US Economy


Trump impeachment odds firm

Via Politico: The top U.S. envoy to Ukraine told House impeachment investigators on Tuesday that President Donald Trump sought to withhold critical military aid to Ukraine and refuse a White House meeting with the country’s president until it pursued politically-motivated investigations into Trump’s rivals. The diplomat, William Taylor, painted a damaging portrait of events that


Who wins the Trump impeachment battle?

Via The Guardian: Donald Trump pushed the United States towards a constitutional crisis on Tuesday when his legal counsel said the White House would refuse to cooperate with Congress’s impeachment inquiry. “Given that your inquiry lacks any legitimate constitutional foundation, any pretense of fairness, or even the most elementary due process protections, the Executive Branch


Bye, bye Bernie, hello Lizzie

Via the ABC: US presidential contender Bernie Sanders has been forced to cancel campaign events until further notice after undergoing an unexpected heart procedure following sudden ill health, according to an adviser. The 78-year-old was in Las Vegas, Nevada, on Tuesday (local time) for 2020 presidential campaign events when he experienced discomfort and was taken to a


Trump impeachment scenarios

Via Rabobank: Summary The Democrats in the House of Representatives have decided to start impeachment proceedings against President Trump. While impeachment is possible as the Democrats have a majority in the House of Representatives, conviction is unlikely as long as the Republicans in the Senate continue to support their President. In this case the removal


Who is Elizabeth Warren?

You need to know because this: Here’s her full policy position run down from Wikipaedia: Economy[edit] Warren believes that America has both a short-term and a long-term jobs problem.[citation needed] Warren notes that China spends 9% of its GDP on infrastructure, and Europe spends about 5% of GDP, while the US is spending only 2.4% and is looking


Can US property reflate the global economy?

Via Damien Boey at Credit Suisse: US existing home sales surprised to the upside, rising by 1.3% in August, taking year-ended growth higher to 2.6% from 0.6%. Housing demand was looking weak at the end of 2018, but now it seems to be turning around, largely in response to lower bond yields and mortgage rates.


Has the Fed plugged the US dollar leak?

Via the excellent Damien Boey at Credit Suisse: The Fed delivered a “hawkish” easing this morning, cutting the Fed funds rate by 25bps to 1.75-2%, and the interest rate on excess reserves by 30bps to 1.8%. Importantly, officials reiterated their “median” guidance for no more rate cuts this year. Interestingly, there were three dissenters –


Why Donald Trump does not do war

The Iranian conflict is more or less over before it began, via CNN: President Trump said Wednesday that his administration would be announcing sanctions on Iran “over the next 48 hours.” He also said that his “thinking pretty much remains the same” on the recent attack on Saudi Arabia. Trump, speaking on a Los Angeles


What’s choking US money markets?

Via the excellent Damien Boey at Credit Suisse: Over the past few days, we have seen chaos in US money markets. Repo rates on general collateral (ie secured borrowing rates) have spiked higher to as high as 10%. The New York Fed has been forced to intervene, conducting a $53 billion overnight “system” repo to


Reasons not to worry about US growth

Via the excellent Damien Boey at Credit Suisse: US non-farm payrolls came in below expectations, rising by only 130K in August, compared with expectations for 160K gain. Compositionally, private payrolls added only 96K, compared with expectations for 150K job creation. Interestingly, many economists expected stronger gains for August because of Census-related hiring. But overshadowing this,


US jobs preview

Via Calculated Risk: Special Note on Decennial Census: Temporary Decennial Census hiring will probably impact the August employment report with the Census hiring as many as 40,000 temporary workers. The headline number should be adjusted for these hires, see: How to Report the Monthly Employment Number excluding Temporary Census Hiring On Friday at 8:30 AM ET, the BLS


The oil domino falls in the US

Another domino falls in the end of cycle shock, via WSJ: Bankruptcies are rising in the U.S. oil patch as Wall Street’s disaffection with shale companies reverberates through the industry. Twenty-six U.S. oil-and-gas producers including Sanchez Energy Corp. and Halcón Resources Corp. have filed for bankruptcy this year, according to an August report by the law firm Haynes & Boone LLP.


Will Democrats keep the pressure on China in 2020?

Via Domain: In late July, the United States Studies Centre and YouGov polled 1,820 Australians and 1,800 Americans. We find Australians strongly prefer a Democratic win in 2020, a result replicated across almost all demographic and political groups. Only about one in five Australians prefer a second term for the Trump administration. Indeed, fewer than


Trump prepares more tax cuts

Because the last batch just two years ago worked so well, at Politico: In public, President Donald Trump and top White House officials keep extolling the strength of the U.S. economy. In private, they’re increasingly worrying about a global economic slowdown triggering a U.S. recession — and weighing options to shore up the economy ahead


The US economy is accelerating!

Via the excellent Damien Boey at Credit Suisse: Overnight, bonds rallied strongly again, partly because of investor nervousness about geo-political risks and slowing growth. Within the stock market, bond proxies and quality exposures outperformed again, while value stocks underperformed. Yet interestingly, we are actually seeing the forward-looking economic data improve: Both the New York and


Pettis: US should tax Chinese capital inflows

Via Michael Pettis: On July 31, 2019, U.S. Senators Tammy Baldwin and Josh Hawley submitted a bill “to establish a national goal and mechanism to achieve a trade-balancing exchange rate for the United States dollar, to impose a market access charge on certain purchases of United States assets, and for other purposes.” According to an earlier memo that further


US coal collapse continues as gas powers on

From the IEA: Source: U.S. Energy Information Administration, Annual Electric Generator Report and Preliminary Monthly Electric Generator Inventory Between 2010 and the first quarter of 2019, U.S. power companies announced the retirement of more than 546 coal-fired power units, totaling about 102 gigawatts (GW) of generating capacity. Plant owners intend to retire another 17 GW of coal-fired capacity by


Trump adds a little fiscal stimulus

Via the excellent Damien Boey at Credit Suisse: Bond and money market investors, as well as the Fed, have been keeping tabs on debt ceiling negotiations. Officially, the fear has been that if legislation were to not change, the US government would “run out of money” by September, causing shutdown and “default”. The official narrative


Fed confusion throws spanner into bond rally

By Damien Boey at Credit Suisse: Over the past few days, we have witnessed some very confusing signals from Fed officials: Vice Chair Clarida suggested that the Fed should not wait until things get so bad to have a dramatic series of rate cuts. These comments followed and potentially reinforced dovish comments from the New


Warnings mount over poor US earnings

  by Chris Becker Stock markets are renowned for pricing in promises but failing to deliver on accuracy. With US markets now at record highs, with the Dow Jones breaking through the 27000 point barrier last night as the S&P500 hovers at a near doubling of its GFC low, and a Federal Reserve hell bent


CS: Value still not lifting as Powell puts the market

Damien Boye at Credit Suisse has his take on the Powell Put overnight: Overnight, Fed Chair Powell delivered the dovishness the market was looking for, but had not fully priced in. He suggested that: Many FOMC members were talking about cutting rates in June. The dip in inflation may not be so transitory, as initially


Can Powell take control of the doves tonight?

by Chris Becker Fed Chairman Powell is testifying before Congress tonight AEDT on the state of the US economy and invariably, markets will hang on his words surrounding further interest rate cuts. At the moment, the probability of a cut at the July meeting remains at 100%, with a 94% chance of being lowered by


US recession is coming

by Chris Becker There are three indicators currently weighing on higher probability of a US recession, probably in early 2020. First, buried in Friday night’s unemployment print was the “unemployed for over 26 weeks (6 months) indicator, remaining stuck at a cyclical low: Interestingly, it has taken large rounds of rate cuts, huge tax cuts


Previewing US jobs

Via Calculated Risk: On Friday at 8:30 AM ET, the BLS will release the employment report for June. The consensus is for an increase of 165,000 non-farm payroll jobs in June, and for the unemployment rate to be unchanged at 3.6%. Last month, the BLS reported 75,000 jobs added in May. Here is a summary


Trump turns steamroller to currencies

El Trumpo on the steamroller again last night: “China and Europe playing big currency manipulation game and pumping money into their system in order to compete with USA. We should MATCH, or continue being the dummies who sit back and politely watch as other countries continue to play their games – as they have for many