US Economy


How did Trump deliver his boom?

It wasn’t hard, via Shane Oliver: It’s been the norm for the US budget deficit to blow out when unemployment rises (as tax revenue falls and jobless claims go up) and decline when unemployment falls. Thanks to Trump’s fiscal stimulus it’s now blowing out when unemployment is collapsing and looks to be on its way


US Democrats have a good idea about GDP

By Leith van Onselen With US real GDP expanding at an annualised rate of 4.2% in the second quarter, partly on the back of the sugar hit from the Trump Administration’s massive corporate tax cuts: A new bill from Democrat Senators Chuck Schumer and Martin Heinrich are demanding a new measure of economic growth that


Which yield curve inversion is the one to watch?

Via the Federal Reserve: Information in the Yield Curve about Future Recessions Michael D. Bauer and Thomas M. Mertens The ability of the Treasury yield curve to predict future recessions has recently received a great deal of public attention. An inversion of the yield curve—when short-term interest rates are higher than long-term rates—has been a


CLOs: The new US sub-prime debt bubble

Via Moody’s: Significant Differences, Erie Similarities The U.S. business cycle has entered its boom phase. This is a period that typically comes closer to the end of the cycle, just prior to a recession. It is characterized by robust economic growth, tightening labor and product markets, intensifying wage and price pressures, monetary tightening, and higher


Risk schmisk! Why US stocks are bullet proof

Investment markets are late in the economic cycle,  the issue being that you never know when the end will come. However, there are some signs that it is not here yet for US equities at least – and there is the potential that US equities will hold the rest of the world out of the abyss


Trump impeachment odds surge

Via Oddschecker: A spike in bets have followed the guilty plea of Michael Cohen. Michael Cohen yesterday pleaded guilty to violating campaign finance laws during the 2017 presidential run and that has caused pressure to build on Trump’s administration. That admission relates to hush money paid to Mr Trump’s lovers and has seen the 72-year-old’s


How does the great US decoupling end?

Readers and investors will know that the MB Fund’s prevailing narrative for 2018 was “reverse decoupling”. That is, that global synchronised growth would slump quickly into US leadership and a growing EM crisis around a rising USD and slowing  China. This, in turn, would club commodities lower and contain US inflation and bond yields boosting


What Trump policies should you worry about?

In The Hitchhikers Guide to the Galaxy there is a galactic president: The President is very much a figurehead… the qualities he is required to display are not those of leadership but those of finely judged outrage. For this reason the President is always a controversial choice, always an infuriating but fascinating character. His job is not


As Aussie household debt hits record high, America’s retraces to 2002

By Leith van Onselen The latest data on household debt from the RBA shows that Australia’s household debt-to-disposable income ratio hit a record high 190% in March 2018: With this in mind, it’s interesting to read Elliot Clarke’s (Senior Economist at Westpac) analysis showing that US household debt-to-disposable income (90%) is now back to 2002


US stocks echoing the 2000 bubble high

by Chris Becker Predictions are hard to make, especially about the future and while trying to overlay charts from different periods can lead to the gambler’s fallacy, it’s when fundamentals collide with technicals that you should pay attention. For US stocks their are some alarming parallels with the end of the 2000 bubble today, according


Strong US economic growth won’t last

Cross posted from The Conversation: by Richard Holden Professor of Economics and PLuS Alliance Fellow, UNSW The US economy grew at a startling 4.1% in the second quarter, the first time in four years it has hit the 4% mark. It was not surprising that President Donald Trump was both delighted and vocal about the figures. “Once again,


Federal Reserve goes strong on US economy

by Chris Becker The FOMC meeting by the Federal Reserve overnight came and went without much fuss, but traders and analysts are focusing in on the “strong” phrase, used no  less than five times in the statement. All bets are on for another rate rise very soon, but the USD had this prices in on


Trump mulls further tax cuts for rich

By Leith van Onselen There is little doubt that the Trump Administration’s tax cut package has been a disaster for ordinary Americans. A few weeks back it was revealed that the US Budget Deficit is projected to balloon past $1 trillion next year: This deterioration in the US Budget deficit has been blamed on the


US earnings still powering ahead

A frequent focus point for the media is whether a company “beat” its earnings forecasts or not. But the definition of a beat or miss is poorly constructed, and often misleading. For me, changes in forward estimates are a more reliable indicator of whether a reporting season is progressing well or not. On that basis,


Is the base metals crash the end of the cycle?

Via Moody’s: Base Metals Price Drop Suggests All Is Not Well Though it goes practically unmentioned, one of the more unexpected developments of late has been the stunning collapse of Moody’s industrial metals price index. In part, the industrial metals price index’s average of July-to-date is a deep 8.2% under its June 2018 average because


Is a US recession imminent?

DXY was firm again last night: AUD fell then recovered versus DMs: Was stronger versus EMs: Gold held on: Oil too: Base metals firmed: Big miners bounced: EM stocks eased: Junk firmed: Treasuries were sold: Bunds bought: Stocks were firm: US data was soft with ordinary housing starts. US Treasury Secretary Larry Kudlow temped fate:


How quickly will the Trump boom slow?

Via Westpac: FOMC Chair Powell appeared before the Senate’s Committee on Banking, Housing, and Urban Affairs overnight in part one of his Semiannual report to Congress. Abstracting from the frequent political focus of the Committee, Chair Powell’s message on the economy was clear: “the FOMC believes that – for now – the best way forward


Paul Kelly develops Trumpian hysteria

Paul Kelly has developed Trumpian hysteria: Donald Trump’s quest to become a man of destiny has scaled new peaks with his aspiration for collaborative ties with Russia’s Vladimir Putin, his public repudiation of US intelligence agencies in favour of Putin’s assurances, and his eclipse of the 70-year-old system of US global leadership buttressed by alliance systems.


US Q2 earnings set to boom

Good breakdown by Credit Suisse (via the Wall Street Journal) on where the US earnings growth is coming from: Oil is good for a small set of companies, bad for the rest. But unless the oil price falls the earnings growth will be repeated in 3Q and 4Q. Taxes are one-off but set to continue


The rude health of US corporate debt markets

From Moody’s: Outstandings of Rated U.S. Corporate Bonds Dip from 2018’s First to Second Quarter According to Moody’s Capital Markets Research Group, second-quarter 2018’s outstandings of Moody’srated U.S. corporate bonds excluding ABS and MBS rose by 3.3% year-over-year to $7.212 trillion, which was a slight 0.6% under first-quarter 2018’s record high of $7.259 trillion. The


US jobs preview

The monthly US jobs preview Calculated Risk: On Friday at 8:30 AM ET, the BLS will release the employment report for June. The consensus is for an increase of 190,000 non-farm payroll jobs in May (with a range of estimates between 144,000 to 212,000), and for the unemployment rate to be unchanged at 3.9%. The


Where will trade wars end?

Via Morgan Stanley: We no longer doubt that the US administration’s proposals signal the direction of trade policy. An escalatory cycle of protectionist actions, not just rhetoric, has begun and will continue. It’s another reason why pressure should continue in risk markets, which now must eat their US policy vegetables after feasting on dessert in