US Economy

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US house prices might be getting frothy again

Last night saw the twin release of US consumer confidence figures and the Case Shiller House Price index. To say these are highly correlated is an understatement with the full transformation of a shelter consumer good that depreciates into a financial asset that has been turned into an ATM. Anyway, the April house price indicies are in

3

How far can the US economy run?

Via the always good value Tim Duy at Fed Watch: Headlines blared the latest recession warning today, this time from David Rosenberg of Gluskin Sheff & Associates. The culprit will be the Fed: “Cycles die, and you know how they die?” Rosenberg told the Inside ETFs Canada conference in Montreal on Thursday. “Because the Fed puts

3

When is the next US recession coming?

Via the AFR: A US recession could occur within the next two years according to former US bond trader Charlie Jamieson, who says the flattening of the bond yield curve is a signpost of possible trouble ahead. Speaking on a panel on global macro at Livewire Live 2018, Mr Jamieson, executive director at Jamieson Coote

1

When will the US economy fall off its fiscal cliff?

Some more good work from Damien Boey at Credit Suisse today: US inflation picks up a little further US headline CPI rose by 0.2% in May, taking year-ended headline inflation higher to 2.8% from 2.5%. Excluding food and energy, core CPI rose by 0.2% over the month, taking year-ended core inflation slightly higher to 2.2%

69

G7 screws the US pooch

While the world’s press is busy lapping up the anti-Trump hysteria post-G7, let’s stop and ask what did they expect? Via The Guardian: Donald’s Trump’s chief economic adviser said the US pulled out of a G7 communique because the Canadian prime minister, Justin Trudeau, “stabbed us in the back” and accused the leader of one America’s

6

All hail the US economy!

EUR fell Friday night and DXY rose: The ludicrous EUR long pulled back but nowhere near enough: AUD rallied with risk: EM currencies are still in trouble: AUD shorts were roughly unchanged: Gold fell: WTI was smashed but Brent held on. The spread is huge now as shale oil floods the US but pipeline bottlenecks

1

US jobs preview

Courtesy of Calculated Risk: On Friday at 8:30 AM ET, the BLS will release the employment report for May. The consensus, according to Bloomberg, is for an increase of 190,000 non-farm payroll jobs in May (with a range of estimates between 155,000 to 220,000), and for the unemployment rate to be unchanged at 3.9%. The BLS

6

Inside the Fed’s risks

Via Elliot Clarke at Westpac: The minutes of a FOMC meeting typically hold little significance for the market. In this instance however, there is cause for a closer look. This is because the May minutes provide a clear assessment of the risks that the US currently faces, particularly with respect to inflation; financial conditions and

2

Young Americans left behind in post GFC recovery

By Leith van Onselen The Federal Reserve Bank of New York (FRBNY) has released research examining “Home Prices, Housing Wealth and Home Equity Extraction”, which reveals that US home prices has finally rebounded above their pre-GFC peak: Home ownership has returned to is long-run (lower) ‘normal’ level: But like in Australia, has collapsed for younger

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, according to Bloomberg, is for an increase of 191,000 non-farm payroll jobs in April (with a range of estimates between 145,000 to 255,000), and for the unemployment rate to decline to 4.0%. The BLS reported 103,000

11

Echoes of the Mining GFC

DXY flew higher last night as EUR tanked. I reckon there’s another 5% in this move for both as the mad EUR long unwinds: AUD held on against DMs: EMs are breaking: Gold is at the brink: Oil looks toppy: Base metals are fighting a losing battle: Big miners too: EM stocks are breaking: EM

3

Why the Petroyuan is no big deal

Via UBS: RMB-denominated oil contracts began trading for the first time in Shanghai on March 26. We believe that in the long term this will ultimately change how oil is traded globally, create a Petroyuan currency flow, increase the role of the RMB as a global trading currency, and compel investors to up their allocations to Chinese financial assets.

8

When will the US lead us into the next recession?

Via Moody’s: Who to Blame for the Flattening Yield Curve The U.S. economy is humming along, but we believe that the economy will weaken and likely fall into recession sometime in 2020 as the boost from the fiscal stimulus fades. There is considerable uncertainty in the timing of the next recession, but the U.S. bond

10

US corporate tax cuts fuel share buybacks, not investment

By Leith van Onselen Treasurer Scott Morrison has confirmed that the Turnbull Government will persist with its policy of progressively reducing the tax rate for all companies, claiming they are essential to fuel investment, jobs and wages growth. From The AFR: “We’ve had significant success already in delivering tax cuts for small and medium-sized businesses

7

Stocks go boom as Trump zips it

All he needed to do was shut up. DXY up: AUD down across the board: Gold off: Oil held on: Base metals were mixed: Big miners rallied: EM stocks too: And junk: The Treasury curve flattened: And bund curve: Stocks took off: Trump managed to shut up for a day and China announced some minor

7

Um, hello, China selling Treasuries is a good thing

Some nice MSM panic today via Reuters: Whether China is reducing its vast holdings of U.S. Treasury bonds is a persistent question in global markets, and the recent escalation in trade tensions between the world’s two largest economies means the question is increasingly on investors’ minds. The U.S. Treasury’s latest report on international capital flows

8

Virtue signalling missiles clear path for markets

DXY firmed Friday night: AUD was mixed: But EMs are weak: AUD CFTC positioning fell a little: Gold rose: Brent too: Despite a climbing US rig count: Base metals were mixed: Miners firm: EM stocks weak: Junk firm: Treasuries soft: Bunds strong: Stocks stable: Syrian missiles upset the apple cart but there does not seem

0

US profits have room to boom

Via Moody’s: Profits Growth Curbs Defaults First quarter 2018’s earnings season has arrived. Though the annual increase of corporate revenues is expected to slow from its pace of 2017’s final quarter, operating income is expected to quicken. Tax cuts and the containment of labor costs help to explain the expected improvement in operating leverage, or

0

“Sell the rips”

DXY was sold last night: AUD was roughly stable against DM: But strong against EM: Gold firmed: Oil too: Base metals were mixed: Big miners weak: EM stocks too: Junk was better: The Treasury curve flattened: And bunds: Stocks soared then flamed out: Everyone is a bear or bear in waiting now. Last night’s bid

2

Tariff tantrum builds

DXY fell Friday night: AUD went risk off anyway: Not as much as EM forex: Gold lifted: Oil was hit as the US rig count jumped 11 to 808: Base metals were mixed: Big miners fell: EM stocks too: Junk held on: Treasuries were bid: And bunds: Stocks were walloped: Stocks should have done well.

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Do Americans support Donald’s China trade war?

That’ll decide it in the end. From The Hill: A strong majority of Americans believe the U.S. should take steps to correct its trade deficit with China, but a majority disapprove of President Trump’s proposed tariffs and there are fears that a trade war could damage the economy. According to the latest Harvard CAPS/Harris Poll, 71 percent

0

Previewing US jobs

From Goldman: We estimate that nonfarm payrolls increased 200k in March, 15k above consensus. While we believe elevated snowfall will cause job growth to decelerate from the +276k average pace in the prior two months, labor market fundamentals remain solid and appear to have improved further. …we estimate the unemployment rate fell to 4.0% in March.