Analysis Topic: Economic Trends Analysis
The analysis published under this topic are as follows.
Sunday, August 18, 2019
The Nuts and Bolts: Yield Inversion Says Recession is Coming But it May take 24 months / Economics / Recession
By: QUANTO
Consumers continue to power economic growth, as retail sales rose 0.7% in July, after a 0.3% increase in June, the Commerce Department reported Thursday. Excluding autos, sales soared 1.0%, after a 0.7% climb in June. Economists polled by IFR Markets expected a 0.3% rise in the headline number and 0.4% excluding autos. Auto sales were down 0.6% in July, after 0.3% growth the prior month.
Preliminary second quarter productivity figures also were positive news for the economy, as non-farm productivity grew a healthy 2.3% on an annualized basis in the second quarter, albeit down from the first quarter’s 3.5% growth, the Labor Department reported. Unit labor costs grew 2.4% in the period, after a revised 5.5% jump in the first quarter, previously reported as a 1.6% decline.
Economists projected a 1.5% gain in productivity and a 1.8% rise in labor costs.
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Monday, August 05, 2019
FOURTH TURNING ECONOMICS / Economics / US Economy
By: James_Quinn
If you feel you’ve recei“In retrospect, the spark might seem as ominous as a financial crash, as ordinary as a national election, or as trivial as a Tea Party. The catalyst will unfold according to a basic Crisis dynamic that underlies all of these scenarios: An initial spark will trigger a chain reaction of unyielding responses and further emergencies. The core elements of these scenarios (debt, civic decay, global disorder) will matter more than the details, which the catalyst will juxtapose and connect in some unknowable way. If foreign societies are also entering a Fourth Turning, this could accelerate the chain reaction. At home and abroad, these events will reflect the tearing of the civic fabric at points of extreme vulnerability – problem areas where America will have neglected, denied, or delayed needed action.” – The Fourth Turning – Strauss & Howe
Sunday, August 04, 2019
Trade Tariff Economic Damage Spreading in US, China within Target in H2 2019 / Economics / China US Conflict
By: Dan_Steinbock
In the second half of 2019, US economic prospects will soften, despite the Fed rate cut, whereas Chinese growth target is likely to prevail. It’s time to prepare for diminished global economic prospects in 2019-20.After an important meeting of the Central Committee of the Communist Party of China (CPC), participants said that China seeks to make its fiscal policy more effective and to maintain “reasonably ample” liquidity.
Instead of resorting to a stimulus in the real estate market, the emphasis will be on “proactive fiscal policy and prudent monetary policy.” It is a challenging balancing act, but the right stance in the right time.
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Sunday, August 04, 2019
Why Trump’s Low-dollar Economic Plan Won’t Work / Economics / US Economy
By: Richard_Mills
The slowdown in the United States, and throughout the world, has led many to speculate that the time has come for an intervention in the US economy.
Despite a healthy stock market and the economy barreling along at near full employment, persistent negative economic indicators have policymakers twitching for some kind of response.
On Friday US Gross Domestic Product numbers failed to inspire. American GDP grew just 2.1% in the second quarter, compared to a 3.1% gain in Q1. One of the most important takeaways from the official report card on the economy, was the value of inventories, or goods waiting to be sold. It shrank by $44.3 billion, Marketwatch reported, knocking a full percentage point off GDP.
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Monday, July 29, 2019
RIP Global Economic Cooperation, 1944–2019 / Economics / Global Economy
By: Patrick_Watson
By Patrick Watson
Last month, world leaders observed the 75th anniversary of D-Day, when Allied troops stormed the beaches of Normandy, France. It was a critical day in world history.
However, other things happened that year.
As that massive invasion took place, a smaller group quietly planned how to reshape the world economy.
The Second World War was, in part, a result of failure to establish a stable currency system after the first one. That led to tariffs and other trade barriers in the 1930s. Economists and bankers wanted to keep it from happening again, and spent the war years discussing solutions.
Tuesday, July 23, 2019
U.S. Recession Watch: The Six-Cycle Forecast / Economics / Economic Theory
By: F_F_Wiley
It’s usually a bad idea to stand too close to something—whether an object, a problem you’d like to solve or any number of other things—which could mean seeing all of the pixels but none of the patterns. That’s why we populate albums, frames and holiday cards with bird’s eye views and sweeping vistas. It’s why every city that aspires to “destination” status advertises this or that Tower, Arch, Needle or Eye.
But if we look from too far away, we run a different risk of missing important information. That’s why we send probes, ships and occasionally scientists into outer space. It’s why we don’t Facetime our doctors, we hop on the examination table and show them exactly what’s bothering us.
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Wednesday, July 17, 2019
Want to See What's Next for the US Economy? Try This. / Economics / US Economy
By: EWI
Don't listen to the naysayers -- there IS a way to forecast the general health of the economy. This method has repeatedly proven itself.
Yes, you can anticipate the likelihood of a recession, even a depression -- or, conversely, when major economic measures -- like jobs -- will be robust.
That surefire way is the performance of the stock market.
That's right, despite the widespread belief that the economy drives the stock market, it's the stock market which leads the economy. Why not the other way around? Because the economy is a slow boat.
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Sunday, July 14, 2019
Fed’s Recessionary Indicators and Gold / Economics / Recession 2020
By: Arkadiusz_Sieron
How likely is a recession in the United States? Predicting a recession is difficult, but one can make some nice money with a good forecast. Consequently, we invite you to read our today’s article, which discusses the most important recessionary models developed by the Fed, and find out what do they imply for the gold market.
How likely is a recession in the United States? Predicting a recession is difficult, but one can make some nice money with a good forecast. So let’s focus on the most important recessionary models developed by the Fed.
The first model is the smoothed recession probabilities for the United States developed by Marcelle Chauvet and Jeremy Piger based on the research published in the International Economic Review and Journal of Business and Economic Statistics. The odds are obtained from a dynamic-factor markov-switching model applied to four monthly coincident variables: non-farm payroll employment, the index of industrial production, real personal income excluding transfer payments, and real manufacturing and trade sales.
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Sunday, July 14, 2019
The Problem with Keynesian Economics / Economics / Economic Theory
By: John_Mauldin
In The General Theory of Employment, Interest and Money, John Maynard Keynes wrote:
“The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.”
I think Lord Keynes himself would appreciate the irony that he has become the defunct economist under whose influence the academic and bureaucratic classes now toil, slaves to what has become as much a religious belief system as an economic theory.
Monday, July 08, 2019
Slowing Western economies will force new QE: Trading Setups and Deep analysis / Economics / Global Economy
By: QUANTO
The world is slowing down dramatically. At the same time, the largest economy is hurtling towards an election. Al governments who go to election will try to massage the numbers and pump the stock markets. So while the economy slows, the governmment is buzy pumping markets higher with his tweets.
The slowing down economy can be seen in numerous metrics and we believe central banks will be forced to begin a new round of QE. This time they will need to face up to inflation even as they pump in money.
Key metrics and charts shown below.
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Friday, July 05, 2019
Modern Monetary Theory – Applications in the 21st Century / Economics / Economic Theory
By: Andy_Sutton
Perhaps one of the biggest frauds perpetrated on the citizens of the world in the 20th century was Keynesianism. For those of you who are new to the discourse, Keynesianism was essentially the ramblings of a well-respected (at the time) economist named John Maynard Keynes and it dealt with deficit spending at the level of the federal government. It was a justification for something governments around the world were beginning to do anyway. The point of Keynes’ work was to give this very dangerous and ill-advised practice legitimacy. Sadly, it worked, and 85 years later, the developed nations of the world are mired in debt the likes of which the world has never before seen and may well never see again.
Before we get to the true purpose of this paper: an analysis of MMT, we must lay some foundational work. Please bear with us. If you have been an active reader of our previous articles and research, feel free to proceed directly to the portion where MMT is addressed.
Interestingly enough, the topic of this paper; (another consequence of treating economics as a debating society instead of a science) the foundations of modern monetary theory (hereafter MMT) actually originated long before Keynes wrote his seminal work in 1936. MMT as it is being rehashed today was actually first described by a German economist name Georg Friedrich Knapp in 1905. Originally coined ‘chartalism’ by Knapp, this perversion of economics was pushed in Knapp’s 1905 ‘State Theory of Money’. The term comes from the Latin root charta, which means ‘token’ or ‘ticket’.
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Wednesday, July 03, 2019
Freight Slowdown Is a Terrible Sign for the Economy / Economics / US Economy
By: Patrick_Watson
Just as an army moves on its stomach, an economy moves on ships, trucks, and planes. They carry the goods whose purchase adds up to growth.Nowadays many goods are digital, delivered electronically. But we still need lots of physical stuff which must travel to the customer.
Fewer goods in motion mean lower growth… and that’s exactly what is happening.
With technology, businesses have grown adept at managing inventory. Goods don’t typically sit on store shelves very long. Retailers stop ordering quickly when demand falls.
Lower freight volume is a symptom of a disease that’s getting worse.
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Wednesday, July 03, 2019
New US-Sino Trade Truce: Tougher Talks, More Economic Damage / Economics / Protectionism
By: Dan_Steinbock
During the G20 summit, China and US agreed to re-start the trade talks. As the US trade war is slowing China’s growth, the collateral damage is now spreading in the US economy, while undermining global prospects.Despite the White House’s efforts to lobby other countries against Huawei, President Trump also said that US companies can supply the technology giant, which the US, Department of Commerce blacklisted last month.
After Osaka, the negotiators face challenging obstacles, despite still another temporary timeout. Deep bilateral disagreements prevail about major structural issues.
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Monday, July 01, 2019
Zimbabwe's Inflation is Still Surging / Economics / Inflation
By: Steve_H_Hanke
The most important price in an economy is the exchange rate between the local currency and the world’s reserve currency — the U.S. dollar. As long as there is an active black‐market (read: free market) for currency and the data are available, changes in the black‐market exchange rate can be reliably transformed into accurate estimates of countrywide inflation rates—if the annual inflation rates exceed 25%. The economic principle of Purchasing Power Parity (PPP) allows for this transformation.
I compute the implied annual inflation rates with high‐frequency data and report them on a daily basis. PPP is used to translate changes in the black‐market exchange rates into annual inflation rates. For the countries that I follow each day, the table below shows the annual rates for the five countries with the highest inflation rates.
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Tuesday, June 25, 2019
Today’s Pets.com and NINJA Loan Economy / Economics / Global Debt Crisis 2019
By: Michael_Pento
The NASDAQ bubble that existed two decades ago contained a plethora of internet companies, such as Pets.com, that proved in the end to having a non-viable business model. Yet, because they enjoyed access to cheap credit, it allowed them to exist for a long time without generating positive cash flow. This, in turn, created artificial and temporary demand for all kinds of capital goods investments such as, fiber optic cable and routing equipment, which in turn served to provide a significant boost to economic growth. The consumption derived from equity prices that generated huge capital gains also proved to be a temporary and artificial support for GDP.
The same dynamic was true for the Real Estate bubble circa 2008. Subprime home buyers purchased multiple properties with no income, no job, and no assets behind their loans. This caused home prices to soar and propelled owners to extract a massive amount of equity from elevated property values that proved to be fictitious. This employed an army of lawyers, real estate brokers, and construction workers; and at the same time was a boon for the basic materials industry, home furnishing stores, etc.
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Tuesday, June 25, 2019
The Next Great Depression in the Making / Economics / Great Depression II
By: Harry_Dent
They lie, cheat, and steal? No way!With all eyes focused on Facebook’s cryptocurrency reveal tomorrow, what the Fed will do this Wednesday, and Slack’s IPO on Thursday, all of which we’ll address in the coming days, let’s turn our attention to another major issue that is silently unfolding: the great baby bust. More than any of the current hot events, it will have a significant impact on the future of our economy and the success of your investments…
Decades before births peaked in 2007, I was projecting it would happen. But how could I know that? Easy. Because births fall when the economy slows, especially in the Economic Winter Season, which we’re in the latter part now.
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Monday, June 24, 2019
The Bad News About Record-Low Unemployment / Economics / US Economy
By: Robert_Ross
Unemployment is the lowest it’s been in 50 years.
That means most people who want to work can find a job. It also means people are making more money and buying more stuff.
All good. More people working is always positive. But a low unemployment rate is a double-edged sword.
See, the unemployment rate is cyclical. It’s always moving up or down. And at this point—3.6%—there’s almost no room for it to drop more.
That’s where the trouble starts: When the unemployment rate bottoms out, like it’s doing now, it means the economy has peaked. And a recession is probably coming…
Monday, June 24, 2019
Trump’s Trade War Is Paralyzing Business / Economics / Protectionism
By: Patrick_Watson
Last week the Business Roundtable, an organization of large company leaders, released its quarterly CEO Economic Outlook Index.The index tracks what executives expect for sales, capital spending, and hiring over the next six months.
The good news is the index has been above its historic average for 10 consecutive quarters. The bad news is, it fell the last five of those quarters.
CEO optimism peaked in Q1 2018, following a climb that began in Q4 2016. Now in Q2 2019, much of the confidence is gone.
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Thursday, June 20, 2019
The Longer the US Sino-Tariff Wars Go On, the Harder It Will Be to Undo the Damage / Economics / Protectionism
By: Dan_Steinbock
Compared to pre-2008 crisis levels, world economic growth has plummeted by half and is at risk of a long-term, hard-to-reverse stagnation. Returning to global integration and multilateral reconciliation could dramatically change the scenarioSince spring 2017, the US-led tariff wars have effectively undermined the global recovery. In the past years, global economy has navigated across several scenarios. Now it is approaching the edge.
I have been following four generic scenarios on the prospects of global economic growth since the U.S. 2016 election. The first two scenarios represent variants of “recoupling." In these cases, global integration prevails, despite tensions. In the next two scenarios, global integration will fail, either in part and regionally or fully and globally.
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Sunday, June 16, 2019
Why Hedge Fund Manager Ray Dalio Is Wrong on Capitalism / Economics / Economic Theory
By: John_Mauldin
Ray Dalio is the thoughtful, somewhat controversial founder of the world’s largest hedge fund, Bridgewater Associates, which he started in 1975.
While much of his writing is private, I (and many others) peruse every word we can of his and the Bridgewater team’s thinking. I find it to be some of the most interesting market commentary I read.
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