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Tag Archives: downturn

As The Fed Seeks To Justify Raising Rates, Global Growth Rates Have Been Falling Off Uniformly Around The World

Sentiment indicators like PMI’s are nice and all, but they’re hardly top-tier data. It’s certainly not their fault, these things are made for very times than these (piggy-backing on the ISM Manufacturing’s long history without having the long history). Most of them have come out since 2008, if only because of the heightened professional interest in macroeconomics generated by a global macro economy that can never get itself going.What PMI’s do have going for them is that they allow us to...

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Did Last Week Deliver Some Sour Certainty?

This sour/soar stuff goes back many years. The last time we went through the same hysteria (if for different reasons), everyone said the global economy was going to accelerate, take off, and sail onward forever after. The world was, they all claimed, set to soar.Globally synchronized growth. The bond market didn’t just disagree, it did so vehemently, a pessimism when 2018 began which only gained (and spread) as the year went further on. The more Jay Powell and those who followed him were...

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A Time Recession

Eurostat confirmed earlier today that Europe has so far avoided recession. At least, it hasn’t experienced what Economists call a cyclical peak. During the third quarter of 2019, Real GDP expanded by a thoroughly unimpressive +0.235% (Q/Q). This was a slight acceleration from a revised +0.185% the quarter before. The real question, though, is whether the business cycle approach means anything in this day and age. I don’t think it does, and that’s a big part of why there’s so much confusion...

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Definitely A Downturn, But What’s Its Rate of Change?

The Chicago Fed’s National Activity Index (NAI) fell to -0.36 in July. That’s down from a +0.10 in June. By itself, the change from positive to negative tells us very little, as does the absolute level below zero. What’s interesting to note about this one measure is the average but more so its rate of change. The index itself is a product of econometric research. Economists had been searching for an alternative to the unemployment rate in order to increase the predictive power of their...

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Nastier Number Four: A Broader Industrial Base On The Wrong Side

There’s always weakness even in the most booming of economies. Even in the real booms, not the 2017 hysteria kind, not all cylinders will be firing. What makes them real, however, is when the vast majority are. The concept behind globally synchronized growth was a valid one, it just never came out in practice. The impression has been incorporated into various data points over the years. These are quantitative measures designed to relay information about this idea of broadness. If so many...

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Trade Wars Have Arrived, But It’s Trade Winter That Hurts

There is truth to the trade war. That’s a big problem because it’s not the only problem. It isn’t even the main one. Given that, it’s easy to look at tariffs and see all our current ills in them. The Census Bureau reports today that the trade wars have definitely arrived. In March 2019, US imports from China plummeted by nearly 19% year-over-year. In the entire series which goes back to 1988, there are only three instances where it has been worse for Chinese manufacturers and one of those was...

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China’s Export Story Is Everyone’s Economic Base Case

The first time the global economy was all set to boom, officials were at least more cautious. Chastened by years of setbacks and false dawns, in early 2014 they were encouraged nonetheless. The US was on the precipice of a boom (the first time), it was said, and though Europe was struggling it was positive with a more aggressive ECB emerging. Even Japan was looking forward to a substantial QQE-based pickup – after the VAT tax hike. For much of the rest of Asia, things were looking up. Global...

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Auto Sales The Lowest In Half A Decade, Just Coincidence FCA Will Join Ford, GM Ditching Monthly Sales Estimates

FCA, formerly Fiat-Chrysler, is the latest automaker to switch from a monthly sales report. Joining GM and Ford, beginning in October all three of Detroit’s big car companies will be publishing quarterly sales figures. The announcement comes at an auspicious moment. As with the other two, FCA claims the change is being done in the name of transparency. Less reporting equals better information? Why not. It probably has nothing to do with estimated April 2019 sales. The Census Bureau figures...

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The Rate Cut Boom

All Presidents love to talk stocks when the stock market is making record highs. It is the one asset class the public knows about. Even the iconic 1980’s movie Wall Street made it seem just that important. The Masters of the Universe are buying equities, so everything has to be awesome. The BSD’s on Wall Street were never stock jockeys, though. Never. They were the junk bond kings and derivatives shakers. Fixed income. FICC. These are the things that actually move, and describe, the world....

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Bonds and Economists At It Again

Federal funds is up again. As of yesterday, the 29th, the effective rate (EFF) is now 5 bps above IOER. That takes it to within 5 bps below the top of the Federal Reserve’s policy range. According to FRBNY, the 1st percentile in yesterday’s session was 2.40%, meaning that almost the entire federal funds market is paying more than IOER. Where are the dealers? If a scramble for liquidity shows up here, what is it like everywhere else where it does matter? The federal funds market is nothing...

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