by Chris Becker Friday night saw the release of the much anticipated second quarter US GDP print with the Bureau of Economic Analysis (BEA) reporting 0.6% growth, or 2.6% annualised. While this was much better than the first quarter, and only slightly below expectations, the so-called acceleration is seasonal and does not represent a new
Via Citi: Balance sheet reductions and tapering Since 2008, central bank balance sheets across advanced economies (AEs) have expanded dramatically (e.g. Fed balance sheet went from 6% of GDP in 2007 to around 25% of GDP in 2015 and the ECB balance sheet went from 13% of GDP in 2007 to around 38% currently) and
Via Westpac: In recent months, uncertainty over the outlook for US inflation has grown. From a peak of 2.8%yr in February, headline CPI inflation abruptly fell back to 1.6%yr in June. Similarly core inflation (which excludes the impact of food and energy) slowed from 2.3%yr in January to 1.7%yr. Albeit only available to May, the
From The Hill: Rep. Brad Sherman (D-Calif.) formally introduced an article of impeachment against President Trump on Wednesday that accuses the president of obstructing justice during the federal investigation of Russia’s 2016 election interference. This is the first time a lawmaker has offered an impeachment article against Trump, and it comes as Democrats have debated whether it is
Via Politico: President Donald Trump is increasingly unlikely to nominate Federal Reserve Chair Janet Yellen next year for a second term, four people close to the process said. National Economic Council Director Gary Cohn is now the leading candidate to succeed Yellen as the world’s most important central banker, these people said. Yellen begins two
Via Citi: Today’s release of a series of emails by Donald Trump Jr., President Trump’s son, and the subsequent reaction by financial markets and in the news media has again highlighted one of this year’s key political risks: concerns about durability of the Trump Administration, and its ability to pass the pro-business legislative agenda that
Following a sharp selloff of US tech shares, concerns about a NASDAQ bubble 2.0 are climbing. Via Societe Generale: The sell-offs themselves are not particularly unusual, but the uniformity of the prices moves all on the same day indicates a market driven by price chasing momentum, with investors heading for the door all at the
The Aussie dollar took off Friday night against the USD and firmed against EUR: It also rose against most EMs: Gold broke out: Brent broke down: Base metals were mixed: Big miners were flat: Em stocks hit new highs: US high yield is firming as EM stalls: The US yield curve was crushed: European spreads
Via Deutsche: Summary The common wisdom is that Fed tightening combined with tapering could lead to greater volatility. The reality is far more complex, it is more like a driver shifting gear to adjust his deceleration as he coasts to the red light. If he doesn’t he might just have to hit the brakes hard.
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
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
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
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
DXY broke support and sank Friday night. Euro soared: Commodity currencies mostly rose a bit: Gold held on: Brent roared back: Base metals had a muted bounce: Big miners benefited from short covering: EM stocks bounced: High yield is fine: US bonds were sold but the curve flattened: European spreads tanked a Marine Le Pen
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
I generally take Ambrose Evans-Pritchard with a grain of salt but this can’t be ignored: Global recession risk rises as the US and China tighten into the storm Equity investors across the world are positioned for the nirvana of synchronised and accelerating global expansion led by China and the US. What they may instead get
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,
From Zero Hedge comes come some cool charts today: Is that meaningful or bear porn? Q1 US GDP was pretty ordinary at 0.7% last week, weighed down largely by a lackluster consumer who retrenched at the fastest quarterly pace since the GFC: Is this some kind of election hangover? Certainly it sits completely at odds with
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
Care of Elliott Clarke at Westpac: Ever since the GFC (if not many years before), financial conditions and taxation in the US has favoured wealthy households. On financial conditions: the ownership of property is heavily skewed towards the wealthy; the same can be said of stock holdings, both those held directly (which depend on existing
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
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
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
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
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
