The running narrative all over the developed world is temporary factors. In the US it is weather-related, while Europe is seized by not enough euphoria (more on that later), and Japan by the tax increase attempt at fiscal responsibility. In the Japanese case, as it relates to the ever-important trade balance, the record debilitation in the first quarter under an [...]
April trade data for Chinese exports purportedly show a rebound forming, though its size and even legitimacy is still much in doubt. The fake Hong Kong invoice scandal of last year is making comparisons to this year difficult, but that doesn’t and won’t quell the extrapolations. The export data are “somewhat inconsistent with the weakness seen in new export orders” [...]
It was the introduction of two Latin words that doomed the modern discipline of economics. As the mathematical modeling craze swept into what is now econometrics, the derivation of theories and, more importantly, the statistical “evidence” of those theories rested upon ceteris paribus – “with other things the same.” It is difficult to accept even the basic proposition that one [...]
The news from China this morning was unexpected only to those who still cling to the idea that the PBOC control is omnipresent. Exports were down 6.6% Y/Y in March (after dropping 18.1% Y/Y in February), while imports simply collapsed 11.3% Y/Y. Since China has been operating as the global trade pivot, the results on both sides of the trade [...]
The word decoupling has made a comeback in recent months. In 2008, it was believed that the world would be able to withstand a slowdown in US growth, as global markets would “decouple” from the primacy of US consumers. In some ill-conceived instances, it was even argued that financial markets would as well. Of course, we know that the interconnected [...]
I think it is very clear that the Bank of Japan is becoming more and more sensitive to swings in the Japanese stock market. Policy pronouncements, toothless as they usually are, seem to correlate very well with downturns in stock prices. Perhaps some of the Federal Reserve literature is making its way East. There were no doubts, none whatsoever, last [...]
So far in China this year there have been defaults and “bailouts” in the credit markets, but they are tiny in relative comparison to everything else. That they have occurred at all is why they have grabbed so much attention. We all have some inkling of the credit and monetary inequities that are roiling inside the Chinese economic gut, but [...]
Persistent whispers throughout the autumn that the Bank of Japan was thinking and even planning (I suppose that meant more modeled simulations) to raise its intervention quota beyond what was judged only months ago to be monstrous and more than sufficient had an anesthetic effect on Japanese “markets.” Despite what was serious consternation about the damning resistance of Japanese companies [...]
QE’s hope is that in the course of redistribution any spurt of temporary activity caused by such monetary deck shuffling will lead to follow-on activity (the cult of aggregate demand). As we see in the US, the redistribution appears to have had the reverse effect, including effects on global trade. In Japan, the other nation so fully devoted to QE, [...]
The economic hopes for 2014 have been largely concentrated in a few sectors. Monetary authorities have been counting on the historical channel of housing to be one of the continued “bright spots” that would transition finally, after almost five years, into an unambiguous recovery. You always have to be cautious about reading too much into one data point, so it [...]
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