The weekly rail traffic report published by the Association of American Railroads provides a great snapshot of US economic activity almost in real (weekly) time. Last July we noted that we were starting to witness some signals of a trend change, now suggesting a softening. But much has happened since then, including a broadly unexpected change in the political direction of the US. Have those signals been reversed as a result?
Moments ago DBRS announced that, just as warned earlier in the week, the rating agency stripped Italy of its last A-rating, when it downgraded italy from A (low) to BBB (high), in the process raising the cost of borrowing ECB funds for the country's struggling lenders.
If there is any economic assumption that goes unquestioned, it's the notion that profits will remain robust for the foreseeable future. This assumption ignores the tidal forces that are now flowing against profits.
While we should take notice at the government preparations for disaster (and the possibility of a cataclysmic collision with damaging objects in space), we should perhaps take more notice at what they are preparing for with all the billions of dollars thrown at defense and survival, it comes in secretive infrastructure for a reclusive sect of power, and in top-down plans to contain the unrest.
Moments ago Italy’s Constitutional Court rejected a request by the country’s top union to hold a referendum on a key provision of the 2015 labor market reform which makes it easier for companies to fire workers and in doing so prevented the need for early elections, sending Italian bond yields lower.
The rise of populism isn’t the politics of rejecting experts, it is the rejection of these “experts” – who quite frankly deserve more than voter disdain. Credentials have come to be seen by a very large and growing proportion of the global population to declare incompetence, having nothing at all to do with intellectual capacity apart from objectivity. It isn’t the denial of reasoned argument but rather the logical end of it.
"I take some responsibility on that. But I think that what is also true is that I couldn't be both chief organizer of the Democratic Party and function as commander in chief and president of the United States. We did not begin what I think needs to happen over the long haul, and that is rebuild the Democratic Party at the ground level.
"The increase in average hourly earnings since the beginning of 2015 has been mostly due to the fact that average weekly hours have fallen. Remember, average hourly earnings is a ratio of average weekly earnings to average weekly hours. The ratio has been going up because the denominator has been going down - not because the numerator has been going up!"
As a result of continued market underperformance, assets under management at Jeremy Grantham's iconic GMO have tumbled to about $80 billion, down from a peak of $124 billion in June 2014, a drop of 35% in two and a half years.
Taken together recent economic data paint a picture of a global economy that’s finally returning to the kind of solid growth and steady, positive inflation that most people consider both normal and good. Unfortunately, the reason for the improvement is emphatically not good: In 2016 the world borrowed a huge amount of money and spent the proceeds. The result is “growth,” but not sustainable growth.