US Economy

From Westpac’s rising star, Elliot Clarke: As we come to the end of October, we find ourselves facing a new state of affairs.

By Leith van Onselen Just six years ago, the US and a number of European nations experienced first hand the carnage of a full scale property bust.

From Westpac’s excellent Elliot Clarke: Since mid-June 2014, the oil price has fallen by over 20% and gasoline and heating oil futures have followed suit. The price which consumers pay for gasoline at the pump is down a more modest (but still substantial) 13% from its late-June peak.

When it rains, it pours: 3Q 2014 earnings preview: The dollar, oil prices, and earnings Global growth concerns and FX headwinds put a negative spin on this earnings season.

The FOMC minutes were out last night and here are the money quotes: Inflation had been running below the Committee’s longer-run objective, and the readings on consumer prices over the intermeeting period were somewhat softer than during the preceding four months, in part because of declining energy prices.

As I’ve argued many times, the US bond bull market that many expect to die is the new incarnation of the Japanese “widow-maker” trade.

From Westpac’s rising star Elliot Clarke comes a terrific chart pack on the US economy.

by Chris Becker Not so much another bear that’s hitting the airwaves as this broad market correction carries on, but one of the best foxes in the business. I’m a big fan of Ray Dalio at Bridgewater (manages around $160 billion) and when he talks, you should listen.

by Chris Becker There’s something to be said for the notion that what is saving the US’s proverbial bacon at the moment is not monetary policy from the Fed but its huge internal oil/gas boom.

by Chris Becker The divergence between the US and European economies, including that of the real central power in Germany, continues with the recent economic data reinforcing this belief.

From Westpac’s excellent Elliot Clarke: Ahead of the August employment report, nonfarm payrolls had maintained a robust pace of growth through 2014, averaging 230k new jobs per month.

From Calculated Risk: Here is a summary of recent data:• The ADP employment report showed an increase of 204,000 private sector payroll jobs in August.

More Goldilocks US data overnight. The ISM manufacturing is booming (charts from Calculated Risk): Economic activity in the manufacturing sector expanded in August for the 15th consecutive month, and the overall economy grew for the 63rd consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

Last night saw more Goldilocks US data.

US markets bulled up again last night on Goldilocks data.

From Westpac’s Elliot Clarke: With the unemployment rate now having declined from 10% to 6.2%, the July 29–30 meeting saw the FOMC adjust their labour market benchmark from a (now not) elevated unemployment rate to the much more amorphous concept of “underutilization” or labour market slack.

From Citi: The consensus expectation is overwhelming that Fed Chair Yellen will deliver a dovish message at Jackson Hole.Macro investors have largely eliminated their short Treasury position and look to be long risk, particularly via equities and EM.

The FOMC minutes were out last night.

Good US data last night. Inflation eased (chart from Calculated Risk): According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.1% (1.5% annualized rate) in July. The 16% trimmed-mean Consumer Price Index also increased 0.1% (1.6% annualized rate) during the month.

From Westpac’s Elliott Clarke While it may not receive the press coverage of headline data outcomes, the NY Federal Reserve’s Quarterly Report on Household Debt and Credit is as important, providing an up-todate portrait of the evolving financial position of US households.