Today’s links are really, really thin. Apologies. I have been tied up doing other things. But I wanted to show you what I am looking at. Note the top two links showing ‘peak expansion’ in the U.S. This is something we need to watch. We need to see 2nd derivatives re-assert an upward trend in the next month or two or I will become convinced this business cycle is headed down permanently.
Here, Tim Duy notes that GROWTH in retail sales ex autos and gas is slowing i.e. second derivatives have turned down somewhat. As you know, I am big on 2nd derivatives in terms of their signal. While the European ones signal recovery, the US ones signal peak expansion.
This chart suggests the peak for economic growth may behind us in this particular cycle. I don’t put a lot of weight on consumer sentiment surveys thoug. It’s just another data point.
“The real estate market in cities across India is crumbling as the Indian economy slows. The rupee has dropped nearly 20 percent against the dollar since early May, scaring away foreign investors.
The Reserve Bank of India, the country’s central bank, raised a key short-term interest rate for commercial banks’ borrowing by two full percentage points in mid-July, to 10.25 percent, mainly to prevent further declines in the rupee. To put a brake on the flow of money leaving the country, the central bank followed up last month with a regulation banning Indians from transferring money overseas for real estate purchases.
Rising financing costs are all the more painful because India’s real estate developments take a long time to build because of a vast and often corrupt regulatory apparatus.”
“Twitter surprised Silicon Valley, Wall Street and even its own employees when it revealed it had filed documents for an Initial Public Offering of with American regulators. “
“U.S. consumers spent more cautiously at retail outlets in August, raising doubts about a long-expected acceleration in economic growth in the second half of the year.
Retail sales rose a seasonally adjusted 0.2% in August from a month earlier, the Commerce Department said Friday, a smaller gain than the 0.5% rise forecast by economists and the weakest increase since April.”
These two paragraphs capture the tension in Chinese economic policy between stimulus and cleanup.
“Imagine the catastrophe in the Chinese banking system today if the government had not recapitalised the banks a decade ago! But I think we would have had a much more efficient and leaner banking system today. More importantly, we would not have had the unpleasant inflation and credit explosion that ensued.
Bad loans and thin capital cushions are indeed a worry. But a much bigger threat to a bank’s survival is a weak economy and thus poor demand for loans, as has been the case in Japan in the past two decades.”
Here’s another good retrospective on the financial crisis from Greg Ip over at the Economist
“as markets mark the anniversary of that Lehman collapse, is the system any safer or saner? The answer is both Yes and No. The good news is that the chance of another full-blown banking crisis has receded: some of the crazier innovations have been reined in, banks are better capitalised and financiers more cautious.
But the bad news is that the system is just as insane – perhaps more so. There are a host of developments that are at best counterintuitive, and at worst dangerously bizarre.”
Wow: “Dr. Shiping Bao, the Volusia County medical examiner who was in charge of handling slain-teenager Trayvon Martin’s body in February 2012, has come out and claimed that the prosecution team was biased against the African-American teenager, and intentionally lost the case. According to Bao’s attorney, Willie Gary, the medical examiner’s office, the state attorney’s office and the Sanford Police’s “general attitude was that [Martin] got what he deserved. He was in essence told to zip his lips. ‘Shut up. Don’t say those things.'” Dr. Bao is speaking out in the wake of having been fired from the m.e.’s office, and is planning a $100 million lawsuit against the State of Florida. “
This has been a long time coming:
“The euro crisis has been on the back burner lately, but the problems facing banks in Slovenia are coming to a head. Billions of euros in bad loans make the country a candidate for the next bailout.”
Interesting analysis of Obama’s speech on Syria. I like the color coding. I have less and less time to unpack these things though. I have grown very skeptical of whatever any politician says justifying why they are doing something. Rather than listen to their rationale, I like to just figure it out for myself.
Terrible data from Italy. Watch this to see whether we are already seeing Italy fall by the wayside in this incipient European upturn.
“Italian industrial output was much weaker than expected in July, falling 1.1 percent and pouring cold water on hopes that the country might emerge from its longest post-war recession in the third quarter.”
AMAZING. If you told me four years ago that Putin would be upstaging Obama with NYTimes Op-Eds, I wouldn’t have believed you. AND it makes sense. Wow. This is bad for Obama.
Corzine’s view is similar to Dick Fuld’s at Lehman.
“The following is an excerpt from an article published by the Center for Public Integrity, a non-profit, independent investigative news organization. It is reprinted here with permission. In the accompanying video, the story’s author examines the lives of former Wall Street executives at the heart of the 2008 financial crisis. You can read the entire story here.”