US Industrial Production contracted for the fourth consecutive month in February, falling 1.03% year-over-year. It was the third drop of more than 1% in those four months, leaving the 6-month average now at -0.57%. A single month of -1% is usually associated with recession, let alone three of the past four and a negative six-month average. Except for one four-month [...]
The idea that China was transitioning to a “consumer led” economy was always a precarious wish. Doubts start with the timing, as it wasn’t until 2009 that it was even proposed, but the idea really didn’t gain any traction until after 2012. In other words, the only time Chinese consumers were ever given much thought was when industry was facing [...]
The PBOC’s balance sheet was relatively quiet in February, with no large moves on either side of its ledger. In fact, these minor shifts appeared to be more so adjustments than the more extreme efforts the central bank had become used to undertaking. The heavy lifting was accomplished in January at least as far was what is visible, leaving February’s [...]
Last week the Federal Reserve updated its quarterly Financial Accounts of the United States Z1 (formerly Flow of Funds) meaning that we can recheck valuation levels of the stock bubble from alternate points of view (data). The most common valuation given by the report is Tobin’s Q which compares the estimated value of corporate equities (liability) to nonfinancial corporate business [...]
Unlike retail sales in January, wholesale sales won’t need revisions to become highly negative in either the seasonal or unadjusted versions. On a seasonally-adjusted basis, wholesale sales declined rather sharply in January (-1.35% M/M), the fourth consecutive decline, sixth out of the past seven months and making fourteen of the past eighteen since all this began. On an unadjusted basis, [...]
It is increasingly difficult to account for the estimates provided by various statistical agencies when there is no consistency not just with other non-governmental series but within each. The latest retail sales report has nothing in common with anything including itself. The mess features major revisions for the prior two months that simply leave the calendar as demarcation. Unadjusted retail [...]
If China is most representative of the current state of the “dollar” economy, Brazil is surely most representative of its worst case. The country’s economy has been like China in slowing down steadily over the past few years, but unlike China it has descended already into a nightmarish level of distress. In other words, Brazil already has a Great Recession [...]
Bond markets have made some dramatic moves over the last few weeks and I thought it an opportune time to review. Credit spreads have narrowed considerably over the last few weeks as risk takers have re-entered the markets. High yield, IG corporates and emerging market bonds have all enjoyed significant rallies. It is our judgement though that - for now [...]
The Central Bank of Egypt auctioned $200 million at 8.85 per Egyptian pound rather than the prevailing 7.73. The inflationary move of devaluation is intended to help the country gain a more solid financial background due to a persisting “dollar shortage” that nobody seems to hold in much curiosity. Despite the fact that this is a widespread and growing problem, [...]
Industrial production for the combined January/February period in China fell to just 5.4%, matching the lowest growth rate of the past fourteen years. Only the January/February 2002 IP rate was lower, but that was a single data point giving way to the rising financialization of the late eurodollar period. In 2016, these decelerations are commonplace, determined, and have no end [...]
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