Tag Archives: 5) Global Macro

The feedback loop has reversed: by saving more, people will spend, borrow and speculate less, draining the fuel from any broadbased expansion. In eras of confidence and certainty, people save less and spend more freely. When we’re confident that good times are not only here but will continue, we not only spend more freely, we’re more inclined to borrow money and speculate on the shimmering promises of more good times ahead. In eras of uncertainty, people save more...

Gordon and I discuss these topics in this 37-minute video: The collateral supporting the global mountain of debt is crumbling as speculative bubbles deflate. A great many freebies are being tossed in the Helicopter Money basket. That households experiencing declines in income need immediate support is obvious, as is the need to throw credit lifelines to small businesses. But beyond those essentials, the open-ended nature of Helicopter Money has unleashed a frenzy of...

Essential home lockdown reading. The pandemic is revealing to all what many of us have known for a long time: the status quo was designed to fail and so its failure was not just predictable but inevitable. We’ve propped up a dysfunctional, wasteful and unsustainable system by pouring trillions of dollars in borrowed money down a multitude of ratholes to avoid a reckoning and a re-set. And very predictably, that’s the “solution” to the unraveling triggered by the...

Risk sentiment is likely to remain under pressure this week as the impact of the coronavirus continues to spread; demand for dollars remains strong As of this writing, the Senate-led aid bill has stalled; the US economic outlook is getting more dire; Canada is experiencing similar headwinds This is a big data week for the UK; eurozone March flash PMIs will be reported Tuesday; oil prices continue to slide Japan has a heavy data week; RBNZ will start QE; China offers...

Exponential Growth and Corona The more mathematically versed folks under us have understood that it the slope (or steepness / derivation) of the Corona expansion curve is important. The following statistics is based on the Worldometer data, that rather shows the “first dimension”; we however, focus on the “second dimension”, the slope of the curve. This is far more useful, because for such exponential curve, the slope is key.The video explains the details....

Markets remain unsettled even as policymakers worldwide continue to take aggressive emergency measures; the dollar continues to power higher Fed rolled out another crisis-era program last night; US Senate passed the House virus relief bill by a 90-8 vote ECB held an emergency call last night and announced an additional bond purchase program to the tune of €750 bln that now includes commercial paper SNB kept rates steady at -0.75% as expected; BOJ continues to flood...

All bubbles pop, period. The financial elites are pushing a narrative that asset prices, sales and profits will all return to January 2020 levels as soon as the Covid-19 pandemic fades. Get real, baby. Nothing is going back to January 2020 levels. Rather than the “V-shaped recovery” expected by Goldman Sachs et al., the crash in asset prices will eventually gather momentum. Why? It’s simple: for 20 years we’ve over-invested in speculative bubbles and squandered...

This is why it’s imperative to go big now, and make plans to sustain the most vulnerable households and small employers not for two weeks but for six months–or however long proves necessary. That governments around the world will be forced to distribute “helicopter money” to keep their people fed and housed and their economies from imploding is already a given. Closing all non-essential businesses and gatherings will crimp the livelihood of millions of households and...

Subtract their immense debts and they have negative net worth, and therefore the market value of their stock is zero. To understand why the financial dominoes toppled by the Covid-19 pandemic lead to global insolvency, let’s start with a household example. The point of this exercise is to distinguish between the market value of assets and net worth, which is what’s left after debts are subtracted from the market value of assets. Let’s say the household has done very...

Market sentiment is likely to open this week on an upswing after the Fed’s emergency rate cut and expanded QE were announced Sunday afternoon local time.  Yet as we have seen time and again this past couple of weeks, added stimulus has had little lasting impact on markets as the virus numbers continue to worsen.  Europe is now reporting more daily cases than China did at its peak.  We remain negative on EM until the global growth outlook becomes clearer. AMERICAS...