Tag Archives: 5) Global Macro

Is the Fed’s monetary tightening about over? Maybe, maybe not but there does seem to be some disagreement between Jerome Powell and his Vice Chair, Richard Clarida. Powell said just a little over a month ago that the Fed Funds rate was still “a long way from neutral” and that the Fed may ultimately need to go past neutral. Clarida last week said the FF rate was close to neutral and that future hikes should be “data...

It is definitely one period that they got wrong. Still, IHS Markit’s Composite PMI for the US economy has been one of the better forward-looking indicators around. Tying to real GDP, this blend of manufacturing and services sentiment has predicted the general economic trend in the United States pretty closely. The latter half of 2015 was the big exception. For November 2015, the composite index jumped to 56.1 from 55.0...

Back in August 2 we reported of a historic event for China’s economy: for the first time in its modern history, China’s current account balance for the first half of the year had turned into a deficit. And while the full year amount was likely set to revert back to a modest surplus, it was only a matter of time before one of the most unique features of China’s economy – its chronic current account surplus – was gone for...

For all we know, the panic selling is Wall Street’s way of forcing the Fed’s hand: stop with the rates increases already or Mr. Market expires. Markets everywhere are gagging on something: they’re sagging, crashing, imploding, blowing up, dropping and generally exhibiting signs of distress. Does the market need a Heimlich Maneuver? Is there some way to expel whatever’s choking the market? So what’s choking the market?...

For Janet Yellen, during her somewhat brief single term she never made the same kind of effort as Ben Bernanke had. Her immediate predecessor, Bernanke, wanted to make the Federal Reserve into what he saw as the 21st century central bank icon. Monetary policy wouldn’t operate on the basis of secrecy and ambiguity. Transparency became far more than a buzzword. Way back in 2012, under Bernanke’s direction officials would...

Does any of this make sense? No. But it’s so darn profitable to the oligarchy, it’s difficult to escape debt-serfdom and tax-donkey servitude. We rarely ask “does this make any sense?” of things that are widely accepted as beneficial – or if not beneficial, “the way it is,” i.e. it can’t be changed by non-elite (i.e. the bottom 99.5%) efforts. Of the vast array of things that don’t make sense, let’s start with borrowing...

Retail sales rebounded 0.8% in October 2018 from September 2018, but it’s the downward revisions to the prior months that are cause for attention. The estimates for particularly September were moved sharply lower. Total retail sales two months ago had been figured last month at $485.8 billion (unadjusted) originally, but are now believed to have been just $483.0 billion. The difference takes the growth rate underneath...

Other governments are keenly interested in following China’s lead. I’ve been pondering the excellent 1964 history of the Southern Song Dynasty’s capital of Hangzhou, Daily Life in China on the Eve of the Mongol Invasion, 1250-1276 by Jacques Gernet, in light of the Chinese government’s unprecedented “Social Credit Score” system, which I addressed in Kafka’s Nightmare Emerges: China’s “Social Credit Score”. The scope of...

It’s one of those “nothing to see here” moments for Economists trying not to appreciate what’s really going on in China therefore the global economy. The slump in China’s automotive sector dragged on through October, with year-over-year sales down for the fourth straight month.Auto sales last month were off 12% from a year earlier to 2.38 million, the government-backed China Association of Automobile Manufacturers said...

Isn’t it obvious that repeating the policies of 2009 won’t be enough to save the system from a long-delayed reset? 2019 is shaping up to be the year in which all the policies that worked in the past will no longer work. As we all know, the Global Financial Meltdown / recession of 2008-09 was halted by the coordinated policies of the major central banks, which lowered interest rates to near-zero, bought trillions of...