Missed among the Facebook/Amazon microphone drops and the hawks in Brexit-land and Brussels circling around rate levers where the latest US Markit/ISM services PMI and factory orders data for December. Both are suggesting the 2021 economic boom maybe over coming into 2022, just as the Federal Reserve is ready to tackle inflation. More: Markit
George Soros on the warpath: The potential for a massive property sector collapse that infects the entire economy will expose Mr Xi’s flaws in governance, he said. The real estate crisis, characterised by huge debt and triggered by the failure of real estate company Evergrande, could be felt more abruptly in the second quarter of this year,
The Fed is now talking 50bps hikes: The Federal Reserve could opt to raise its benchmark rate by 50 basis points if a more aggressive approach to taming inflation is needed, Raphael Bostic, president of the Fed’s Atlanta branch, told the Financial Times in an interview.\ Bring it on! Might as well make your policy
Poor old Goldman, which forecast none of it, says now that the market correction is all a passing fad: As markets continue to digest the outlook for the Fed, rates, and growth, we believe that the recent equity drawdown will prove to be a correction in a longer bull market cycle, rather than the start
Deutsche with the note. To my mind, if get anywhere near this outcome then stocks are going to crash. Put another way, stocks are going to crash to prevent it: Introduction Last week we adjusted our Fed view to bring forward liftoff to March and accelerate quantitative tightening (QT) to begin during the summer (see
Well there it is – proof the US Federal Reserve is way behind the ball on tackling inflation which will have massive implication for global markets in 2022. Here’s the scoop on the print last night: Inflation jumped at its fastest pace in nearly 40 years last month, a 7% spike from a year earlier
Goldman with the note. By year-end, it’ll be back to secular stagnation. A tragedy for the US. After negotiations on the Build Back Better (BBB) Act stalled late last year, the outlook for fiscal legislation is particularly unclear. While we think the Senate is very unlikely to pass a comprehensive bill similar to the House-passed
It’s that time of month where traders gather round their screens to see what the full picture of US unemployment, and hence the direction the Federal Reserve will take in the following month with regards to monetary policy. 2022 is already going to be a bumpy ride with the release of the December minutes from
BofA Global Research with the note: The December FOMC meeting minutes included a lengthy discussion of the timing and speed of Fed balance sheet shrinkage (quantitative tightening or “QT”). The broad message appears to be that QT will start sooner than it did in the previous tightening cycle, and proceed at a faster pace. Even
Goldman Sachs with the note: We expect that sequential wage growth will decelerate from its 5-6% pace in 2021 Q2 and Q3 to around 4% in 2022. An upside risk to this forecast is that if employers and workers expect wage growth to remain very firm, they might set wages and prices accordingly, leading to
Risk markets took a big deep breath overnight with the release of the Federal Reserve’s December minutes, which showed a much more hawkish path ahead in 2022 for the bank followed by all other banks as labour market conditions and rising inflation spook the wonks. The Fed explicitly stated that it might need to raise
Goldman Sachs with the note: Inflation trends: The core PCE price index rose 0.46% month-over-month in November to a new three-decade high of 4.68% year-on-year, and core CPI inflation rose to 4.96%. Core inflation was again boosted by rapid shelter inflation—which has run at the highest level since 1990 over the last three months—and another
And you think Australian property is booming? The US is having another mammoth surge in property values, helped along by debt of course. From the WSJ: Mortgage lenders issued $1.61 trillion in purchase loans in 2021, up from $1.48 trillion in loans issued in 2020 and marking the highest mortgage borrowing numbers ever recorded. The
Wall Street couldn’t wait for the new year to hit new time highs, having lifted nearly 30% in 2021, capping off one of the best years in history. The funny thing is, there’s been more than seventeen times since 1928 where the US stock market went up 30% or more in a calendar year, but
US Senate leadership reportedly plans to delay consideration of the Build Back Better plan, as they continue to negotiate on key items and await guidance from the Senate parliamentarian on the eligibility of certain provisions. Goldman with the note: BOTTOM LINE: Sen. Joe Manchin (D-W. Va.) announced that he is a “no” on moving forward
Goldman Sachs has released a new paper entitled “Why is US Labor Supply so Low?”, which is leading to wage pressures: Goldman shows that US labour force participation rate has declined more since 2019Q4 than in most other developed economies: Goldman ascribes four main drivers of the US’ low participation rate: About one-half of the
Westpac sees yesterday’s Federal Reserve policy decisions, whereby the pace of tapering was doubled and indications of rate rises in 2022 was both brought forward and doubled in scope, as indicative of US economic strength and why “normalization” is being accelerated. Although where that normalization of interest rates will occur in the next cycle is
Just a few hours ago, the US Federal Reserve held its FOMC meeting for December and surprised with a doubling of its taper – that is, the speed at which it winds down its asset purchase program that has been holding up equity markets (and everything else) since the pandemic began, with the end date
Goldman Sachs with the note: In the spring, we wrote that shelter inflation would rise to 30-year high on the back of substantial home price appreciation and a rapidly improving labor market. Since then, a number of alternative rent measures have increased at dizzyingly high rates, with some pointing to price increases that are almost
The question on everyone’s lips is when is the US Federal Reserve going to raise rates to combat inflation? With US real average hourly earnings falling, food inflation spiking and the Great Resignation rolling ahead, it may sooner rather than later. Interest rate futures are putting it at June next year, with the tapering and
Nordea has done a great job on this so it worth listening to: Despite November’s slowdown in hiring, with only 210K new non-farm payrolls, less than half of consensus, the November unemployment rate dropped to 4.2%, down from 4.6% in October. Federal Reserve Bank of St. Louis estimates the 2021Q4 NAIRU to be 4.45%. NAIRU stands
I was reading through some fascinating US wage data yesterday when it became apparent the current frenzied market attack on an imminent wage-push inflation breakout is a kangaroo short in the top paddock. Check out these charts. The only US demographic enjoying anything above modest pay rises is youth: They are unskilled: Uneducated: Poor: Sheilas:
In the US, there are mounting signs that the supply side squeeze is coming to an end. Goods inflation is still unsustainably elevated versus services: Despite the extreme demand, manufacturing output is swiftly catching up: Backlog has slumped: So is global shipping: On the services side, rental inflation is flaming out: Does the US extremity
Calculated Risk with the note: On Friday at 8:30 AM ET, the BLS will release the employment report for November. The consensus is for 563 thousand jobs added, and for the unemployment rate to decrease to 4.5%. There were 531 thousand jobs added in October, and the unemployment rate was at 4.6%. • First, currently
Goldman with the note: The November FOMC minutes provided little new insight into the FOMC’s tapering plans. All participants judged it appropriate to announce the start of tapering at the November meeting and “some” participants favored a faster taper, but the September minutes had already revealed that “several” participants advocated for a more rapid reduction
