The institute’s sentiment index has improved in the last two, but only slightly. As of the latest calculation released today, it stands at -3.6.

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Downturn Rising, German Industry

2019-03-12

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2019-03-12

US Treasury Yield Curve, Aug 2007 - Jan 2019
You know things have really changed when Economists start revising their statements more than the data. What’s going on in the global economy has quickly reached a critical stage. This represents a big shift in expectations, a really big one, especially in the mainstream where the words “strong” and “boom” couldn’t have been used any more than they were.

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Getting Back Up To Speed On Loss Of Speed in US Economy

2019-02-21

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2019-02-21

U.S Industrial Production Real Personal Income Vehicle Sales, Jan 2010
For much of 2018, the idea of “overseas turmoil” lived up to its name. At least in economic terms. Market-wise, there was a lot domestically to draw anyone’s honest attention. Warnings were everywhere by the end of the year. And that was what has been at issue. Some said Europe and China are on their own, the US is cocooned in a tax cut-fueled boom. Decoupling, only now the other way around.

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Retail Sales Landmine

2019-02-18

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2019-02-18

Retail Sales, NSA 2011-2018
Ignore Black Friday and Cyber Monday. Those are merely an appetizer, an intentional preamble to whet the appetite of hungry consumers looking to splurge. The real action comes in December. People look, some buy, after Thanksgiving, but as anyone counts down the actual twelve days of Christmas and celebrates the eight crazy nights of Hanukkah that’s when the retail industry makes its bank.

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Inflation Falls Again, Dot-com-like

2019-02-16

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2019-02-16

CPI Changes On Energy 2016-2019
US inflation in January 2019 was, according to the CPI, the lowest in years. At just 1.55% year-over-year, the index hadn’t suggested this level since September 2016 right at the outset of what would become Reflation #3. Having hyped expectations over that interim, US policymakers now have to face the repercussions of unwinding the hysteria.

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Insane Repo Reminds Us

2019-01-04

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2019-01-04

Money Markets Equivalents 2009-2018
It was only near the quarter end, that’s what made it so unnerving. We may have become used to these calendar bottlenecks over the years, but they still remind us what they are. Late October 2012 was a little different, though. On October 29, the GC repo rate for UST collateral (DTCC) surged to 52.6 bps. The money market floor, so to speak, was zero at the time and IOER (the joke) 25 bps. We also have to keep in mind the circumstances of that...

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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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Monthly Macro Monitor – September

2018-09-20

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2018-09-20

Economic Growth & Investment September 20
This has already been one of the longest economic expansions on record for the US and there is little in the data or markets to indicate that is about to come to an end. Current levels of the yield curve are comparable to late 2005 in the last cycle. It was almost two years later before we even had an inkling of a problem and even in the summer of 2008 – nearly three years later – there was still a robust debate about whether the US could avoid...

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Global Asset Allocation Update

2018-06-21

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2018-06-21

Global Asset Allocation Update
The risk budget is unchanged this month. For the moderate risk investor the allocation to bonds and risk assets is evenly split. There are changes this month within the asset classes. How far are we from the end of this cycle? When will the next recession arrive and more importantly when will stocks and other markets start to anticipate a slowdown?

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Why The Last One Still Matters (IP Revisions)

2018-04-26

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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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If Bitcoin Is A Bubble…

2018-01-07

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2018-01-07

Organizational Theorist Frederic Laloux’s Five Kinds of Human Organizations
Our earlier articles on bitcoin discuss the crypto asset as a currency and a commodity. Both papers focused on the consequences of bitcoin’s defining feature: the asymptotic supply limit of 21 million coins. This gives it an unusual juxtaposition of demand uncertainty and supply certainty (as well as inelasticity). As a currency, it gives rise to a tension between its use as a store of value and as medium of exchange.

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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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Bi-Weekly Economic Review: Yawn

2017-10-24

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2017-10-24

When I wrote the update two weeks ago I said that we might be nearing the point of maximum optimism. Apparently, there is another gear for optimism in this market as stocks have just continued to slowly but surely reach for the sky.

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Is This The Best Way To Bet On The Fed Losing Control Of The Bond Market?

2017-10-20

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2017-10-20

Bad Idea
Authored by Kevin Muir via The Macro Tourist blog, Lately, one of my biggest duds of a call has been for the yield curve to steepen. Sure, I have all sorts of fancy reasons why it should steepen, but reality glares back at me in black and white on my P&L run. Sometimes fighting with the market is an exercise in futility.

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More Noise Than Signal

2017-08-27

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2017-08-27

US Real Gross Corporate, 1951 - 2017
A number of people have forwarded this Bloomberg article – Wall Street Banks Warn Downturn Is Coming – to me over the last couple of days. That fact alone is probably a good argument to ignore it but I can’t help but read articles like this if for no other reason than to know what the crowd is thinking.

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Bi-Weekly Economic Review: Ignore The Idiot

2017-08-15

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2017-08-15

Of the economic releases of the past two weeks the one that got the most attention was the employment report. That report is seen by many market analysts as one of the most important and of course the Fed puts a lot of emphasis on it so the press spends an inordinate amount of time dissecting it.

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