Tag: inventories

Economic data show Europe on upswing and US growth down

Economic data show Europe on upswing and US growth down

Since October I have been saying that the US growth was probably going to decline for the remainder of this business cycle. In contrast, I have believed Europe would recover ever since data last June confirmed a broad based phase shift across the entire eurozone from worsening data to better data. The most recent data confirm this pattern becoming well entrenched. Some thoughts below

Economic and market themes: 2014-02-14

Economic and market themes: 2014-02-14

Themes for today:

Commodities: soybean prices could fall due to increased supply. This would be troublesome for Argentina.
Emerging markets: Of the fragile five, India is looking better, Brazil is still a big concern.
Developed Markets: House price inflation makes France, the UK, Australia and Canada vulnerable to real economy shocks.
US: Consumers are only supporting 1-2% growth. Q1 will be weak. Inventory builds are still the big story.

Why the Fed tapered asset purchases

Why the Fed tapered asset purchases

Yesterday, the FOMC decided to reduce the pace of its large scale asset purchase program from $85 billion per month to $75 billion per month. The Fed has long wanted to taper its LSAP program and move to forward guidance to normalize policy but the data weren’t strong enough. Ben Bernanke pulled off this transition in masterful fashion, setting the stage for more market upside. Headwinds are building though. Building inventories, earnings disappointments and a lack of wage growth are my principal concerns.

Do the US GDP figures point to a bullish outlook in the global economy?

Do the US GDP figures point to a bullish outlook in the global economy?

I am not a bull, largely because I have concerns about the long-term sustainability of today’s policy mix in Europe and the United States and the rise in equity multiples. But it is undeniable that we are seeing a more bullish outlook for the global economy at present. Below are some thoughts about the outlook in the context of today’s upward revision in US GDP figures.

Stall speed: Goldman cuts US Q4 GDP forecast to 1%

Stall speed: Goldman cuts US Q4 GDP forecast to 1%

By Sober Look As discussed earlier (see post), US manufacturing data for November shows shrinking inventories. This is true for both the ISM survey … ISM Inventories index (source: ISM) as well as the Markit PMI index: US Markit PMI Inventories Index (orange line, source: JPMorgan) Goldman looks at the change in private inventories (also called “inventory investment”) as a […]

First Quarter 2011 GDP: The only improving factor was stronger inventory growth

First Quarter 2011 GDP: The only improving factor was stronger inventory growth

The Bureau of Economic Analysis’ (BEA) first (“Advance”) estimate of the annualized growth rate of the first quarter 2011 U.S. Gross Domestic Product (GDP) was 1.75%, down significantly from the 3.11% growth rate reported for the fourth quarter of 2010. When compared to the prior quarter the lower growth was caused by a number of factors: somewhat weaker consumption of durable goods, weaker fixed investments, substantially weaker overall trade numbers, and increased contraction in governmental expenditures. The only improving factor was stronger inventory growth, which reverted to form after an anomalous fourth quarter reduction (most likely driven by a noisy, if not aberrant, price “deflater”).

Philly Fed Index Highest Since 1984

Philly Fed Index Highest Since 1984

From the Federal Reserve Bank of Philadelphia: The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, increased from 35.9 in February to 43.4 this month (see Chart). This is the highest reading since January 1984. The demand for manufactured goods is showing continued strength: The new orders index increased 17 points this month, the sixth consecutive […]