Promises, promises! We’ve heard it all before. ‘We’re gonna get you, guys’. We know the song it’s just the words that get changed from time to time, but anyone can hum along to it these days. The bankers, those banksters are gonna get their comeuppance. Trouble is: they never do. It’s just getting boring now.
Anyone reading the regular Federal Open Market Committee press releases can easily envision Chairman Yellen and the Federal Reserve team at the economic controls, carefully adjusting the economy’s price level and employment numbers. The dashboard of macroeconomic data is vigilantly monitored while the monetary switches, accelerators, and other devices are constantly tweaked, all in order to “foster maximum employment and price stability." The Federal Reserve believes increasing the money supply spurs economic growth, and that such growth, if too strong, will in turn cause price inflation. But if the monetary expansion slows, economic growth may stall and unemployment will rise. So the dilemma can only be solved with a constant iterative process: monetary growth is continuously adjusted until a delicate balance exists between price inflation and unemployment. This faulty reasoning finds its empirical justification in the Phillips curve. Like many Keynesian artifacts, its legacy governs policy long after it has been rendered defunct.
On June 6, 1944, Allied forces from the United States, United Kingdom and Canada launched the largest seaborne invasion in history by landing nearly 160,000 troops on the beaches of Normandy in a single day...
This week's busy calendar starts off with today’s global PMIs and ISMs. On Tuesday, President Obama begins a four day European trip ahead of the G7 meeting which starts on Wednesday. This G7 meeting is replacing the G8 meeting that was originally scheduled in Sochi but was cancelled after Russia’s annexation of Crimea. Tuesday’s data docket is important with Euroarea data releases including inflation and unemployment expected to further cement the ECB’s resolve in easing policy come Thursday. Wednesday features the global services ISMs and PMIs. Other data releases scheduled for that day includes the ADP employment report, which will provide an important preview to Friday’s NFP, and US trade. The Fed releases its Beige Book on Wednesday too and the second estimates of Euroarea GDP will be published on Wednesday as well. Apart from the ECB on Thursday, we also have the BoE policy meeting.
Several days ago, we looked at the big picture of US immigration, presenting the place of origin of America's 40 million foreign-born residents. However, as is always the case with the US, focusing on the big picture at the national level ignores the nuances at the state level. The following two charts using Pew Research data, compiled by the WaPo, show the dramatic changes in the land of origin of US immigrants, beginning with 1910 when Germany was the primary driver of US-born residents, accounting for 18% of US immigrants, and proceeding through 2010, when Mexico has become the biggest source of foreign-born residents: the birthplace of 29% of all immigrants in the US.
- Vietnam, China trade accusations after Vietnamese fishing boat sinks (Reuters)
- SEC Set to Spur Exchange Trading (WSJ)
- Bank of Japan quietly eyes stimulus exit (Reuters)
- Japan Risks Low Growth Even as Easing Spurs Inflation (BBG)
- Hello Japan: Bond Market Message to Fed: Your 4% Rate Outlook Is Too High (BBG)
- Malaysia, UK firm release satellite data on missing MH370 flight (Reuters)
- Fighting rages in eastern Ukraine city, dozens dead (Reuters)
- Bad Credit No Problem as Balance-Sheet Bombs Rally 94% (BBG)
- Draghi’s Asset-Backed Drive Rouses Academic Skeptics (BBG)
- For-Profit Colleges Face Test From State, Federal Officials (WSJ)
Yes, U.S. capital markets have officially gone "Full Seinfeld"; As ConvergEX's Nick Colas notes, Tuesday’s selloff over “Nothing” reversed higher Wednesday throuygh Friday for similarly non-specific reasons. So, today we will go a little further afield and talk about words and what they tell us about shifting societal priorities and norms. Wonder what the most commonly searched word might be on the Merriam-Webster website? It is “Pragmatic”... which seems incredibly ironic given the total lack of pragmatism that appears to be shown in world markets.
Using espionage for gain in negotiations is an age-old tactic; but are the norms of 'appropriate' espionage changing?
In the past several years, one of the topics covered in detail on these pages has been the surge in such gimmicks designed to disguise lack of demand and end customer sales, used extensively by US automotive manufacturers, better known as "channel stuffing", of which General Motors is particularly guilty and whose inventory at dealer lots just hit a new record high. But did you know that when it comes to flat or declining sales and stagnant end demand, channel stuffing is merely the beginning? Presenting... Where the World's Unsold Cars Go To Die
Over a third of the global population is now overweight, and the percentages are increasing. Some neuroscientists have suggested that the rise of so-called "hyperpalatable foods" may partially explain the unprecedented rates of obesity.
This week markets are likely to focus on a few important data prints in DMs, including Philly Fed in the US (expect solid expansionary territory) and 1Q GDP releases in the Euro area (with upside risks). In DMs, the highlights of the week include [on Monday] Japan’s trade balance data and Australia business conditions; [on Tuesday] US retail sales, CPI in Italy and Sweden; [on Wednesday] US PPI, Euro area IP, CPI in France, Germany and Spain; [on Thursday] US Philly Fed, CPI, capacity utilization, Euro area and Japan GDP; and [on Friday] US Univ. of Michigan Confidence. In the US, we expect Philly Fed to print in solidly expansionary territory (at 14, similar to consensus) and to inaugurate what we call the active data period of the month. We also expect CPI inflation to print at 0.3% mom (similar to consensus), and core CPI inflation at 0.18% mom (slightly above consensus).
- Alibaba files for what may be biggest tech IPO (Reuters)
- Early Tap of 401(k) Replaces Homes as American Piggy Bank (BBG)
- Developers Turn Former Office Buildings Into High-End Apartments (WSJ)
- Thai court orders Yingluck Shinawatra to step down as PM (Guardian)
- German industry orders fell 2.8% in March, the biggest drop in one and a half years (RTE)
- Ukraine Bulls Scatter as Death Toll Mounts (BBG)
- China Property Slump Adds Danger to Local Finances (BBG)
- Stein Says Fed May See Bouts of Volatility as It Approaches Exit (BBG)
This week, markets are likely to focus on US ISM Nonmanufacturing, services and composite PMIs in the Euro area (expect increases), ECB’s Monetary Policy Decision (expect no change in policy until further ahead), and Congressional testimony by Fed’s Yellen.