Tag Archive: services

Weekly Market Pulse: A Most Unusual Economy

2022-07-11

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2022-07-11

The employment report released last Friday was better than expected but the response by bulls and bears alike was exactly as expected. Both found things in the report to support their preconceived notions about the state of the economy.

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Another Month Closer To Global Recession

2022-05-26

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2022-05-26

We always have to keep in mind that the major economic accounts perform poorly during inflections. Europe in early 2018, for example, was supposed to have been just booming only to have run right into the brick wall that was Euro$ #4.

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Worry Walls Don’t Explain Repeated Falls

2022-04-09

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2022-04-09

Someone once said that the stock market is always climbing a wall of worry. Maybe that had been true in some long-ago day, but whether or not it might nowadays is beside the point. The nugget of truth which makes the prosaism memorable is the wall rather than the climber. There’s always something going on somewhere to get worked up over.

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All Eyes On Inventory

2021-09-24

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2021-09-24

You’ve heard of the virtuous circle in the economy. Risk taking leads to spending/investment/hiring, which then leads to more spending/investment/hiring. Recovery, in other words. In the old days of the 20th century, quite a lot of the circle was rounded out by the inventory cycle. Both recession and recovery would depend upon how much additional product floated up and down the supply chain.

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ISM’s Nasty Little Surprise Isn’t Actually A Surprise

2021-07-07

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2021-07-07

U.S. ISM Non-Manufacturing PMI, Employment, Jan 2017 - May 2021
Completing the monthly cycle, the ISM released its estimates for non-manufacturing in the US during the month of June 2021. The headline index dropped nearly four points, more than expected. From 64.0 in May, at 60.1 while still quite high it’s the implication of being the lowest in four months which got so much attention.

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There’s Two Sides To Synchronize

2021-03-03

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2021-03-03

The offside of “synchronized” is pretty obvious when you consider all possibilities. In economic terms, synchronized growth would mean if the bulk of the economy starts moving forward, we’d expect the rest to follow with only a slight lag. That’s the upside of harmonized systems, the period everyone hopes and cheers for.

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Where Is It, Chairman Powell?

2020-11-15

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2020-11-15

CPI less Food & Energy, 1983-2020
Where is it, Chairman Powell? After spending months deliberately hyping a “flood” of digital money printing, and then unleashing average inflation targeting making Americans believe the central bank will be wickedly irresponsible when it comes to consumer prices, the evidence portrays a very different set of circumstance.

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Counting The Corroborated Stall, Not The Coming Lawfare Election Mess

2020-11-06

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2020-11-06

CPS Household Survey, 2003-2020
While we wait for the electoral count to be sorted out by what we hope are competent and honest people (not holding our breath), there’s a greater muddle growing where it actually counts and where it’s never fully nor properly accounted. By a large and growing number of accounts, the US economy’s rebound seems to have stalled out back around June or July, an inflection unrelated to COVID case counts, too.

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Inflation Karma

2020-09-15

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2020-09-15

CPI Changes on Energy, 1995-2020
There is no oil in the CPI’s consumer basket, yet oil prices largely determine the rate by which overall consumer prices are increasing (or not). WTI sets the baseline which then becomes the price of motor fuel (gasoline) becoming the energy segment. As energy goes, so do headline CPI measurements.

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A Japanese Stall?

2020-07-24

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2020-07-24

Japan PMIs, 2018-2020
In sharp contrast to the sentimental deference towards central bank stimulus exhibited by Germany’s ZEW, for example, similar Japanese surveys are starting to describe potential trouble developing. Like Germany, Japan is a bellwether country and a pretty reliable indicator of global economy performance.

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Latest European Sentiment Echoes Draghi’s Last Take On Global Economic Risks

2019-12-19

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2019-12-19

Germany Economy, 2016-2019
While sentiment has been at best mixed about the direction of the US economy the past few months, the European economy cannot even manage that much. Its most vocal proponent couldn’t come up with much good to say about it – while he was on his way out the door. At his final press conference as ECB President on October 24, Mario Draghi had to acknowledge (sort of) how he is leaving quite the mess for Christine Lagarde.

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All Signs Of More Slack

2019-12-07

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2019-12-07

PCE Chain-type Price Index, 2009-2019
The evidence continues to pile up for increasing slack in the US economy. While that doesn’t necessarily mean there is a recession looming, it sure doesn’t help in that regard. Besides, more slack after ten years of it is the real story. The Federal Reserve’s favorite inflation measure in October 2019 stood at 1.31%, matching February for the lowest in several years.

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You Have To Try Really Hard Not To See It

2019-11-07

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2019-11-07

ISM Purchasing Managers Indexes, 2017-2019
In early September, the Institute for Supply Management (ISM) released figures for its non-manufacturing PMI that calmed nervous markets. A few weeks before anyone would start talking about repo, repo operations, and not-QE asset purchases, recession and slowdown fears were already prevalent.

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More Synchronized, More Downturn, Still Global

2019-11-03

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2019-11-03

China GDP, 2007-2019
China was the world economy’s best hope in 2017. Like it was the only realistic chance to push out of the post-2008 doldrums, a malaise that has grown increasingly spasmatic and dangerous the longer it goes on. Communist authorities, some of them, anyway, reacted to Euro$ #3’s fallout early on in 2016 by dusting off their Keynes. A stimulus panic that turned out to be more panic than stimulus.

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Somehow Still Decent European Descent

2019-10-28

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2019-10-28

IHS Markit Germany Flash PMI
How times have changed. In the middle of 2018, we were told the risks to the global economy were all tilted to the upside. If central bankers weren’t careful, they chanced an uncontrollable inflationary breakout, the kind that would make the last few years of the 2010’s look too much like the 1970’s. Always eager to bottle up the inflation genie, Germany out of everyone actually welcomed negative factors as they built up during the year.

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More Down In The Downturn

2019-10-25

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2019-10-25

IHS Markit US Manufacturing, 2012-2019
Flash PMI’s from IHS Markit for the US economy were split in October. According to the various sentiment indicators, there’s a little bit of a rebound on the manufacturing side as contrary to the ISM’s estimates for the same sector. Markit reports a sharp uptick in current manufacturing business volumes during this month.

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No Longer Hanging In, Europe May Have (Been) Broken Down

2019-09-24

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2019-09-24

Central Bank Failure, 1999-2017
Mario Draghi can thank Jay Powell at his retirement party. The latter being so inept as to allow federal funds, of all things, to take hold of global financial attention, everyone quickly shifted and forgot what a mess the ECB’s QE restart had been. But it’s not really one or the other, is it? Once it actually finishes, the takeaway from all of September should be the world’s two most important central banks each botching their...

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US Economic Crosscurrents Reach the 50 Mark

2019-07-27

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2019-07-27

U.S. PMI Chicago Fed NAI, Jan 2006 - July 2019
In the official narrative, the economy is robust and resilient. The fundamentals, particularly the labor market, are solid. It’s just that there has arisen an undercurrent or crosscurrent of some other stuff. Central bankers initially pointed the finger at trade wars and the negative “sentiment” it creates across the world but they’ve changed their view somewhat.

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Germany Struggles On

2019-07-25

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2019-07-25

Germany ZEW Financial Market Survey, Jan 2006 - 2019
The popular image of the German industrial machine politics is one which has Germany’s massive factories efficiently churning out goods for trade with the South of Europe (Club Med). Because of the common currency, numerous disparities starting with productivity differences had left the South highly indebted to the North just as the Global Financial Crisis would strike.

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Just In Time For The Circus

2018-12-26

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2018-12-26

Eurozone Markit Composite PMI and GDP, Jul 2012 - Nov 2018
Just in time to follow closely upon yesterday’s European circus, IHS Markit piles on with more of the same forward-looking indications looking forward the wrong way. Mario Draghi says the ECB is ending QE, good for him. The central bank will do this despite balanced risks rebalancing in a different place. The more bad news and numbers stack up the more “they” say it’s nothing just transitory roughness.

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