Market Conditions

How Long Can China's Debt Continue To Grow Before A Systemic Crisis Strikes?

How long can China's debt continue to grow before a Minsky moment or systemic debt crisis?  As the government continues to rely on credit-fuelled investment to offset downward pressures within the domestic economy and from a subdued global environment China's debt/GDP ratio is set to rise further. But how much higher can it rise? Here is UBS' attempt to answer the $64 trillion question.

Frontrunning: January 27

  • Mexico Dispute Could Overshadow May’s Free-Trade Message (BBG)
  • NATO, Russia and trade top the agenda for Trump talks with Britain's May (Reuters)
  • Trump's plan for import tax worsens crisis with Mexico (Reuters)
  • Nafta’s U.S. Impact is Modest (WSJ)
  • Republicans Are Making Little Progress on Their Obamacare Repeal Strategy (BBG)

Trump & Yellen's Collision Course

Although the stock market is giddy from President Trump’s pro-growth policies, there is another constituent not quite so enamored with recent developments...the more Trump pushes on the fiscal accelerator, the harder the Fed will lean on the brake.

One Hour After Taking Office, Trump Suspends FHA Mortgage Fee Cut

In a move that has sparked controversy among some economists, within an hour of being sworn in, Trump undid one of Barack Obama’s last-minute actions, a mortgage-fee cut under a government program catering to first-time home buyers and low-income borrowers.

Beige Book Notes Minimum Wage Increases, Warns Of Building Margin Pressures

The Fed's latest beige book, perhaps the most boring report released by the Federal Reserve, found 10 of the 12 Fed districts growing at the now ubiquitous "modest or moderate pace" with Cleveland growing only slightly and New York reporting little change for the fourth period in a row.  However, despite stagnant growth, margin pressures are building as input prices are rising faster than final goods prices.

Oil Slides After Saudis Suggest Early End To OPEC Deal

Following a brief spike overnight (as China intervened in its equity market), crude prices slipped lower, testing towards a $51 handle after Saudi Arabia says OPEC is on track to wrap up its production curbs by the middle of the year, potentially leaving its aim of clearing a global oil glut unfinished.

Fed's Labor Market Conditions Index Plunges Most In 7 Years

While mainstream media clung to The White House spin of record monthly streak of jobs gains after Friday's payrolls, The Fed's own Labor Market Conditions Index (LMCI) paints a very different picture of the health of the American job market. With a 0.3% drop in December, the LMCI is now down 5.8% year-over-year, the biggest plunge since Jan 2010.

What Keeps Goldman Up At Night About 2017

Between China, credit markets, financial conditions, political uncertainty, the consequences of Brexit, the presidential elections, global trade, the risk of sharp reflation, and the impotence of central banking, here are the top things that keep Goldman Sachs up at night about 2017.

2016 Year In Review

We started this year with the economy deteriorating and finished it with the second interest rate increase in ten years. There were a lot of ups and downs along the way, but ultimately 2016 was defined by three key story-lines:  1) Brexit 2) The Presidential Election 3) Fed Policy. The first two events were votes that shocked the world. The stock market’s reaction to each was arguably even more shocking.