Chart Of The Week: The Rush For Inflation Protection
Janet Yellen thinks she wants inflation. The market thinks she's going to get it: The hawks at the Fed are losing the battle but I suspect they will win the war - after Yellen gets what she wants.
Another Level of Absurd
For reasons relatively easy to figure out, the massive flood of repo fails from a few weeks back was largely ignored outside of a few minor references. Not much has been made of it at all, and why would there be since it is really hard to shove the imbalance into “the narrative.” That isn’t to say that there haven’t [...]
Figuring Out The ‘Services Economy’
The Markit Services PMI flash reading for March rebounded from the sub-50 reading in February, but only slightly. The calculation continues to suggest that the “services economy” is following the manufacturing and “goods economy” even if with some lag. The internals of the survey were not any better, with the new orders component falling to the lowest level of the [...]
R or D; Perhaps Both
As the indications of hitting a cyclical turn multiply against the steady and alarming negative trend baseline background, there is more clarity on how what looks like an unrelenting slowdown had not yet morphed into the traditional recession setting (the “V”). For the most part, it appears as if the business or corporate sector has absorbed the negative pressures not [...]
Corporate Profits and Cash Flow Also Suggest Worse
The “final” estimate for Q4 GDP was uninteresting save the update to corporate profits and cash flow. The upward revision to 1.4% wasn’t really any different than the preliminary or advance estimates, and since 12% of it was simply a guess by the BEA it doesn’t amount to a whole lot of solid analysis especially when in conflict with so [...]
Durable Goods May Not Actually Show Recession, And That Is The Worst Case
Orthodox economic theory assigns recession to some exogenous “shock.” Without it, an economy is supposed to grow indefinitely along its trend or potential baseline so long as NAIRU (non-accelerating inflation rate of unemployment) is maintained. As you can imagine, economists and policymakers spend most of their time on that latter part which is one reason, though more so ideology, that [...]
Country ETF Update
The theme for Single Country ETFs over the last month is either countries that produce a lot of natural resources (commodities) or Countries in which sane people don't invest. Okay, maybe sanity isn't the proper metric but surely investors who can't afford to take a loss shouldn't be investing in Russia, Peru or Turkey, all three of which make the [...]
What UBS Tells Us About Credit Suisse, And What Both Suggest of Economics
Credit Suisse released its annual report for 2015 today allowing us to update its progress through winding down its eurodollar activity exposures. As expected, the bank’s gross notional balance sheet offerings declined by quite a bit in Q4. Gross notional interest rate swaps fell by 15% from Q3 to just CHF 28.8 trillion, the largest quarterly decline (in percentage terms) [...]
If There Were Truly Growth, Home Builders Would Be Very Busy
There is one part missing from the narrative sketched out in home resales being subjected to monetary imbalance. It is a compelling explanation for what we find as the most striking aspect of existing home sales, namely the curious lack of depth among sellers. It’s as if despite rising prices there is a seller strike where a significant part of [...]
Only One Oil Fundamental Factor
The fundamentals for crude oil continue to be atrocious. Production remains relatively stable if slightly reduced, which is about the only factor in favor of oil prices since the February 11 low. On the other side of the ledger, you don’t hear as much about how it’s all oil supply anymore other than the occasional reference to a “glut” that [...]
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