Tag: economic data

Europe on the mend and China decelerating

Europe on the mend and China decelerating

The Euro area composite PMI rose to 54.0 from 53.1, making it unlikely that the ECB will move against deflation in May The Chinese HSBC/Markit flash manufacturing PMI was up to 48.3 from 48.0. However, this still shows contracting manufacturing and means China is still rebalancing Yesterday on Boom Bust, […]

Secular versus cyclical factors in equity markets

Secular versus cyclical factors in equity markets

Continuing where I left off yesterday, it’s clear that the global economy is growing now. We see growth in the US, Europe, Japan, and in emerging markets. Economic growth is the norm, not the exception. And over the longer term, markets will rise to reflect that growth. That’s what I mean when I say market and economic momentum is up and to the right. Here’s the problem; there are periods of time when economies and markets fall out of bed. And sometimes the upheaval is so great, it turns into a generational divide – a depression and/or secular bear market. I believe there is a good case that we are still both in a depression and a secular bear market and I want to explain how that matters below.

Dealing with confirmation bias in macro analysis at market turning points

Dealing with confirmation bias in macro analysis at market turning points

My macro view for most of the global economy is upbeat. My only downbeat views concern deceleration of growth in emerging markets and froth in capital markets. But in the main, market and economic momentum is up and to the right. The natural path is progress. Or at least it has been for the last couple hundred years. In that vein, I see the US in a middling upturn, Europe in an improving recovery and China in a softish landing due to loss socialization. But if you read my daily analysis, it is full of worry and in-depth coverage of downside risks. For some of you, it can be confusing. You’re saying to yourself, “I thought you were upbeat about this.”

Four key reasons for capex accelerating

Four key reasons for capex accelerating

Sober Look’s received a number of e-mails regarding the recent post on the possibility that rising CAPEX spending in the US is driving corporations to tap their credit facilities, thus increasing loan growth. Most were highly critical of this line of thinking in their comments, using words such as “bogus”, “propaganda”, “head fake”, “delusional”, etc. But let’s just look at 4 key data points.

The lower bound of central bank effectiveness

The lower bound of central bank effectiveness

Through the lens of someone looking at economies with rapidly ageing populations we can simply say that this problem arises because there isn’t any consumption to pull forward! Fisher’s interest theory was always valid, it is merely that in the context of a rapidly ageing population the consumption smoothing mechanism breaks for obvious and quite logical reasons. Quite simply, even in ZIRP you are not stealing a sufficient amount of “future” growth to kick-start the recovery because such future growth is not there.

Some thoughts on Ukraine, part 1

Some thoughts on Ukraine, part 1

It is about time I did a long-form political economy piece because a lot of what is occurring in emerging markets is of that ilk. The political economy dominates the economics of the issues in a way that makes discussing markets and economics very much related to politics. Here I want to concentrate on Ukraine because I believe it has become an important point of conflict for the future geopolitical landscape.

Can the Jobs Data Give the Dollar Another Leg Up?

Can the Jobs Data Give the Dollar Another Leg Up?

The US dollar is consolidating yesterday’s gains that were scored largely in response to Draghi’s revelation that QE and a negative deposit rate were discussed at the ECB meeting. The consensus expects that the US economy grew 200k jobs last month and that the unemployment rate ticked down to 6.6% from 6.7%. In addition, the ISM for the service sector saw a strong recovery, providing new information we did not have at the start of the week. The bottom-line here is that US economic growth picked up in late Q1.

The US jobs market is healing

The US jobs market is healing

We are seeing signs of significant improvements in US labor markets. The ADP report today was certainly an indication of recovery from the winter slowdown. One area to watch in the ADP report is construction, as construction payrolls have consistently increased each month over the past year. With demand for rental units remaining high, this sector could pick up quickly.

Relief rally in emerging markets

Relief rally in emerging markets

The emerging markets crisis has died down recently and we are resuming a normal bull market. That is bearish for gold. But when the emerging markets crisis heats up again due to the Chinese slowdown, a flight to safety will occur again. The big headline in EM is China. The […]

Economic and market themes: 2014-03-28

Economic and market themes: 2014-03-28

The West has accepted Crimea’s annexation and will likely only increase sanctions if Russia goes further The Ukraine – IMF deal will put the Ukrainian economy through the wringer Russia’s economy is going to tank due to capital flight Brazil’s economy is in jeopardy of recession The US is doing […]