Tag Archive: recession

Red Flags Over Labor

2019-11-10

by

2019-11-10

Establishment Survey; Payrolls 2010-2019
Better-than-expected is the new strong. Even I’m amazed at the satisfaction being taken with October’s payroll numbers. While you never focus too much on one monthly estimate, this time it might be time to do so. But not for those other reasons. Sure, GM caused some disruption and the Census is winding down, both putting everyone on edge. The whisper numbers were low double digits, maybe even a negative headline estimate.

Read More »

You Have To Try Really Hard Not To See It

2019-11-07

by

2019-11-07

ISM Purchasing Managers Indexes, 2017-2019
In early September, the Institute for Supply Management (ISM) released figures for its non-manufacturing PMI that calmed nervous markets. A few weeks before anyone would start talking about repo, repo operations, and not-QE asset purchases, recession and slowdown fears were already prevalent.

Read More »

QE by any other name

2019-11-07

by

2019-11-07

Boosting Reserves, 2018-2019
“The essence of the interventionist policy is to take from one group to give to another. It is confiscation and distribution. “ – Ludwig von Mises, Human Action In less than a year, we have witnessed an unprecedented monetary policy rollercoaster by the Federal Reserve, which began with a momentous U-turn in the central bank’s guidance in January, and has continued to escalate ever since.

Read More »

More Down In The Downturn

2019-10-25

by

2019-10-25

IHS Markit US Manufacturing, 2012-2019
Flash PMI’s from IHS Markit for the US economy were split in October. According to the various sentiment indicators, there’s a little bit of a rebound on the manufacturing side as contrary to the ISM’s estimates for the same sector. Markit reports a sharp uptick in current manufacturing business volumes during this month.

Read More »

Never Attribute To Malice What Is Easily Explained By Those Attributing Anything To Term Premiums

2019-10-13

by

2019-10-13

US Treasury CMT Yields, 2017-2019
There will be more opportunities ahead to talk about the not-QE, non-LSAP which as of today still doesn’t have a catchy title. In other words, don’t call it a QE because a QE is an LSAP not an SSAP. The former is a large scale asset purchase plan intended on stimulating the financial system therefore economy. That’s what it intends to do, leaving the issue of what it actually does an open question.

Read More »

CPI Changes On Energy: The Inflation Check

2019-10-13

by

2019-10-13

CPI Changes on Energy, 1995-2019
After constantly running through what the FOMC gets (very) wrong, let’s give them some credit for what they got right. Though this will end up as a backhanded compliment, still. After having spent all of 2018 forecasting accelerating inflation indices, from around New Year’s Day forward policymakers notably changed their tune.

Read More »

Monthly Macro Monitor: Doom & Gloom, Good Grief

2019-10-12

by

2019-10-12

Economic Growth & Investment, October 2019
When I first got in this business oh so many years ago, my mentor told me that I shouldn’t waste my time worrying about the things everyone else was worrying about. As I’ve related in these missives before, he called those things “well worried”. His point was that once everyone was aware of something it was priced into the market and not worth your time.

Read More »

The Consequences Of ‘Transitory’

2019-10-08

by

2019-10-08

Euro Interbank, 2019
Europe’s QE, as noted this weekend, is off to a very rough start. In the bond market and in inflation expectations, the much-ballyhooed relaunch of “accommodation” is conspicuously absent. There was a minor back up in yields between when the ECB signaled its intentions back in August and the few weeks immediately following the actual announcement.

Read More »

ISM Spoils The Bond Rout!!!

2019-10-03

by

2019-10-03

Federal Reserve Empire States Manu. Index, 2004-2019
With China closed for its National Day Golden Week holiday, the stage was set for Japan to steal the market spotlight. If only briefly. The Bank of Japan announced last night that it had had enough of the JGB curve. The 2s10s very nearly inverted last month and BoJ officials released preliminary plans to steepen it back out.

Read More »

No Longer Hanging In, Europe May Have (Been) Broken Down

2019-09-24

by

2019-09-24

Central Bank Failure, 1999-2017
Mario Draghi can thank Jay Powell at his retirement party. The latter being so inept as to allow federal funds, of all things, to take hold of global financial attention, everyone quickly shifted and forgot what a mess the ECB’s QE restart had been. But it’s not really one or the other, is it? Once it actually finishes, the takeaway from all of September should be the world’s two most important central banks each botching their...

Read More »

Focus Is On The Pre-recession Condition

2019-09-18

by

2019-09-18

Industrial Production, SA 2016-2019
Before the Great “Recession” ended the business cycle as we once knew it, there was a widely accepted concept known as stall speed. In the US, if GDP growth decelerated down to around 2% it suggested the system had reached a danger zone of sorts. In a such a weakened state, one good push, or shock, could send the economy plunging into recession.

Read More »

A Bigger Boat

2019-09-11

by

2019-09-11

Europe Industrial Production, 2013-2019
For every action there is a reaction. Not only is that Sir Isaac Newton’s third law, it’s also a statement about human nature. Unlike physics where causes and effects are near simultaneous, there is a time component to how we interact. In official capacities, even more so.

Read More »

Japan: Fall Like Germany, Or Give Hope To The Rest of the World?

2019-08-29

by

2019-08-29

Japan JGB, Jan 2014 - Jul 2019
After trading overnight in Asia, Japan’s government bond market is within a hair’s breadth of setting new record lows. The 10-year JGB is within a basis point and a fraction of one while the 5-year JGB has only 2 bps to reach. It otherwise seems at odds with the mainstream narrative at least where Japan’s economy is concerned.

Read More »

Definitely A Downturn, But What’s Its Rate of Change?

2019-08-28

by

2019-08-28

US Durable Goods Chicago Fed NAI, Jan 2006 - 2019
The Chicago Fed’s National Activity Index (NAI) fell to -0.36 in July. That’s down from a +0.10 in June. By itself, the change from positive to negative tells us very little, as does the absolute level below zero. What’s interesting to note about this one measure is the average but more so its rate of change.

Read More »

Monthly Macro Monitor: Does Anyone Not Know About The Yield Curve?

2019-08-26

by

2019-08-26

Economic Growth & Investment
The yield curve’s inverted! The yield curve’s inverted! That was the news I awoke to last Wednesday on CNBC as the 10 year Treasury note yield dipped below the 2 year yield for the first time since 2007. That’s the sign everyone has been waiting for, the definitive recession signal that says get out while the getting is good.

Read More »

Germany’s Superstimulus; Or, The Familiar (Dollar) Disorder of Bumbling Failure

2019-08-24

by

2019-08-24

European Economy, 2004-2019
The Economics textbook says that when faced with a downturn, the central bank turns to easing and the central government starts borrowing and spending. This combined “stimulus” approach will fill in the troughs without shaving off the peaks; at least according to neo-Keynesian doctrine. The point is to raise what these Economists call aggregate demand.

Read More »

US Industrial Downturn: What If Oil and Inventory Join It?

2019-08-16

by

2019-08-16

Industrial Production, NSA 2006-2019
Revised estimates from the Federal Reserve are beginning to suggest another area for concern in the US economy. There hadn’t really been all that much supply side capex activity taking place to begin with. Despite the idea of an economic boom in 2017, businesses across the whole economy just hadn’t been building like there was one nor in anticipation of one.

Read More »

Why You Should Care Germany More and More Looks Like 2009

2019-08-14

by

2019-08-14

Germany ZEW Financial Market Survey, 2006-2019
What if Germany’s economy falls into recession? Unlike, say, Argentina, you can’t so easily dismiss German struggles as an exclusive product of German factors. One of the most orderly and efficient systems in Europe and all the world, when Germany begins to struggle it raises immediate questions about everywhere else.

Read More »

Monthly Macro Monitor: We’re Not There Yet

2019-07-21

by

2019-07-21

US High Yield Master 2000-2015
I first wrote about the current economic slowdown a year ago and Jeff Snider actually started seeing signs of slowdown in the Eurodollar market as early as May 2018. So, the slowdown we’re in now certainly isn’t a surprise here at Alhambra. I think though that we often forget how long these things take to develop.

Read More »

Japan’s Bellwether On Nasty #4

2019-06-25

by

2019-06-25

Japan Industrial Production, NSA 2009-2019
One reason why Japanese bond yields are approaching records like their German counterparts is the global economy indicated in Japan’s economic accounts. As in Germany, Japan is an outward facing system. It relies on the concept of global growth for marginal changes. Therefore, if the global economy is coming up short, we’d see it in Japan first and maybe best.

Read More »