recovery

GoldCore's picture

Global economic growth remains weak and vulnerable and the global financial system remains very fragile. The ebola virus has the potential to be the straw that breaks the proverbial camel’s back. 

Stocks and commodities fell globally today due to concerns about the spread of Ebola and declining economic growth. Precious metals bounced from near multi month lows.

"What Changed?" - The Simple Reason For Yesterday's Sharp Selloff

"The new information on global slowing may be less important than the realization that policymakers have few tools to deal with any kind of slowing, let alone a major shock. G3 10yr government rates now average 1.27, within 10bps of the all-time pre-tapering low of 2013 (Figure 1).  So if the last 100bps of rate reduction did not stimulate global growth, it does not seem likely that another 20-30bps or so in the presence of negative demand shocks will do the trick.  The market takeaway from their comments is that the US economy is not strong enough to stand on its own, leaving little hope for the rest of the world, which is already slowing. Moreover since investors and business do not have particular confidence that the policy response will be effective, any upgrading of the risk of negative shocks raises the probability that we may be put into a zone to which there is no adequate response."

Frontrunning: October 8

  • Turkey says Syria town about to fall as Islamic State advances (Reuters)
  • Only now? Growth worries grip stocks, oil (Reuters)
  • Hong Kong Protest Leaders ‘Furious’ at Agenda for Talks (BBG)
  • Earthquake Damages Thousands of Homes in Southern China (BBG)
  • Keystone Be Darned: Canada Finds Oil Route Around Obama (BBG)
  • Where Is North Korea's 31-Year-Old Leader? (BusinessWeek)
  • Australia to Revise Employment Data (WSJ)
  • Americans Living Longer as Fewer Die From Heart Disease, Cancer (BBG)
  • A 401(k) Conundrum: Can You Make Cash Pile Last for Life?  (BBG)
  • China Services Sector Slows in September (WSJ)

Futures Fail To Rebound Despite Another Overnight Slam Of Global Bad News

And it all started off so promisingly, when after the biggest selloff in US stocks in two months, the BOJ and its preferred banks once again sold 6J (i.e., bought USDJPY) in the morning Japan session (while collecting CME liquidity rebates of course), sending the pair from below 108 to half the way to 109, and naturally taking global futures higher while pushing yields lower when as ITC says a "large TY seller knocked USTs to lows during the session" - hmmm, wonder who the large seller was. And then... the "rebound euphoria" fizzled a la Sodastream, sending the Nikkei sliding 1.2%, and US equity futures back to unchanged with the bond surge returning and sending German Bunds to new all time highs once again, while the Dax briefly broke below under 9000 before stabilizing at the key support level. It is unclear what caused the failure in central bank euphoria, although some suggest that the latest bevy of disappointing economic news wasn't quite bad enough.

Germany’s Bad Numbers Are Great News For All Of Us

The good thing about Germany’s bad, make that awful, numbers is that they will raise the voices of euroskeptics across the country. If there is to be a change in view or politics from Angela Merkel and her people, it’s not going to be what the rest of Europe wants, a softer stance on Mario Draghi’s ABS junk paper purchases. Quite the opposite: Germans will increase their calls for Deutschland first, and Merkel can no longer ignore them.

Inside September's "Born Again" Jobs Report

The September jobs report was greeted by a flurry of robo-trader exuberance because another print well above 200k purportedly signals that growth is underway and profits will remain in high cotton as far as the eye can see. But how many years can this Charlie Brown and Lucy charade be taken seriously - even by the headline-stalking talking-heads who inhabit bubblevision? For the entirety of this century they have actually been gumming about little more than “born again” jobs, not real expansion of labor inputs to the faltering US economy.

Japan Admits It Has Entered A Triple-Dip Recession

The Cabinet Office revised down its economic assessment to “signaling a possible turning point” from “weakening” for the first time since April, as the 7-month average sign for the coincident CI changed, and the change swung by more than 1 standard deviation in the reverse direction. According to the Cabinet Office, such a change in assessment provisionally indicates a likelihood that the economy has already fallen into recession. This is effectively akin to the government acknowledging that the economy is in recession.

Will Gold Crash With The Dow... Or Soar?

In recent months, this prognostication has been gaining traction that a second, more severe crash - one that reflected the level of debt - is inevitable. There are two primary camps amongst economists with regard to the economic direction that a crash will generate: inflationists and deflationists. The argument goes back and forth, yet there seems to be the misconception that one must be either an inflationist or deflationist. This is not at all the case.

Inflation's Not The Only Way Easy Money Destroys Wealth

If by means of monetary pumping one could strengthen the economic growth then it would imply that - by means of monetary pumping - it is possible to create real wealth and generate an everlasting economic prosperity. This would also mean that world wide poverty should have been erased a long time ago. After all, most countries today have central banks that possess the skills to create money in large amounts. Yet world poverty remains intact. The artificial boosting of the demand by means of monetary pumping leads to the depletion of the pool of real wealth. It amounts to adding more individuals that take from the pool of real wealth without adding anything in return - an economic impoverishment.

"We Call It Democracy, But It's Not"

It is amazing how the government manages to continue selling Brooklyn Bridges to a gullible public. Americans buy wars they don’t need and economic recoveries that do not exist. Government in America is focused on something different from a healthy economy and the well being of citizens. We call it democracy, but it’s not.