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Tag Archives: currencies

US IP: May Was A Good Month And It Was Still ‘Manufacturing Recession’

Whether or not a full-scale recession shows up in the US is an open question. There’s less of one in US industry. The “manufacturing recession” we last saw of Euro$ #3 is becoming clearer as a repeat property in Euro$ #4. According to the Federal Reserve, May was a relatively good month for industry – total output didn’t decline from April. No matter in the big picture. The trajectory is becoming very well established. As is consistent with economic and market data from all over the world,...

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China’s Wolf, Not Dragon

Much of the original thesis on economic decoupling surrounded myths of what were believed invulnerable economies. Emerging markets might see some slowing during 2008, but they weren’t supposed to drop off. China was right at the top of everyone’s list, the unstoppable force then transforming the world’s political as well as economic order. In the early months of the Global Financial Crisis (how was it global, again?), that was how it went. The US and much of Europe were in deep trouble. The...

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Retail Sales (US): Green Shoots Under the 3% Line?

Retail Sales rose just 3.46% year-over-year (unadjusted) in May 2019. The estimate for April was revised substantially higher, now suggesting growth of 5.6%. Altogether, however, consumer spending continues to be unusually weak. How unusual? The 6-month average, a better gauge of growth conditions given the noisy nature of the series, is now below 3% for the first time since late 2016. The 3% mark is historically more like recession than anything else. In more recent times, with the lack of...

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A Domestic Conversation

Once you realize negative yielding sovereign bonds aren’t investments, they are balance sheet tools for global banks, things start to fall into place. I had the honor to chat with the fellas at Grant’s Interest Rate Observer. In a world where stocks are the media kings it’s good every once in a while to talk to people who know better. Jeff Snider (@JeffSnider_AIP), head of global research of Alhambra Investments, calls in to discuss the workings of the modern financial...

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Curve Sanity (Not What Most People Want To Hear or See)

Rate cuts will be insurance against whatever “trade wars” will throw at the global economy. That’s the current line from monetary officials in the US, anyway. The real question to ask is, how would they know? Starting with trade wars. Is that really what’s behind all this? The evolution of the curves told you everything you need to know, and tell you what to prepare for. It’s not just inversion that is noteworthy. They said all along there was no boom, even during the most maniacal parts of...

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Curve-sanity

There are those which are so very clear in their disingenuousness – to the point of overdoing it and becoming obviously absurd. In the increasingly desperate rush to downplay the headlong race to rate cuts, this one’s up there: Eurodollar futures traders, having decided that the Federal Reserve is likely to cut the fed funds target range at least twice over the next six months, are looking beyond the expected easing cycle in search of their next edge — the point at which rates will...

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Recent Offshore Conversations

It’s the nature of the business, on my end, anyway. Talking, writing, speaking incessantly about the effective global reserve currency puts me more in touch with folks from outside the US. People in the rest of the global economy see and feel the effects of that currency system far more and more directly than we Americans do. It is one of the (few) perks in this line of work, being able to speak with foreigners and gain a firsthand sense of how they might be seeing the same things if...

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When Verizons Multiply, Macro In Inflation

Inflation always brings out an emotional response. Far be it for me to defend Economists, but their concept is at least valid – if not always executed convincingly insofar as being measurable. An inflation index can be as meaningful as averaging the telephone numbers in a phone book (for anyone who remembers what those things were). If you spend $1,000 a month on food for your family, and food prices rise 6% generally that’s an additional $60 that has to come from somewhere. It is...

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Commodities And The Future Of China’s Stall

Commodity prices continued to fall last month. According to the World Bank’s Pink Sheet catalog, non-energy commodity prices accelerated to the downside. Falling 9.4% on average in May 2019 when compared to average prices in May 2018, it was the largest decline since the depths of Euro$ #3 in February 2016. Base metal prices (excluding iron) also continue to register sharp reductions. Down 16% on average last month, that level nearly matches January and the biggest negative price change in...

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The Unemployment Rate Has Been Left Even Lonelier

The unemployment rate has been maybe the loneliest of numbers. That didn’t quite mean it was entirely alone. Of the major economic accounts, only the JOLTS series and only one part of that series suggested the big mainstream employment indicator was anywhere close to accurate. Job Openings (JO) have been surging as if companies are in high demand for new labor. It has therefore been widely cited. Or, more accurately, it had been surging. It is no longer as widely cited. The level of JO has...

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