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Did US Macro Just Jump The Shark?
For the past five years there has been a very clear and significant cycle to US macro data - a slight rise to start the year, notable weakness into the middle of the year, a rapid recovery into the fall, then generally flat to year-end. A year ago, we explained this cycle appears to be created by government agencies need to spend, spend, spend their budgets out ahead of fiscal year-end (Sept).
This year has been no different, aside from the knee-jerk higher in macro data - somewhat shocking in its magnitude to 'every' economist with 3, 4, and 5-sigma beats in many data - came a little earlier but to the same level of past year's exuberance (as perhaps Ex-Im concerns, Fed concerns, and election concerns sparked earlier-than-usual spend-down by agencies).
The last few weeks have seen US Macro surge faster compared to expectations that at any time since the initial takeoff from the 2009 lows... and note, every time we surge at this pace, US Macro tops out!
As in past years, this spike in activity is extrapolated by the smartest people in the room, leaving the reality to miss expectations for the rest of the year. A glance at the chart above might suggest, we just jumped the shark once more in US macro data for 2014...
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This begs the question: is the only reason why the economy tends to pick up momentum dramatically as the summer ends just a function of a surge in government spending permeating the broader economy as agencies scramble to spend all the money they have before the end of the September 30 Fiscal Year End (just so they get allocated the same or greater budget in the coming fiscal year), which subsequently plunges or is outright halted as the case may be right now?
If so, it would explain so much, and certainly why year after year, the US economy seems to pick up in the mid-to-late Q3 period, only to dramatically fade away in the coming months, as government spending goes from a waterfall to a trickle.
It would also put the government's role in generating transitory periodic spikes in economic output under a microscope, especially since it is so clearly staggered to recur every September as one after another government agency spends like a drunken sailor. And if that is the case, how long until the BLS or some other agency (upon reopening of course) is taken to task to normalize not only for hedonic indicators and climate-related seasonal factors, but also for what is now clearly an annual aberration of economic output trends?
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Better temporarily hedge those long tbonds.
Fake fake and faker
It's all fake, but you can learn to read them like a book with some effort.
since 2012 i have lost my mind. i can not believe the sheer manipulation. but thats not the worst part, the worst part is that the ignorant and naive are so happy and i am miserable for knowing the truth
I believe it is Cog Dis that called it "awareness fatigue". Good description.
The Bible says the truth will set you free, it does not say it will make you happy.
Jack Nicholson says "You can't handle the TRUTH!"
I used to work for the Man. And sure enough my office would ask every August if we didn't need new desk chairs, new office setups, another book or two. And when we said no, they'd still order them.
Bastards are still wasting my tax dollars for sure. And I told them to take the job and shove it.
Ho Lee Fuk
Seems like the Lobbyists & Small Business Admin & Chamber of Commerce... probably push for this kind of subsidy.
Wi Tu Lo
Hi Fuk Shi
One of my (sarcastically) favorites was with the debt ceiling (where RINOs folded like lawn chairs anyway) when temporarily there were some 'shutdowns' and all 'nonessential employees' were laid off. How many 'nonessential employees' does the private sector get to employ?
In .govt you're a goat if you find ways to do things more efficiently/make the honest analysis that your interventions are causing harm.
LOL, I was in the Marine Corps and we went nuts on our budget every September.
It's the same down to the smallest school districts across the land. National, state, town level- just less zeros. When this bs ends across the board it is going to be a spectacle.
Many years ago I worked for a Gov IT dept. Just before end of year my boss's boss told him to clear out the budget, and so he told us to 'buy shit'. We ordered all kinds of shit we didn't need, new office equipment, etc.
In the end there was still 50K to spend and we just thought 'fuck it - this is insanely wasteful - if anybody asks we'll just point at all the shit we bought that we don't need and they'll understand'.
My boss later told me after financial year end, he got chewed out over not spending that 50K. True story.
It's election time. Have to protect that 90% incumbency rate.
BINGO!
OK, good article assuming it's true - but where's the data showing government spending throughout the year? Otherwise it's just speculation.
Oh holy shit. Really? Look up the damned stats yourself or ask your local Govco worker.
If it's so obvious and available, they should cite the source. I'm tired of all the "news" out there that is endless opinion but short on evidence. Anyways, off to google around myself...
This same article (in similar form) has appeared here on ZH for the last several years. I don't doubt that there is merit to the underlying argument that the numbers are rigged by government spending, but it doesn't tell you much in terms of timing of any eventual collapse or whether any of us will be alive to see it. If Happy Days jumped the shark in the same manner, it would still be on during Prime Time.
That's exactly how it worked when I was a young USAF officer in Resource Management at Wilford Hall Medical Center (biggest Air Force medical facility) back in the late 80's. I doubt that it has changed since then...
Global macro has jumped the shark as a whole. You've GPIF in Japan reducing their bond holdings to to buy moar trash, and that's why the peNikkei has been up. These CB's just keep monetizing lower and lower quality collateral like heroin addicts.
The PBoC is pumping more QE into their economy. The ECB is throwing around asset backed security purchases and T-LTRO.
If everything's functioning so smoothly then why is everyone pumping more worthless paper in the global economy. Personally I think we're going get a sharp pullback after the ECB Thursday going in to the next couple of weeks.
The Spanish 10year is yielding 15 basis points less than the US 10year. That's fucking NUTS.
ECB thurs, Jobs, fri, post labor day fireworks. Good luck.
in fireworks you mean SPX 2100 right?
I expect the desperate bastards will try to squeeze every damn market possible for as much juice as possible, and then whiplash the fuck out of all that they can. Pension funds, annuities, etc need some cash flow every month. Watch for markets to go from one extreme to another, ie. lots of volatility. Don't forget that's also how they make their "vig".
A lot of this easing, or talk of, has priced itself in. The real risk is to the downside now. I seriously doubt Draghi will do any asset backed security program. There's just not enough collateral for it to be effective in it's current plan/form. The Germans are also against it.
The markets have priced in the easing from China, and Japan. Even if Draghi does more to ease, I'd be inclined to sell the news anyways. I shorted usd/jpy last Monday and closed it last Thursday for a pretty good trade. I'll probably short it again going into Thursday. Thanks for the "Good Luck".
I'm not a player OR Financial expert, but hey maybe you are pointing out here a play that doesn't hurt Households or Individuals.
I have to look into this.
My cheap ass Broker is cheap to the point that I don't think I can make any of these advanced plays. If the play is comfortable at $5K, is it possible to make moves of small money and actually win or grow capital in simple options. I don't think my broker has FOREX or Physical Gold Plays... Don't think I can really play Commodities.
But I'm a Geek that doesn't know the lay of the land...
In options, as in lottery tickets derivatives and stock certificates, the way to make money is to print them and sell them.
They just played a TV commercial... if you see lucky opportunities in your day... then you should play the Lotto.
Tax on the Poor.
Greg Morse did a 3 hour video on Caravan to Midnight with John B Wells in August... he was talking about A-Cemetric Warfare... if you put your municipal bond or your company stock in public stock... you are now subject to A-Cementric Warfare.
https://www.youtube.com/watch?v=HmJKrhWucC0
Your city or your company can be hit by outsiders. Plus you are in part owned by the people that actually hold your stock certificates.
Like a holding company is a cartel of board of directors and they select your board of directors, and they pick the Executives, and they decide the Dividend Payouts, and they make the Employment strategy, compensation policy, place of production, place of incorporation, and if you shake it more than one time at the urinal...
Okay, I know. What I said was simplistic and Naive. So sue me...
- DTCC, Depository Trust & Clearing Corporation does like $1.8 Quadrillion in Derivatives 2013 for USA according to their website I believe (must be cumulative I guess)
- DTCC is supposed to be the strongest member & stock holder of FED, so is in control of the Federal Reserve, who ELSE can buy into the Federal Reserve... European, Arabic, Israeli, South American & Asian Banks?
FR10y @ -120bps to TY....now that is when you know how fcuked up things really are.
Ain't nothing changed, still gonna be broke and printing!!
gonna need new strategy real soon...Right?
Well there is this one holding company, seems the have created $1.8 Quadrillion in Derivatives. Maybe the last move was auto loans and credit card debt....
- DTCC, Depository Trust & Clearing Corporation does like $1.8 Quadrillion in Derivatives 2013 for USA according to their website I believe (must be cumulative I guess)
- DTCC is supposed to be the strongest member & stock holder of FED, so is in control of the Federal Reserve, who ELSE can buy into the Federal Reserve... European, Arabic, Israeli, South American & Asian Banks?
I smell a war.