US Economy

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Strong US economic growth won’t last

Cross posted from The Conversation: by Richard Holden Professor of Economics and PLuS Alliance Fellow, UNSW The US economy grew at a startling 4.1% in the second quarter, the first time in four years it has hit the 4% mark. It was not surprising that President Donald Trump was both delighted and vocal about the figures. “Once again,

1

Federal Reserve goes strong on US economy

by Chris Becker The FOMC meeting by the Federal Reserve overnight came and went without much fuss, but traders and analysts are focusing in on the “strong” phrase, used no  less than five times in the statement. All bets are on for another rate rise very soon, but the USD had this prices in on

1

US earnings still powering ahead

A frequent focus point for the media is whether a company “beat” its earnings forecasts or not. But the definition of a beat or miss is poorly constructed, and often misleading. For me, changes in forward estimates are a more reliable indicator of whether a reporting season is progressing well or not. On that basis,

5

Memo to Senate: Company tax cuts will destroy the Budget

By Leith van Onselen While the Turnbull Government and the Business Council of Australia (BCA) continue to push the Senate to lower Australia’s company tax rate to 25% from 30%, on the grounds that it would boost investment and wages, the impact from the recent US corporate tax cuts has clearly missed American workers and

4

Is the base metals crash the end of the cycle?

Via Moody’s: Base Metals Price Drop Suggests All Is Not Well Though it goes practically unmentioned, one of the more unexpected developments of late has been the stunning collapse of Moody’s industrial metals price index. In part, the industrial metals price index’s average of July-to-date is a deep 8.2% under its June 2018 average because

22

Paul Kelly develops Trumpian hysteria

Paul Kelly has developed Trumpian hysteria: Donald Trump’s quest to become a man of destiny has scaled new peaks with his aspiration for collaborative ties with Russia’s Vladimir Putin, his public repudiation of US intelligence agencies in favour of Putin’s assurances, and his eclipse of the 70-year-old system of US global leadership buttressed by alliance systems.

1

US Q2 earnings set to boom

Good breakdown by Credit Suisse (via the Wall Street Journal) on where the US earnings growth is coming from: Oil is good for a small set of companies, bad for the rest. But unless the oil price falls the earnings growth will be repeated in 3Q and 4Q. Taxes are one-off but set to continue

0

The rude health of US corporate debt markets

From Moody’s: Outstandings of Rated U.S. Corporate Bonds Dip from 2018’s First to Second Quarter According to Moody’s Capital Markets Research Group, second-quarter 2018’s outstandings of Moody’srated U.S. corporate bonds excluding ABS and MBS rose by 3.3% year-over-year to $7.212 trillion, which was a slight 0.6% under first-quarter 2018’s record high of $7.259 trillion. The

1

US jobs preview

The monthly US jobs preview 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 190,000 non-farm payroll jobs in May (with a range of estimates between 144,000 to 212,000), and for the unemployment rate to be unchanged at 3.9%. The

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Where will trade wars end?

Via Morgan Stanley: We no longer doubt that the US administration’s proposals signal the direction of trade policy. An escalatory cycle of protectionist actions, not just rhetoric, has begun and will continue. It’s another reason why pressure should continue in risk markets, which now must eat their US policy vegetables after feasting on dessert in

1

BofAML: US dollar to the moon!

Via Bloomie comes David Woo, head of global rates and foreign exchange strategy at Bank of America: “I’ve never been this bullish the U.S. economy in 20 years I’ve been doing this,” the strategist said in an interview on Bloomberg Radio, citing the effects of the tax overhaul on corporate behavior. “That’s the fundamental story

0

How will the trade war impact the US economy?

Via Westpac today: Expectations for business investment through late-2017 and 2018 have been abnormally strong on the back of fiscal reform. Currently they sit at or above the level seen in the post-GFC recovery and, before that, the heady days of pre-crisis expansion. These expectations have subsequently been franked by the activity data, with the

4

US house prices might be getting frothy again

Last night saw the twin release of US consumer confidence figures and the Case Shiller House Price index. To say these are highly correlated is an understatement with the full transformation of a shelter consumer good that depreciates into a financial asset that has been turned into an ATM. Anyway, the April house price indicies are in

3

How far can the US economy run?

Via the always good value Tim Duy at Fed Watch: Headlines blared the latest recession warning today, this time from David Rosenberg of Gluskin Sheff & Associates. The culprit will be the Fed: “Cycles die, and you know how they die?” Rosenberg told the Inside ETFs Canada conference in Montreal on Thursday. “Because the Fed puts

3

When is the next US recession coming?

Via the AFR: A US recession could occur within the next two years according to former US bond trader Charlie Jamieson, who says the flattening of the bond yield curve is a signpost of possible trouble ahead. Speaking on a panel on global macro at Livewire Live 2018, Mr Jamieson, executive director at Jamieson Coote

1

When will the US economy fall off its fiscal cliff?

Some more good work from Damien Boey at Credit Suisse today: US inflation picks up a little further US headline CPI rose by 0.2% in May, taking year-ended headline inflation higher to 2.8% from 2.5%. Excluding food and energy, core CPI rose by 0.2% over the month, taking year-ended core inflation slightly higher to 2.2%

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G7 screws the US pooch

While the world’s press is busy lapping up the anti-Trump hysteria post-G7, let’s stop and ask what did they expect? Via The Guardian: Donald’s Trump’s chief economic adviser said the US pulled out of a G7 communique because the Canadian prime minister, Justin Trudeau, “stabbed us in the back” and accused the leader of one America’s

6

All hail the US economy!

EUR fell Friday night and DXY rose: The ludicrous EUR long pulled back but nowhere near enough: AUD rallied with risk: EM currencies are still in trouble: AUD shorts were roughly unchanged: Gold fell: WTI was smashed but Brent held on. The spread is huge now as shale oil floods the US but pipeline bottlenecks

1

US jobs preview

Courtesy of Calculated Risk: On Friday at 8:30 AM ET, the BLS will release the employment report for May. The consensus, according to Bloomberg, is for an increase of 190,000 non-farm payroll jobs in May (with a range of estimates between 155,000 to 220,000), and for the unemployment rate to be unchanged at 3.9%. The BLS

6

Inside the Fed’s risks

Via Elliot Clarke at Westpac: The minutes of a FOMC meeting typically hold little significance for the market. In this instance however, there is cause for a closer look. This is because the May minutes provide a clear assessment of the risks that the US currently faces, particularly with respect to inflation; financial conditions and