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Tag Archives: Recession

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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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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One Trick Pony: The Fed Is Pushing On A String

Last week, I discussed the Fed’s recent comments suggesting they might be closer to cutting rates and restarting “QE” than not. “In short, the proximity of interest rates to the ELB (Effective Lower Bound) has become the preeminent monetary policy challenge of our time, tainting all manner of issues with ELB risk and imbuing many old challenges with greater significance.   “Perhaps it is time to retire the term ‘unconventional’ when referring to tools that were used in the crisis. We...

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Technically Speaking: The “Sellable Rally” Chart Review

Over the past couple of weeks, we have been discussing a “sellable rally” following the sell-off during the month of May. To wit: “This week we are going to look at the recent sell-off and the potential for a short-term ‘sellable’ rally to rebalance portfolio risks into. The markets only need some mildly positive news at this point to spur a ‘short-covering’ rally. I would encourage you to use it to reduce risk, rebalance holdings, and raise cash until the ‘trade war smoke’ clears. The market...

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Why You Should Not Underestimate The Severity Of The Coming Recession

The financial world has been buzzing nervously about the rapidly rising risk of a recession as warning signs mount. Though many mainstream economists and commentators are finally starting to concede that a recession in the next year or two is likely, almost all of them downplay the likely severity of the coming recession by saying “but it will be short-lived!” and “we’re due for a healthy slowdown after a ten year expansion!” (economists were saying the same thing in 2006 and 2007 too). My...

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Payrolls: Rate Cuts Not Of Their Choice

It’s never just one payroll report. The month-to-month changes in the Establishment Survey barely qualify as statistically significant, let alone meaningful. What that means is one good monthly headline is nothing to get excited about, just as one bad month shouldn’t get anyone too worked up. May 2019’s jobs report, however, isn’t in isolation. The headline for the Establishment Survey was +75k, well below expectations. On top of that, last month’s blowout (or what passes for one these days)...

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All Of US Trade, Both Ways, And Much, Much More Than The Past Few Months

The media quickly picked up on Jay Powell’s comments this week from Chicago. Much less talked about was why he was in that particular city. The Federal Reserve has been conducting what it claims is an exhaustive review of its monetary policies. Officials have been very quick to say they aren’t unhappy with them, no, no, no, they’re unhappy with the pitiful state of the world in which they have to be applied. That’s not quite how this central bank quandary is being characterized, of course....

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The Fed, QE, & Why Rates Are Going To Zero

On Tuesday, Federal Reserve Chairman Jerome Powell, in his opening remarks at a monetary policy conference in Chicago, raised concerns about the rising trade tensions in the U.S., “We do not know how or when these issues will be resolved. As always, we will act as appropriate to sustain the expansion, with a strong labor market and inflation near our symmetric 2 percent objective.” However, while there was nothing “new” in that comment it was his following statement that sent “shorts”...

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3-Steps To Holistic Financial Wellness

Investors tend to narrowly define wealth management as portfolios and products. Unfortunately, many financial professionals permit this shortsightedness as it aligns with their aspirations to sell investment vehicles, then move on to the next prospects. However, this pervasive myopia is a tremendous oversight; investors and financial consumers miss out on the advantages of holistic financial processes and the robust long-term fruitful actions which follow. We find that people who embrace...

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Bad Steepening Bills and Europe’s Possible Self-Reinforcing Recession Processes

Normally, it’s a very good sign when the yield curve steepens. If longer-term rates are rising faster than those on the shorter end of the curve, it would say the bond market is forecasting a better probability of normal. Given where interest rates have been the last decade plus, this kind of steepening is what should’ve happened in 2017 if globally synchronized growth had been a real thing. There’s another kind of steepening curve – the bad kind. This one is pretty much the best recession...

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