US Economy

17

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

11

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

3

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

2

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

3

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

39

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

8

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

13

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

27

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

3

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

9

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

2

Previewing US jobs

Thanks to Calculated Risk: On Friday at 8:30 AM ET, the BLS will release the employment report for May. The consensus is for an increase of 180,000 non-farm payroll jobs in April, and for the unemployment rate to increase to 3.7%. Last month, the BLS reported 263,000 jobs added in April. Here is a summary

0

US jobs preview

Via Calculated Risk: On Friday at 8:30 AM ET, the BLS will release the employment report for April. The consensus is for an increase of 180,000 non-farm payroll jobs in April, and for the unemployment rate to be unchanged at 3.8%. Last month, the BLS reported 196,000 jobs added in March. Here is a summary

4

Has Powell withdrawn the “Fed put”?

Via Elliot Clarke at Westpac first: The April/ May FOMC meeting saw the Committee hold firm to their constructive but cautious view of the economic outlook. That inflation’s underperformance of the 2.0%yr medium-term target was highlighted in the decision statement initially supported market pricing of rate cuts in late-2019 and 2020. However, in the press

0

Has the Fed set a “dove trap”?

Via Tim Duy at FedWatch: The Federal Reserve quickly switched gears between December 2018 and March 2019 as policy became “patient” and the two rate hikes projected for 2019 fell to zero. The backdrop for the shift was stumbling markets, softer growth data, and falling inflation. Fed officials find the turnaround of inflation particularly worrisome.

10

Bernie Sanders leads Democrat fundraising

Via the FT: Bernie Sanders, the Vermont senator who fought Hillary Clinton for the Democratic nomination in 2016, led the field of 18 Democrats in the first quarter of the year by raising $18m, according to the Federal Election Commission. He was followed by Kamala Harris, the California senator, who raised $12m in the first

36

Bernie Sanders runs amok on Fox

Via The Guardian: At every turn they clapped and cheered, enamored with the candidate’s prescriptions for universal healthcare, a humane attitude toward immigrants and the rejection of climate change denialism. Bernie Sanders was the candidate, and the people clapping and cheering were audience members who turned out in Bethlehem, Pennsylvania, for a televised town hall on

2

US jobs preview

Via Calculated Risk: On Friday at 8:30 AM ET, the BLS will release the employment report for March. The consensus is for an increase of 170,000 non-farm payroll jobs in March, and for the unemployment rate to be unchanged at 3.8%. Last month, the BLS reported 20,000 jobs added in February. Here is a summary

2

US growth exceptionalism not over

Via FTAlphaville: For most of 2018, US assets were exceptional. Thanks to a hefty dose of fiscal stimulus from the Trump administration, the economy surged at a time when growth elsewhere was slowing down. And when the Fed moved to further tighten monetary policy — as the likes of the ECB and BOJ held firm —

6

Will the Fed cut interest rates?

Via S&P: Fed Will Cut Rates If 10-Year Yield Breaks Under 2.4% The Treasury bond market was stunned by the drop in the Federal Open Market Committee’s “dot chart” projection for year-end 2019 fed funds’ midpoint from the 2.875% of December 2018’s projection to 2.375% as of March 2019’s projection. Moreover, the FOMC formally announced

14

Here’s a Black Swan for ya: Trump does MMT

The Economist tackles MMT today: That perspective is not always clear; there is no canonical mmt model. But there are some central ideas. A government that prints and borrows in its own currency cannot be forced to default, since it can always create money to pay creditors. New money can also pay for government spending;

1

Previewing US jobs

Via Calculated Risk: On Friday at 8:30 AM ET, the BLS will release the employment report for February. The consensus is for an increase of 178,000 non-farm payroll jobs in February, and for the unemployment rate to decline to 3.9%. Last month, the BLS reported 304,000 jobs added in January. Here is a summary of

5

El-Erian: US growth leadership to persist

Via Reuters: “People are underestimating how quickly Europe is slowing,” El-Erian said. The International Monetary Fund revised down its forecast for euro zone growth to 1.6 percent in January from 1.9 percent three months prior, but El-Erian thinks even the lowered outlook is overly optimistic. El-Erian, the former chief executive of Pimco, the bond investment

1

Previewing US jobs

Via Calculated Risk: On Friday at 8:30 AM ET, the BLS will release the employment report for January. The consensus is for an increase of 158,000 non-farm payroll jobs in January (with a range of estimates between 140,000 to 183,000), and for the unemployment rate to be unchanged at 3.9%. Last month, the BLS reported