US Industrial Production and the NY Fed Empire State Manufacturing survey are the two main releases for the US. In Europe, the euro area trade balance will be the notable print. Beyond today, US PPI, German ZEW and UK CPI are the main economic reports tomorrow. Wednesday will see the release of BOE’s meeting minutes, the US CPI, and the Euro area inflation report. On Thursday, President Obama will host Poroshenko and on the data front we have Philly Fed, initial claims, and building permits to watch out for, but the biggest market moving event will surely be the Scottish independence referendum. German PPI will be the key release on what will otherwise be a relatively quiet Friday.
Were this extreme policy to be implemented it would be a further and deliberate debasement of fiat currencies. Alan Greenspan’s warning of “fiat money in extremis” becomes more real by the day. Were this silly proposal ever to become policy, it would significantly increase the risk of inflation and stagflation. In a worst case scenario, it will lead to currency collapse and hyperinflation.
Just when you thought it couldn't get any worse... In a veritable deluge of data from Japan tonight, there is - simply put - no silver lining. First, Japan's jobless rate unexpectedly jumped to 3.8% - its highest since Nov 2013 (despite the highest job-to-applicant ratio in 22 years). Then, household spending re-collapsed 5.9% for the 4th month in a row (showingh no sign of post-tax-hike-recovery). Industrial Production was up next and dramatically missed expectations with a mere 0.2% rebound after last month's plunge (-0.9% YoY - worst in 13 months), quickly followed by a 0.5% drop in Japanes retail trade MoM (missing hope for a 0.3% gain). That's good news, right? Means moar QQE, right? Wrong! Japanese CPI came hot at 3.4% YoY with energy costs and electronic goods 'hyperinflating' at 8.8% and 9.1% respectively. As Goldman's chief Japan economist warns, "the BOJ doesn’t have another bazooka," adding that "The window for reform may already have been half closed." We're gonna need another arrow, Abe!
There is a standard view of energy and the economy that can briefly be summarized as follows: Economic growth can continue forever; we will learn to use less energy supplies; energy prices will rise; and the world will adapt. The following view of how energy and the economy fit together is very different - it is based on the principle of reaching limits in a finite world.
A look at the price action in the major currencies, US Treasuries and the S&P 500.
One of the biggest games played by the bean counters in Washington in the US is the overstatement of GDP growth by understating inflation.
When it comes to the apocalypse, Krugman likes to have his apocalyptic cake and eat it too. Krugman says that the recent concern about “debts and deficits” was a “false alarm.” He attempts to paint those who were concerned about the debt crisis as scare mongers. He sarcastically says that “the debt apocalypse has been called off.”
For all the talk about "noisy inflation" this and "rising prices are good for the economy" that, what the Fed's cheerleading squad continues to ignore is the one most important inflation the US economy needs in order to actually have a sustainable recovery instead of centrally-planned stagflation: wage inflation. And while bullish pundits keep reffering to some mythical CEO survey promising wage will increase any day now, just not today, the BLS released its most recent real wage (adjusted for inflation) report today showing that not only did the average real hourly wage remain flat for the second month in a row at $10.29, the lowest level since September 2013, but posted the first annual decline since October 2012.
Silver Up 10.3% YTD - Should Continue To Outperform Gold And Other Assets - Silver’s Unique Properties - Silver: Increasing Technological, Industrial and Medical Demand - Increasing Investment Demand - Silver Undervalued Versus Gold - Conclusion
Is this the reason for the blowout, on the surface, payroll number?
- Citigroup 190K
- HSBC 200K
- Goldman Sachs 210K
- UBS 215K
- JP Morgan 220K
- Deutsche Bank 225K
- Bank of America 225K
- Barclays 250K
Once again, US equity futures are roughly unchanged (while Treasurys have seen a surprising overnight bid coming out of Asia) ahead of an avalanche of macroeconomic news both in Europe, where the ECB will deliver its monthly message, and in the US where we will shortly get jobless claims, ISM non-manufacturing, trade balance, nonfarm payrolls, unemployment, average earnings, Markit U.S. composite PMI, Markit U.S. services PMI due later. Of course the most important number is the June NFP payrolls and to a lesser extent the unemployment rate, which consensus expects at 215K and 6.3%, although the whisper number is about 30K higher following yesterday's massive ADP outlier. Nonetheless, keep in mind that a) ADP is a horrible predictor of NFP, with a 40K average absolute error rate and b) in December the initial ADP print was 151K higher than the nonfarms. Those watching inflation will be far more focused on hourly earnings, expected to rise 0.2% M/M and 1.9% Y/Y. Should wages continue to stagnate and decline on a real basis, expect to hear the "stagflation" word much more often in the coming weeks.
The government now has another measure which under-reports inflation by accounting chicanery...
Weak GDP growth with major currency devaluation? This is called stagflation. And it’s causing the Bank of Japan some doubt.