Analysis Topic: Economic Trends Analysis
The analysis published under this topic are as follows.
Wednesday, May 26, 2021
Inflation Easing, Now What? / Economics / Inflation
By: Monica_Kingsley
S&P 500 refused to keep early gains, and reversed back into no man‘s land – on little convincing volume. For now, we remain chopping below my 4,180s level, conquering which on a closing basis would a bullish achievement. Until that happens on convincing internals, fake moves in both directions would remain with us.
The Fed telegraphing the talk about talking taper is a first step in preparing the markets not to get surprised by the actual deed, but how far is that one really? Stocks, bonds and currencies aren‘t reacting much – it‘s only commodities that are in consolidation mode, but this can be chalked down to inflation expectations calming down over the prior three trading days. Until the Fed truly moves or makes its forward guidance as unequivocal as can be in this respect, the markets would be in a doubting attitude (or at a minimum, a wait and see one):
(…) The market simply isn‘t convinced the Fed is serious about taking on inflation through (gradual) removal of the punch bowl – or about shaping its forward guidance credibly this way (yet). Inflation expectations are cooling down a little, and the Treasury market is tracking them closely. But this doesn‘t mean that bonds are taking the central bank seriously – this move is part and parcel of the transitory vs. getting (practically permanently unless a Fed game changer arrives – still unlikely) elevated inflation readings debate.
While I think that the red hot CPI inflation would die down a little (i.e. not keep rising ever as steeply as was the case with Wednesday‘s data) once the year on year base to compare it against normalizes, a permanently elevated plateau of high and rising inflation would be a reality for more than foreseeable future simply because the Fed would be as behind as Arthur Burns was in fighting the 1970s inflation, and upward price pressures in the job market pressures would kick in.
Friday, May 21, 2021
How the Pandemic Is Changing the Labor Market / Economics / Employment
By: Patrick_Watson
When it comes to the US jobs situation, the “One of these things is not like the others” song from Sesame Street comes to mind.We have two competing narratives. Official data says millions are unemployed and seeking work. At the same time, businesses say they can’t find enough workers.
A skills mismatch between the workers who need jobs and the job openings themselves isn’t unusual. But many of today’s available jobs don’t require advanced education.
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Friday, May 21, 2021
Inflation Bunker Mentality: 'Striking' Similarities Between Now and the Inflationary 1970s / Economics / Inflation
By: The_Gold_Report
Sector expert Michael Ballanger examines the parallels between the present and the inflationary years of the mid-1970s, and also comments on how gold markets are responding.
For many of those following the writings of this "dithering old fool," who continues to hold an unfailing conviction in the strategic importance of gold and silver ownership in an otherwise out-of-control fiscal and monetary world, let me tell you a story about the 1970s.
I arrived in Saint Louis, Missouri, in the late summer of 1972, at the start of a magical four-year career as a student athlete at one of the top undergraduate business schools in the country. Populated largely by Jesuit educators, it also had many non-Jesuit professors in the twilight of their business careers that bestowed impressive anecdotes upon the collective psyches of the student population. In fact, it was a wonderful, coffee-sipping, Camel non-filter-chain-smoking finance professor who stood in front of the class in old De Smet Hall one morning, tripping the light fantastic about the implications of Richard Nixon abandoning the gold standard the year before and how it was going to cause massive inflation.
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Sunday, May 16, 2021
Inflation Going Stag / Economics / Stagflation
By: Gary_Tanashian
Stagflation in the offing, unless it’s not different this time…
As corporations continue to raise wages, market participants fear the Fed is wrong about supposedly “transitory” inflation, long-term Treasury bond yields resume the rally (bonds decline) manufacturers’ (ISM) costs keep rising, the Fed’s inflationary operation – a desperate monetary kick save if ever there was one – labors on.
The Fed has manipulated bonds and flooded the markets and the economy with funny munny created out of nowhere, as if by magic. As if by MMT (modern monetary theory) TMM (total market manipulation). So far, so good. Jerome Powell stands to be the first non-Bernanke winner of the Ben Bernanke Award for Heroism in the line of inflating a debt ridden economy.
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Thursday, May 13, 2021
Peak Growth and Inflation / Economics / Inflation
By: Michael_Pento
The rates of growth and inflation are now surging in the U.S., but that shouldn't be a surprise to anyone. What else would you expect when the Federal government has sent $6 trillion dollars in helicopter money to state and local governments, businesses, and individuals over the past year. Then, at the same time, millions of homeowners are told they don't have to pay their mortgages. In addition, our central bank has printed trillions of dollars to push asset prices through record-high valuations and continues to create $120 billion each month in order to keep Wall Street happy.All the above is happening while the economy opens up due to the dissemination of COVID-19 vaccines. The markets have anticipated this economic boom and have now nearly fully priced it all in. For instance, home prices have soared by 12% year over year in February, which was the fastest increase in the past seven years. And, the total market cap of equities is now over 200% of GDP—about twice the level reached at the start of the Great Recession.
But that rate of change in growth and inflation will be peaking in the next two months. I'll explain why that is and what that means for investors?
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Thursday, May 06, 2021
Vaccine Economic Boom and Bust / Economics / US Economy
By: Stephen_McBride
By the numbers, the US looks much better than it did than a few months ago. Jobless claims dropped to their lowest levels of the pandemic; COVID-19 vaccine shots went into arms at a record rate.But we’ve seen how this goes. The virus spreads in waves that recede and then return, often stronger. Some areas of the US are experiencing their fourth wave of coronavirus cases.
Vaccinations are supposed to break this cycle. And maybe they will. Unfortunately, that looks less likely as vaccine demand shows signs of peaking.
That means some establishments have, or will soon, close their doors … to mass vaccinations.
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Wednesday, May 05, 2021
Global Economic Recovery 2021 and the Dark Legacies of Smoot-Hawley / Economics / Protectionism
By: Dan_Steinbock
In 2021, China’s economic momentum will drive global economic prospects. But new trade wars could derail global recovery, again.In the 1st quarter of the ongoing year, China’s GDP rose to a record 18.3% year-on-year. Despite the base effect, due to the pandemic plunge a year ago, the performance reflects strong momentum. In April, China’s economy continued to boom, with strong exports and rising business confidence supporting the recovery.
U.S. economic growth accelerated in the 1st quarter, thanks to a rush of consumer spending. The GDP expanded at a 6.4% annualized rate; the second-largest since 2003. But it missed the estimates by 0.3 percent. Moreover, it was fueled by two rounds of huge stimulus payments, ultra-low interest rates and historical debt-taking.
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Monday, May 03, 2021
MMT: Medieval Monetary Theory / Economics / Economic Theory
By: The_Gold_Report
Peter Krauth of Gold Resource Investor provides his take on MMT and explains why he believes its effects will drive precious metals and commodities much higher.
Modern Monetary Theory or MMT, as it's better known, is a recurring theme that's not likely to go away. However, there's nothing modern about it, it's not about money (it's about currency), and it's no longer a theory.
We've certainly not heard much about it in mainstream economics or investment publications. But I do think it's gaining traction.
In my view, MMT is a very big deal because of its massive implications to our economic future. And so, I think it's worthwhile having at least a basic understanding of the concept.
In fact, if you're reading this, odds are good you've at least heard of MMT and you may have some idea of what it's about. If that's the case, you probably understand better than most the importance of investing in hard assets that can't be inflated at the whim of central planners.
And right now, the two most undervalued hard assets remain gold and silver.
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Sunday, May 02, 2021
Inflation or Deflation? (Not a silly question…) / Economics / Deflation
By: EWI
Dear reader,
The question in the subject line of this email is not an idle one.
It has everything to do with how you should position your portfolio for in the months -- and maybe even years -- ahead.
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Tuesday, April 27, 2021
Biden’s Green New Deal / Economics / Renewable Energy
By: Richard_Mills
Joe Biden came to power as the 46th US president expecting to spend more on green energy and clean technology. Just how much more is starting to be revealed.
Doubles down on emissions
This week Biden fulfilled a campaign promise in convening a “global climate summit” within his first 100 days in office. The two-day virtual meeting, attended by the leaders of a number of US allies and two of its adversaries — China and Russia — appears like many of these gatherings to be mostly a talking shop.
But a decision on Thursday is substantive, and therefore bears examination. The president committed the US to reducing its greenhouse gas emissions by 50 to 52% below its 2005 emissions levels by 2030, without revealing any details as to how this would be achieved.
The announcement also brings GHG reduction targets 20 years forward from what is set out in Biden’s $2.3 trillion infrastructure/ clean energy proposal unveiled in March. That plan commits to net-zero emissions by 2050 (net-zero refers to balancing the amount of emitted greenhouse gases with the equivalent emissions that are either offset or sequestered).
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Saturday, April 24, 2021
No Fear Of Inflation; Threat Of Deflation / Economics / Deflation
By: Kelsey_Williams
The Fed wants to have their cake and eat it too, but the cake is stale. Jerome Powell’s remarks in testimony before the Senate recently provoked considerable attention.
Responses, interpretation, and analysis by observers were many and varied. Unfortunately, no one learned anything different from what they thought they knew before Powell’s testimony.
The Fed is well aware of the problem. It is systemic in nature and goes far beyond corporate due diligence, bank liquidity, and the safety of your broker.
Most everyone else (with the exception of Janet Yellen, Ben Bernanke, and Alan Greenspan) thinks they understand the problem, but their limited understanding doesn’t allow for the subtleties of Fed Chair behavior.
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Thursday, April 22, 2021
China's record first quarter fuels strong expansion in 2021 / Economics / China Economy
By: Dan_Steinbock
China’s 1st quarter record performance will accelerate momentum in China and support recovery in the US and global economic prospects – as long as unwarranted geopolitical tensions remain in check.A year ago, China’s first quarter plunge was -6.8 percent, due to the pandemic effect. In the West, it was widely seen as the “end of China's growth story.”
Instead, in early February 2020 I predicted a turnaround in the increase of new virus cases in China, with the beginning of the economic rebound in the second quarter. Following the 6.5 percent expansion in the fourth quarter of 2020, the GDP rose to a record 18.3 percent year-on-year in the past quarter.
Obviously, the performance benefited from the base effect, due to the pandemic plunge a year ago. Nonetheless, it reflects a strong impetus for normalization.
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Tuesday, April 20, 2021
Inflation: First the Gain, Then the Pain… / Economics / Inflation
By: MoneyMetals
Gold and silver markets are exhibiting more signs of breaking out into a rally.
On Thursday, bond yields pulled back sharply. That helped fuel a new record in the Dow Jones Industrials. But the precious metals sector was an outperformer on the day, with mining stocks leading gold prices to a fresh multi-week high.
With the exception of palladium, precious metals markets have lagged behind other asset classes in 2021. That may be in the process of changing here in the second quarter.
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Tuesday, April 13, 2021
Biggest Inflation Threat in 40 Years Looms over Markets / Economics / Inflation
By: MoneyMetals
William Watts with MarketWatch sees the “biggest Inflation scare in 40 years” on its way. He expects massive amounts of stimulus coupled with a boom associated with easing COVID restrictions to generate a surge in prices like the nation hasn’t seen since the late 1970s to early 1980s.
The signs say Watts may be right. Commodities, with the exception of closely managed gold and silver prices, have been screaming higher in recent months. Wheat, corn, lumber, copper, steel, and a host of other key inputs have all spiked higher.
The jump is already being felt in consumer goods and construction, but the bulk of the price hikes may still lie ahead.
Tuesday, April 06, 2021
Inflation Fears Rise on Biden’s $3.9 TRILLION in Deficit Spending / Economics / Inflation
By: MoneyMetals
Gold and silver markets sprung higher on Thursday as April and second quarter trading kicked off. After suffering losses in the first quarter, precious metals may now be due for a spring rally.
The U.S. Dollar Index was up slightly this week. Regardless of how the dollar fares against other fiat currencies, investors can expect massive depreciation ahead in real terms. There is no end in sight to the inflationary cycle of spending, borrowing, and printing in Washington.
This week, President Joe Biden promoted a so-called infrastructure package that comes in at more than $2 trillion. That’s on top of $1.9 trillion in bailouts and giveaways finalized last month.
Much of the proposed “infrastructure” spending has nothing to do with paving roads, building bridges, or expanding ports. These sorts of transportation upgrades are slated to only get $115 billion. Meanwhile, Biden would spend $174 billion on electric vehicle subsidies and hundreds of billions more on various “green” and racial leveling programs.
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Wednesday, March 31, 2021
INFLATION - Wage Slaves vs Gold Owners / Economics / Inflation
By: Richard_Mills
Inflation is the rate at which prices within a basket of goods or services (called the consumer price index or CPI) rise or fall. When a currency falls, the ability of that unit of money to purchase goods and services weakens, ie., it takes more units of currency to buy the same basket of goods as before it weakened. The more a currency falls, the less you can buy with it because its purchasing power decreases. We call this devaluation/ loss of purchasing power.
Casey Research founder Doug Casey believes we often put the cart before the horse when thinking about inflation. The renowned investor, author, and speaker states,
“Inflation” occurs when the creation of currency outruns the creation of real wealth it can bid for… It isn’t caused by price increases; rather, it causes price increases.
Inflation is not caused by the butcher, the baker, or the auto maker, although they usually get blamed. Inflation is the work of government alone since government alone controls the creation of currency.
Indeed, governments in fiat economies can literally print paper money “out of thin air,” something impossible to do with a gold-backed currency. When the United States and most of the world was on the gold standard, dollars could be converted to gold at the US Treasury’s “gold window” @ 1 oz=US$35. However, the US government was only allowed to create as much money as could be backed by the gold in its faults. (it is often said, “the Fed can’t print gold” (or silver).
When gold goes up or down it is not inherently losing value; what has changed is the value of paper money, the fiat dollar. When you buy gold to resist inflation, ie., rising prices that eat away your savings by reducing your purchasing power, it is called a hedge against inflation.
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Friday, March 19, 2021
What the "Sudden, Dramatic" Surge in Googling "Inflation" Tells You / Economics / Deflation
By: EWI
It likely "typifies the end of an old economic trend and the beginning of a new one"
In the news, you hear that the big monetary fear these days is the prospect for a jump in inflation.
Here are some headlines since the start of the year:
- Inflation Is Coming. That Might Even Be a Problem. (Bloomberg, Jan. 13)
- Inflation concerns put Biden, Fed on defensive (TheHill.com, Feb. 23)
- Stocks tumble as Powell signals inflation is ahead (CNN Business, March 5)
Tuesday, March 16, 2021
We Need Infrastructure Spending to Avoid Another Texas-Sized Mess / Economics / Infrastructure
By: John_Mauldin
I just talked with one of the most successful hedge fund managers in the country (in terms of returns over the last four years). He will not allow me to use his name. But I can tell you he is a raging bull.
He believes the stimulus that we already had plus what we will get—coupled with a major infrastructure bill, plus extraordinarily easy monetary policy, combined with significant new technology innovations—adds up to a new bull market.
This is someone with 5X returns over the last four years with a very diverse portfolio. So it could pay to pay attention.
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Sunday, March 14, 2021
Keys to US / Global Economic Recovery - Part 2 / Economics / Economic Stimulus
By: Chris_Vermeulen
This is a continuation of our extended technical review of what my research team and I believe will be required for the US/Global markets to enter a stronger post-COVID-19 recovery phase. If you missed Part I of this research series then you can find it here: www.thetechnicaltraders.com/....
In this Part II, we will look at how potential currency shifts will prompt new trending in various economic sectors. The past 20+ years have really changed how the markets operate from a standpoint of capital deployment and capital function. We certainly live in interesting times from a trader and investor perspective. There is more capital floating around the globe right now than ever before… and that changes certain things.
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Thursday, March 11, 2021
Biden Stimulus And Consumers Are The Keys To Further US/Global Economic Recovery / Economics / US Economy
By: Chris_Vermeulen
At this point in our lives, we are hoping the new COVID-19 vaccines will do their part to help move the world towards more normal consumer and economic activities. The US Senate recently a new $1.9 Trillion stimulus package that should continue to provide assistance to various levels of consumer, state governments, and corporate enterprises. The next question in our mind is “what will the recovery look like if/when it happens?”. We need to look at three critical components of the global economy to help answer this question: Consumer Activity, Debt, and Supply/Demand Functions.
Consumer activity makes up more than 60% of the US GDP. It also drives money flow as consumers engage in economic activity, create credit for new purchases and help to balance the supply/demand equilibrium functioning properly. The participation of the consumer within an economy is essential for a healthy growing economy.
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