US Economy


US lowflation temporary or permanent?

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


Democrat launches Trump impeachment

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


Vampire squid wraps tentacles around the Fed

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


Impeachment risks rise as Trump’s Russian debacle deepens

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


Stocks roar as US lowflation returns

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


Will reversing Fed QE trigger volatility?

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.


Markets dismiss hawkish Fed

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


The US Health system is busted

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


Has Trump killed the Trump trade?

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


Is Trump headed for Watergate?

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


Previewing US jobs

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


Is Chimerica about to “buckle”?

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


Understanding the Trump tax plan

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


Trump’s tax plan fail: More for the rich

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


Is the Canadian property bubble bursting?

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


Trump-Australia propaganda flows

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


US jobs good enough

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


Fed hawks up with good US data

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


Xi set to run rings around Trump?

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


Will the US strike North Korea pre-emptively?

Via The Australian: The US is “rapidly and dangerously” edging closer to taking military action against North Korea’s nuclear missile program, a former general close to President Trump says. Jack Keane, a four-star general who declined a role in the cabinet, said: “A pre-emptive strike against launch facilities, underground nuclear sites, artillery and rocket response


Grantham: US stocks not a bubble

Pop over to view Jeremy Grantham at the WSJ for a cold shower if you’re concerned about US stocks being in a bubble. Below as well is a nice antidote the recent concern over US corporate lending, via Citi:  The recent investor focus on decelerating C&I loan activity as a gauge for economic trends and


Trumps ramps anti-China tweetoric as Xi meet agreed

Our Donald: Amid this: The Trump administration appears poised to cement China’s unfavorable status in trade cases, making Chinese goods eligible for higher U.S. tariffs well into the future. U.S. officials are preparing a review of China’s “market-economy status” under the World Trade Organization, according to official documents on the Commerce Department website. The review


US GDP rocks and rolls with consumer

DXY is back: Commodity currencies fell: Gold too: Brent rose as sell side permabulls pile in: Base metals fell: Big miners were mixed: EM stocks lifted: HY too, with oil: US bonds were sold: European spreads widened: And stocks rose, especially in Europe: Two events dominated the night. Reuters hosed off ECB tightening: European Central


Trump’s wealthy consumers are very happy

From Westpac, some good material on the US consumer: Confidence is a key factor for the underlying health of the economy and its ability to adjust to changes in the stance of monetary policy. Simply it determines households’ willingness to consume and invest as well as firms’ investment and employment decisions. Following the election of President