US Economy


Sell gold! Or why the US dollar is not going to weaken

Via Bloomie: The U.S. dollar may be poised to decline, according to Goldman Sachs Group Inc. Comments from Federal Reserve Chairman Jerome Powell on Friday boosted the chances that the central bank will pause interest-rate increases, strategists at Goldman wrote in a note Saturday. Powell cited the events of 2016, when rates were kept unchanged through


US jobs report preview

From Calculated Risk: Note: The Employment report will be released as scheduled, and not postponed by the government shutdown. On Friday at 8:30 AM ET, the BLS will release the employment report for December. The consensus is for an increase of 180,000 non-farm payroll jobs in December (with a range of estimates between 160,000 to 200,000),


When will the Trump shutdown end?

by Chris Becker As adult supervision returns to Congress (but not the Senate) on January 3rd, the US Government shutdown rolls on with news this morning that President Trump has invited the new Congressional leadership to the White House. From The Hill: Trump will host the leader and whip of each party from both chambers,


US Treasury secretary reassures markets again

Via CNN: In a precautionary move, Treasury Secretary Steven Mnuchin spent Sunday on the phone speaking with the chief executives of some of the country’s largest banks to avoid yet another market whiplash when Wall Street opens Monday, according to a person familiar with the matter. The secretary, who has been visiting his children in


When will the Fed blink?

Via Ambrose Evans-Pritchard: Monetary tightening by central banks is like trying to pull a brick across a rough surface with elastic: nothing happens; still nothing happens; then it leaps up and hits you in the face. The US Federal Reserve’s Jerome Powell may have a broken nose after asserting stubbornly this week that he would


Does the US have a new housing bubble?

“No” is the short answer, via Calculated Risk: Last Friday, Professor Robert Shiller wrote in the NY Times: The Housing Boom Is Already Gigantic. How Long Can It Last? We are, once again, experiencing one of the greatest housing booms in United States history. How long this will last and where it is heading next are


Goldman doves up on Fed, lifts AUD

And so it begins, from Goldman which has been far too hawkish this cycle all along: Relative to the turmoil in the financial markets, the economic numbers have been remarkably stable recently. Admittedly, jobless claims have risen and November payrolls fell somewhat short of expectations. But a report showing 155k new jobs and a decline


US jobs preview

Via Calculated Risk: On Friday at 8:30 AM ET, the BLS will release the employment report for November. The consensus is for an increase of 190,000 non-farm payroll jobs in November (with a range of estimates between 140,000 to 220,000), and for the unemployment rate to be unchanged at 3.7%. Last month, the BLS reported


What has Cold War 2.0 cost Trump’s stock market?

Via FTAlphaville: Just days after President Trump broke bread with Chinese president Xi Jinping in Buenos Aires and agreed to a ceasefire in the US-China trade war, Trump tweeted that his administration is working closely “on seeing whether or not a REAL deal with China is actually possible”. If not, the self-proclaimed “Tariff Man” warned that new


Is the Fed about to stop hiking rates?

Via Goldman: How Does Fed Policy React To Stock Market Declines? The equity market sell-off since the beginning of October has led to questions around whether the Fed will maintain its current path of rate hikes. Historically, the Fed appears to have responded with more accommodative policy after stock market sell-offs, on average (Exhibit 1). This


Why Trump tax cuts failed

From Paul Krugman: The answer, I’d argue, is that business decisions are a lot less sensitive to financial incentives — including tax rates — than conservatives claim. And appreciating that reality doesn’t just undermine the case for the Trump tax cut. It undermines Republican economic doctrine as a whole. About business decisions: It’s a dirty


Westpac: US wage inflation contained

Via Westpac: Nonfarm payrolls rebounded strongly in October following a disappointing September print – a consequence of Hurricane Florence’s disruption. October’s 250k gain leaves the three-month average at 218k, in line with the month-average for 2018, but ahead of 2017’s 182k. The unemployment rate was unchanged at 3.7% – a near 50-year low – as


US debt markets still solid despite equity ructions

Via Moody’s: Net Stock Buybacks and Net Borrowing Have Yet to Alarm Recent outsized advances by equity prices probably owe something to either actual or anticipated buybacks of common stock. Both the relative steadiness of corporate credit quality and ample amounts of corporate cash now improve the outlook for equity buybacks. In the Financial Accounts


Trump looks to MOAR tax cuts

Via Reuters: The White House and Republicans on the House of Representatives tax-writing committee vowed on Wednesday to take “swift action” next year on a 10 percent tax cut for middle-class Americans. In a joint statement, the White House and the House Ways and Means Committee’s Republican members said they would push the tax-cut legislation


What will US mid-terms do to markets?

Via Goldman: Allison Nathan: How do you expect the midterm elections to play out? Alec Phillips: It’s hard to argue with the consensus view that Republicans will hold the Senate and Democrats will win the House majority. Polling suggests the chances of the Democrats gaining the Senate majority have declined in recent weeks, but they appear to


President Trump rallies into the mid-terms

The latest polls show Mr Trump at post-election highs: Morgan Stanley mulls outcomes: Trade risk is a constant. On election night, focus on other variables. While much is made of election outcomes influencing markets by shifting trade policy, we think this is overstated. Even if Democrats take control, they have their fair share of trade


Trump boom to fade not bust

Via Westpac: The latest GDP report for the US showed their economy in strong form, with a 3.5% annualised gain in the three months to September following the June quarter’s 4.2% rise. For the year to date, growth is currently running at a 3.3% annualised pace, close to twice potential. In assessing the outlook for


US debt withstanding equity crunch

Via Moody’s: Financial Liquidity Withstands Equity Volatility for Now Higher interest rates and trade related frictions, including the effective tax hikes brought on by the imposition of tariffs, have lowered the market value of U.S. common stock by 8.1% from its current zenith of September 20, 2018. Thus far, systemic financial liquidity has yet to


US tech is no bubble

I am bemused by those endlessly calling US tech a bubble. It’s not. Goldman shows us why today: This is secular growth story as lowflation drives ever more technology productivity spending: Multiples are almost fantastically cheap for the growth: There are some dimensions of bubblyness in frontier firms and the new age FAANGS – such


MV Tampa sails into Trump’s lap

Via AFR: The Trump administration has intensified its claims “Middle Easterners” have hidden themselves in a caravan of thousands of Central American migrants marching towards the US border from Honduras through Mexico, in a move that analysts say will swing key Senate battlegrounds to the GOP. “It’s inconceivable that there would not be individuals from


Is the US housing market about to crash?

As interest rates rise the US housing market has begun to slow and stock prices of home builders have crashed: Is this the beginning of the end for the US expansion? Via BofAML: Home prices nationally, as measured by the S&P CoreLogic Case-Shiller index are running at 6.0% yoy as of the latest data in


Jacksonian Trump whacks Saudi with lettuce leaf

Via Bloomie: President Donald Trump said he’s immediately sending Secretary of State Michael Pompeo to Saudi Arabia to meet with King Salman bin Abdulaziz and suggested that “rogue killers” might be behind the disappearance of journalist Jamal Khashoggi in Turkey. Trump commented on Monday after he said the king, in a 20-minute phone call, offered


How high will US interest rates get?

Via Westpac: Though credit spreads in the US are off their lows, they have remained relatively impervious to the heightening global risks surrounding trade and geopolitics. This partly reflects the strength in the US economy which has continued to support corporate earnings. With credit spreads in the US and Australia tightly linked, our spreads have


US jobs boom will fizzle

More on the US jobs market from Westpac’s Elliot Clarke today: The US labour market delivered again in September, as strong employment growth continued and the unemployment rate fell to a new low dating back to 1969. Despite this strength however, the wages data did little to rebut Chair Powell’s message of recent weeks that