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Tag Archives: manufacturing

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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Poring Over Poor Singapore’s Far Nastier Number Four

You aren’t going to find the worst economic quarter in Singapore’s modern history in either 2008 or 2009. It was actually posted in 2010. During the third quarter of that year, GDP declined by a whopping 11% annual rate. While that’s the biggest contraction still on record, initial government estimates thought it was closer to -20%. Singapore’s Monetary Authority wasn’t worried, however. Officials often complain about lumpiness in their numbers, and in the city’s case it was actually true for...

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I’d Like To Solve The Puzzle: Nastier Number Four, The New Lows in Germany

The European slump had been a combination of several transitory factors. At least that’s what they had kept saying. ECB officials and staff Economists didn’t use that specific word, so far that’s the exclusive domain of the Federal Reserve. Regardless of semantics, the message was clear: the 2018 economy ended on a sour note but that was nothing to be worried about, soon to be forgotten. In January 2019, various private Economists pitched in. One working for JP Morgan, Greg Fuzesi, estimated...

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Contracting Factories, Curiously Rebounding Inbound Cars, And the Confirmed End of Decoupling

The US manufacturing sector may not be in as bad a shape as its German or Japanese counterparts, though it appears to be catching up on the downside. The Census Bureau reports today that new orders for all types of goods in all industries fell 1.6% year-over-year (unadjusted) in May 2019. This was the first minus sign for the broad category which includes both durable and non-durable goods manufacturing. Orders hadn’t fallen on annual basis since 2016. It is further evidence that the supply...

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The Domestic PMI Picture, Still A Dollar Shortage

This green shoot didn’t wilt so much as it exploded into a fireball. FRBNY’s Empire State Manufacturing Index had captured the landmine in its initial 2019 readings. Starting from 21.4 (this version uses zero rather than 50 as its dividing line) in November 2018, by January the index had dropped 17.5 points in just two months. It then stabilized and by April was moving up again. This rebound or green shoot pushed the PMI to 17.8 by May, almost retracing the entire landmine aftermath. No doubt...

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The Asian PMI Picture of A Dollar Shortage

It’s actually one of the few areas that has been studied in mainstream Economics. The links between global financial upset and broader economic consequences are pretty well understood. Trade gets shut down, therefore economies which are highly dependent upon the exchange of goods experience the effects first. When you see these bellwethers under pressure, it’s a bad sign. The mysterious part is where these financial problems might come from. It’s one of the more uncomfortable aspects of the...

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The Road To July Rate Cut Runs Through the Brazilian Zone

The way I look at the global economy, there are basically five different zones. The first is the US and the second is Europe. China might be third on this list but often second if not first in terms of what’s driving marginal changes. In behind those is Japan, not what it once was but still often a bellwether for those changes. Lastly, there is the developing world (as well as any small DM economies not otherwise assigned). Standing in for the final group, I often turn to Brazil as a proxy....

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Manufacturing Cross-Currents

ACT Research, the leading publisher of commercial vehicle industry data in North America, reported last week that freight rates in for-hire trucking had declined in May. It was the fourth month in row when prices had been pressured. More and more, there is a downturn growing in the transportation sector. Commenting on freight rates, Tim Denoyer, ACT’s VP and Senior Analyst said: May’s Pricing Index was the fourth consecutive negative, after 30 straight months of expansion. This confirms our...

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Japan’s Bellwether On Nasty #4

One reason why Japanese bond yields are approaching records like their German counterparts is the global economy indicated in Japan’s economic accounts. As in Germany, Japan is an outward facing system. It relies on the concept of global growth for marginal changes. Therefore, if the global economy is coming up short, we’d see it in Japan first and maybe best. I wrote in April last year how Japanese Industrial Production was a true bellwether: The positives are far fewer than the negatives....

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Behind The Blame Game, A Nastier #4

After what is all but certain to be the final “rate hike” in this cycle, Bloomberg reported that President Trump had previously explored all possible legal ramifications of demoting Federal Reserve Chairman Jay Powell. The issue has become a major one, in the media, anyway, now that Mr. Powell has indicated his error. There will be no further hikes this year, rate cuts now pretty much a done deal from here. Given the situation, it’s at least understandable how no one is in much of a...

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