US Economy

4

Markets dismiss hawkish Fed

Got the lurgy today so limited posting. Fed minutes were out last night: …Importantly, PCE  growth was expected to pick up to a stronger pace in the spring, which would be more consistent with ongoing gains in employment, real disposable personal income, and households’ net worth. …Members generally judged that it would be prudent to

71

The US Health system is busted

By Leith van Onselen VOX has produced an interesting study on the US health system where, despite spending by far the most in the world, health outcomes are poor by developed world standards, partly due to the overuse of expensive low-quality drugs: Abstract: Despite higher per capita healthcare spending, US health outcomes compare poorly with

23

Has Trump killed the Trump trade?

Citi says it’s all a storm in teacup:  A report from the New York Times citing a memo alleging that President Trump asked former FBI Director Comey to end an investigation into Russian links has roiled markets. Concerns about Congressional reviews, potential special prosecutors and a deeper inquiry into the allegations could paralyze the

82

Is Trump headed for Watergate?

New York Times: President Trump asked the F.B.I. director, James B. Comey, to shut down the federal investigation into Mr. Trump’s former national security adviser, Michael T. Flynn, in an Oval Office meeting in February, according to a memo Mr. Comey wrote shortly after the meeting. “I hope you can let this go,” the president

0

Previewing US jobs

Cross-posted from Calculated Risk: On Friday at 8:30 AM ET, the BLS will release the employment report for April. The consensus, according to Bloomberg, is for an increase of 185,000 non-farm payroll jobs in April (with a range of estimates between 150,000 to 225,000), and for the unemployment rate to increase to 4.6%. The BLS

3

Should we be spooked by an historic low in volatility?

Via BofAML: Fearless VIX is pulling global equity risk down but its optimism is not universal The VIX dipped below 10 Monday, near a historic floor, as it has closed below 10 only nine days since 1990. More remarkably, US realized vol has only been lower 3% of the time since 1928. Absent regional catalysts,

0

Understanding the Trump tax plan

From Goldman: Q&A on the President’s Tax Reform Plan The White House announced a slightly revised set of principles for tax reform, which appear to incrementally reduce the size of the proposed tax cut compared with the President’s campaign proposal, and eliminate a few of the differences between the campaign plan and the House Republican

28

Is the Canadian property bubble bursting?

Canada’s largest mortgage non-bank mortgage lender appears to be going under, via Bloomberg: Home Capital Group Inc.’s shares plunged more than 60 percent after the mortgage lender disclosed a costly new loan to tide it over as its deposits dwindle, intensifying a spiral of bad news for the company. The C$2 billion ($1.5 billion) loan is

5

Trump-Australia propaganda flows

A river of drivel today surrounding Vice-President Mike Pence’s Aussie visit. Grovelling central is the AFR: US President Donald Trump’s “massive” tax reduction plan, details of which are expected on Thursday, will have direct benefits for Australia, Vice-President Mike Pence says. He met privately with the chief executives of Westfield, Macquarie Group, Lendlease and Austral

0

US jobs good enough

The USD took off Friday night: Commodity currencies were mixed, the Aussie weak: Gold reversed its Syrian gains: Brent a little too: Base metals were weak: Big miners soft: EM stocks too: High yield held up: US bonds were sold: European were bought big but spreads widened: Stocks were stable: The big news was US

2

Fed hawks up with good US data

The USD was firm last night: Commodity currencies too: And gold: Brent flamed out: Base metals were strong: Big miners stable: EM stocks are stuck: High yield too: US bonds were sold: European spreads stable: Stocks too: US data was good with the ADP printing way above expectations for a second month: Private sector employment

13

Xi set to run rings around Trump?

From the New Yorker: Trump’s first China summit may well push the White House off its game in more complicated ways. China occupies a prominent, but loosely defined, place in Trump’s world view. As a candidate, Trump rarely delivered a speech without accusing China of abusing the United States with unfair trade practices and by

20

Will the US strike North Korea pre-emptively?

Via The Australian: The US is “rapidly and dangerously” edging closer to taking military action against North Korea’s nuclear missile program, a former general close to President Trump says. Jack Keane, a four-star general who declined a role in the cabinet, said: “A pre-emptive strike against launch facilities, underground nuclear sites, artillery and rocket response

6

Grantham: US stocks not a bubble

Pop over to view Jeremy Grantham at the WSJ for a cold shower if you’re concerned about US stocks being in a bubble. Below as well is a nice antidote the recent concern over US corporate lending, via Citi:  The recent investor focus on decelerating C&I loan activity as a gauge for economic trends and

8

Trumps ramps anti-China tweetoric as Xi meet agreed

Our Donald: Amid this: The Trump administration appears poised to cement China’s unfavorable status in trade cases, making Chinese goods eligible for higher U.S. tariffs well into the future. U.S. officials are preparing a review of China’s “market-economy status” under the World Trade Organization, according to official documents on the Commerce Department website. The review

1

US GDP rocks and rolls with consumer

DXY is back: Commodity currencies fell: Gold too: Brent rose as sell side permabulls pile in: Base metals fell: Big miners were mixed: EM stocks lifted: HY too, with oil: US bonds were sold: European spreads widened: And stocks rose, especially in Europe: Two events dominated the night. Reuters hosed off ECB tightening: European Central

5

Trump’s wealthy consumers are very happy

From Westpac, some good material on the US consumer: Confidence is a key factor for the underlying health of the economy and its ability to adjust to changes in the stance of monetary policy. Simply it determines households’ willingness to consume and invest as well as firms’ investment and employment decisions. Following the election of President

14

Trump to turn to Dems for infrastructure boom

Via Axios: The Trump administration is looking at driving tax reform and infrastructure concurrently, according to a White House source with direct knowledge. It’s a major strategic shift – infrastructure was likely going to be parked until next year – and is only possible because of last week’s healthcare debacle. President Trump feels burned by

2

Has the Fed already ruptured US credit?

A couple of interesting pieces of research today are important. First from Morgan Stanley: A sharp slowdown in US credit creation: Since October, bank lending in the US has slowed sharply. While higher debt issuance, lower M&A activity and new risk retention rules play a role, the slowdown could stoke concerns that a highly leveraged