Tag Archives: 5) Global Macro

Mario Draghi doesn’t have a whole lot going for him, but he is at least consistent – at times (yes, inconsistent consistency). Bloomberg helpfully reported yesterday how the ECB’s staff committee that produces the econometric projections has recommended the central bank’s Governing Council change the official outlook. Since last year, risks have been “balanced” in their collective opinion. Given what’s happened this...

We’ve been here before. Economists and central bankers become giddy about the prospects for success, meaning actual recovery. For that to happen, reflation must first attain enough momentum. If it does, as is always forecast, reflation becomes recovery. The world then moves off this darkening path toward the unknown crazy. The problem has been that officials mistake reflation for what it is. Each time they believe it...

Neither small business nor the bottom 90% of households can afford this “best economy ever.” After 10 years of unprecedented goosing, some of the real economy is finally overheating: costs are heating up, unemployment is at historic lows, small business optimism is high, and so on–all classic indicators that the top of this cycle is in. Financial assets have been goosed to record highs in the everything bubble.Buy the...

The risk budget is unchanged again this month. For the moderate risk investor, the allocation between bonds and risk assets is 50/50. Decoupling anyone? That’s what the market is whispering right now, that the recent troubles in foreign economies is contained and won’t affect the US. The most obvious example of that trend is the performance of US stocks versus the rest of the world. I am painfully aware of the...

If the world’s economies still need central bank life support to survive, they aren’t healthy–they’re barely clinging to life. The “recovery”/Bull Market is in its 10th year, and yet central banks are still tiptoeing around as if the tiniest misstep will cause the whole shebang to shatter: what are they so afraid of? The cognitive dissonance / crazy-making is off the charts: On the one hand, central banks are still...

Currencies don’t melt down randomly. This is only the first stage of a complete re-ordering of the global financial system. Take a look at the Shanghai Stock Market (China) and tell me what you see: Shanghai Stock Exchange Composite Index - Click to enlarge A complete meltdown, right? More specifically, a four-month battle to cling to the key technical support of the 200-week moving average (the red line). Once...

Stock Markets EM FX ended last week on a firm note, but weakness resumed Monday. Higher than expected Turkish inflation hurt the lira, which in turn dragged down BRL, ARS, ZAR, and RUB. We expect EM to remain under pressure this week when the US returns from holiday Tuesday.  Stock Markets Emerging Markets, August 29 - Click to enlarge Korea Korea reports August CPI Tuesday, which is expected to rise 1.4% y/y...

Summary China stepped up efforts to attract more foreign inflows to the onshore bond market. Russia has softened its unpopular pension reform proposal. The African National Congress withdrew an existing land expropriation bill. Moody’s downgraded twenty Turkish financial institutions. Turkey central bank Deputy Governor Erkan Kilimci has reportedly resigned. Moody’s moved the outlook on Egypt’s B3 rating from stable to...

The US yield curve isn’t the only one on the precipice. There are any number of them that are getting attention for all the wrong reasons. At least those rationalizations provided by mainstream Economists and the central bankers they parrot. As noted yesterday, the UST 2s10s is now the most requested data out of FRED. It’s not just that the UST curve is askew, it’s more important given how many of them are. Look to our...

The only possible output of this system is extortion as a way of life. As the accompanying chart shows, productivity in the U.S. has been declining since the early 2000s. This trend mystifies economists, as the tremendous investments in software, robotics, networks and mobile computing would be expected to boost productivity, as these tools enable every individual who knows how to use them to produce more value. One...