Gross Domestic Product

Hangzhou, We Have A Problem: "Over 71% Of New Chinese Loans Went To Fund Mortgages"

Last week, the IMF warned that China's growing debt "posed risks to financial stability." Here's why: new loans in August reached 948 billion yuan ($142 billion), more than double the figure a month before, data from the People's Bank of China showed. And the punchline: over 71% of the loans went to households, mainly to fund mortgages.

Kuroda Ruined His Chance Of A Second Term By Doing "Stupid Things", Abe Advisor Says

BOJ governor Kuroda has ruined his chances of getting a second full term, according to Nobuyuki Nakahara, who has advised the prime minister on the economy and was an intellectual father of Japan's QE. "They are trying to clean up the mess of negative rates. It’s impossible to do a stupid thing like keeping the yield curve under government control."

Crude Declines As OPEC Deal Doubts Emerge; Futures Roll Over

After oil soared over 5% yesterday, its biggest jump since April, overnight skepticism and doubts have emerged about the viability and compliance with the deal, coupled with a boost in production by non-OPEC producers, and as a result WTI has dipped back under $47, down 0.5%, suggesting that the OPEC surge may be short-lived, and modestly pressuring US equity futures.

"It’s A Lot More Negative Than People Think" - China Beige Book Issues Stark Warning About The Economy

“I’d find it earth-shatteringly surprising if we don’t have a significant problem between now and China’s leadership change” in the fall of 2017 when the 19th Party Congress convenes, said Leland Miller, China Beige Book’s president. “This is not a stable economy. It’s one that twists and turns and happens to end up at the same spot. There are real problems below the surface.”

Turkey Lashes Out At Moody's After Downgrade To "Junk" Sends Turkish Assets Plunging

Turkish assets plummeted the most since an attempted coup in July and credit risk climbed after Moody’s Investors Service cut the country’s sovereign rating to junk. The immediate response by the Turkish administration was to lash out at Moody's calling the decision "politically-motivated", after a similar downgrade by S&P led Erdogan to acuse the agency of siding with coup plotters.

Chinese Contagion Risks Surge: Banks' Reliance On Each Other For Funding Hits All Time High

China’s smaller banks have never been more reliant on each other for funding, prompting rating companies to warn of contagion risks in any crisis.  "Contagion risks are definitely rising," according to S&P: "The pace of the development is concerning. If this isn’t stopped in time, the central bank will lose some control and flexibility of its monetary policy."

Why The Fed Destroyed The Market Economy

But after 100-years of mismanagement, the last eight being in the radically extreme, the Fed has scored a big fat rotten tomato.  The data still stinks – GDP’s still anemic.  But the downside of their actions is downright putrid.

Frontrunning: September 16

  • Deutsche Bank to fight $14 billion demand from U.S. authorities (Reuters)
  • Exxon’s Accounting Practices Are Investigated (WSJ)
  • European leaders seek elusive 'road map' after Brexit shock (Reuters)
  • Johnson Said to Tell Italy Exit Talks Likely to Start Early 2017 (BBG)
  • Brexit Bulletin: Merkel Sings the Bratislava Blues (BBG)

US Futures, European Stocks Rebound, Bonds Fall Ahead Of US Data Deluge

The overnight session started with more weakness out of Asia, where chatter that the BOJ may end up doing nothing despite all the trial balloons (as we hinted yesterday), sent the USDJPY sliding, pushing the Nikkei lower, leading to a 7th consecutive decline in the Topix, the longest such stretch since 2014 even though the BOJ is now actively buying a record amount of ETFs. However, the modest dip in S&P futures and European stocks proved too much for BTFD algos, and risk promptly rebounded.

What's The Real Unemployment Rate? That's The Wrong Question

The truth is the unemployment rate is a political number, not an economic one. If we want an accurate snapshot of employment, earned income and the state of small business, we have hard data that is already collected quarterly. Common sense suggests we will get more value from hard data than from politicized guesswork.

GDP - Less Than Meets The Eye

The most common statistic used to measure the size and growth rate of a nation’s economy is Gross Domestic Product (GDP).  However, GDP as most commonly used can be a flawed measurement if one tries to infer that the size or growth of economic activity is well correlated to the prosperity of its people.