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Tag Archives: Euro$ #4

Meaning Mexico

It took some doing, and some time, but Mexico has managed to bring its car production back up to more normal levels. For two months, there had been practically zero automaking in one of the biggest auto-producing nations. Getting back near where things left off, however, isn’t exactly a “V” shaped recovery; it’s only halfway.Two months of zero production are two months of zero sales for the OEM’s producing down there. The latest data is for the month of July meaning that for all the...

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It’s Not As Obvious, But Stocks Are Tipped More Toward ‘Deflation’, Too

You have to laugh at the absurdity of the puppet show theater. A few months ago when bond yields backed up a little bit, as they do from time to time, everyone from Bond Kings to Dollar Crash-ists to Economists to just about every writer at the Wall Street Journal and Bloomberg became fixated on yield caps (or yield curve control, if you prefer the extra helping of myth). And why wouldn’t they? Given the existing intellectual paradigm which posits the central bank at the center of the...

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Synchronized, Like A Cheap Imported Suit

Trading partners like Mexico didn’t have a labor participation problem by which to hide the economic downturn last year. The whole idea of “decoupling” in the 2018 sense of the word was how the US economy, by virtue of its 50-year low unemployment rate, couldn’t possibly be as weak as it increasingly appeared overseas. The US was good, they kept saying. If there was a problem it was China. And Germany. South Korea. Japan. South America. All of Europe. Mexico, too.The truth was more...

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Just One More And Q1 Will Be A Clean Sweep Of Fragility

The Japanese went ahead with it anyway. Real GDP had bounced back, sort of, from a near recession in 2018. Central bankers at the Bank of Japan had reassured Shinzo Abe that the economy was on the mend. Therefore, the second round of the VAT tax hike, an imposition which had been postponed since 2015, could go ahead in 2019. The government had put it off long enough. In this way, Japan made the same mistake late last year about the tax everyone made this year about the pandemic response....

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EA GDP + GFC = HOLY CR$%

Following along the same top-down model, what unites central bankers and socialists is equality. Handing over significant authority to either results in everyone being equally impoverished. And, therefore, those very authorities fighting over minute scraps so as to display some sense of accomplishment.In October 2015, safely nested within the cozy confines of Brookings, being paid handsomely to opine on matters he’d shown no talent for, former Federal Reserve Chairman Ben Bernanke was given...

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Can You Quota The World Into Recovery?

Saudi Arabia once burned through the bond market on par with demand for Argentina’s paper. During the 2016-17 globally synchronized growth-inspire Eurobond binge, the country made up for its lost oil revenues (oil crash and all) with dollar-denominated, offshore debt flotations. These merely stabilized the country’s forex reserves after they had collapsed (by a third) alongside benchmark Brent crude prices 2014-16 (the most direct deflationary consequence of Euro$ #3).Having done nothing to...

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There’s No V In Wholesale

With survey after survey showing Americans are now firmly more concerned about the economy than the pandemic, the narrative reassurance program will be even more in demand than ever. The latest Axios-Ipsos poll suggests nine out of ten US citizens are today worried about economic disaster. To counter the growing angst, Treasury Secretary Mnuchin declared over the weekend that his super-secret economic models say everything will be back to normal, if not better, starting around August....

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TED’s Not Dead Because Jay Don’t Pay, Just Like Ben Couldn’t Then

It was chaos. Rumors of not one but two large European banks being pushed to the brink. Money market funds worried about breaking the buck rapidly pulling cash out from under any global name. The FOMC debating what would’ve been a repo-like bailout, even though $1.6 trillion of bank reserves had been “added” to the system. What was most damaging about Euro$ #2 when it showed up in the middle of 2011 was probably how it took place so close to Euro$ #1. Ben Bernanke, most of all, had...

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The Real Diseased Body

Another day, another new Federal Reserve “bailout.” As these things go by, quickly, the details become less important. What is the central bank doing today? Does it really matter?For me, twice was enough. All the way back in 2010 I had expected other people to react as I did to QE2. If you have to do it twice, it doesn’t work. And if Ben Bernanke grew so concerned he felt a second dose was required…Put another way, if a central bank keeps doing “bigger” things, that isn’t a basis for...

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Stagnation Never Looked So Good: A Peak Ahead

Forward-looking data is starting to trickle in. Germany has been a main area of interest for us right from the beginning, and by beginning I mean Euro$ #4 rather than just COVID-19. What has happened to the German economy has ended up happening everywhere else, a true bellwether especially manufacturing and industry. The latest sentiment figures from ZEW as well as IFO are sobering. Taking the former first, it had been quite buoyant last year on the false promises, I believe, of last year’s...

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