Americans still say they believe in free markets, democracy and financial rectitude. But only as platitudes and hypocrisies... the free market was one of the first casualties of the post-1971 fiat money period. In a free market, people earn money by working (income) or by saving and investing it (capital growth). But credit-based money needed neither work nor saving; you just had to know the right people.
On the scale of 'unpatriotic' things to suggest, there is only one thing worse than a tax inversion for an American to do... suggest something positive about Russia, Russian markets, or Russia's economy. So it perhaps ultimately ironic that none other than Goldman "doing God's work" Sachs suggests Russian bonds are both cyclically and strucuturally under-priced.
The answer, straight from the horse's mouth.
Back in 2009, the United Nations Statistical Commission endorsed a revision to the System of National Accounts (SNA), which sets the international standards for the compilation of national accounts. As a consequence, Eurostat has amended the European equivalent of the SNA, the European System of Accounts (ESA) leading to a revision of GDP figures. Out of nothing but accounting smoke and mirrors, the reclassification has had a positive effect on GDP, increasing it on average by 3.5 percentage points for the EU and the Euro area as whole.
"Competitive devaluation” doesn’t actually work, as it is not a zero sum game (one country gaining at the expense of another) but rather currency “wars” subtract from the whole altogether (both countries lose). The entire point of currency destabilization is exactly that, and business transpires less and less under more extreme versions of instability – intentional or not. And to top it all off - No matter how you want to view all this, January was perhaps the worst month for US trade since the Great Recession.
"In light of the data we've received this week – January reports for real consumer spending, construction spending, and net exports that varied from disappointing to downright weak, as well as a softer February print for car sales –-- we are marking down our tracking for annualized real GDP growth in Q1 from 2.5% to 2.0%. Even after this revision risks are more skewed to the downside than upside. By way of comparison, the Atlanta Fed's tracking estimate of Q1 recently came down to 1.2%. It's still relatively early in the quarterly data flow, even so, it is feeling eerily like Q1 of last year. In both cases the quarter began with high expectations, estimates were brought down as the quarter progressed, weather was blamed, but most forecasts remained upbeat on the medium-term outlook."
Following December's worse than expected drop in personal spending (and slowing groweth in incomes), analysts wewre expected the usual hockey-stick bounce... it did not happen. Despite all the exuberance over low gas prices, US personal spending dropped 0.2% in January - twice as bad as the 0.1% drop expected and the 3rd miss in a row. The spending drop was driven in large part by a slide in non-durables. Personal income also missed excpectations, rising just 0.3% (against a +0.4% expectation) hovering at its lowest growth since September. The savings rates surged to 5.5% - its highest since Dec 2012.
With more than 60 percent of all Americans are living paycheck to paycheck, and a whopping 24 percent of the country has more credit card debt than emergency savings, when the coming economic crisis strikes, more than half the country is going to be financially wiped out within weeks. If you are trusting in the government to save you when things fall apart, you will be severely disappointed.
Following last month's narrative-crushing drop in retail sales, despite all that low interest rate low gas price stimulus, January was more of the same as hopeful expectations for a modest rebound were denied. Falling 0.8% (against a 0.9% drop in Dec), missing expectations of -0.4%, this is the worst back-to-back drop in retail sales since Oct 2009. Retail sales declined in 6 of the 13 categories.
Once again we found ourselves bewildered while watching financial discussions on television. All one needs to do to follow along is forget your rational objective analysis at the door, have another glass of the proverbial “Kool-Aid™, and chant with the
congregation panel “everything is just awesome!” Why? Because it’s in the “numbers!” When you listen to most of these debates by economists using today’s “numbers” one can’t help but think any release of data must be taken as holy writ. For our money, when it comes to this new theology of economics, we’d rather be with the heretics. Maybe we don’t understand how they can believe the numbers they recite. But we do no one thing above all else. We won’t partake in the Kool-Aid.
"According to the University of Michigan survey, consumers have not been this upbeat since January 2004, when the economy was booming. The natural outcome should be for consumers to splurge, hitting the malls and going out to restaurants. But much to our surprise, the data suggest otherwise." - BofA
The economy being talked about in the media just doesn’t exist, no matter how you view the unemployment rate. There is no spending because there is no income(marginally deficient). Instead, what we see is instability where these low levels of activity and true wealth creation persist. There are no “tailwinds” to be found here, only confusion about the relative state of progress. Going from really bad to less bad is not recovery, just another fact of an unstable economy plodding its way toward the next, and eventual, dislocation.
Simply atrocious income and spending numbers: if this data is even remotely correct, then the balance sheet of the US consumer is in horrible shape.
Today's Brazilian economic data follows up quite well to our article from a month ago "Brazil's Economy Just Imploded" and as the earlier article on the crashing Brazilian Real hinted, things for the Brazilian economy how gone from imploding to, well, worse because not only did the twin fiscal and current account deficits rise even more, hitting a whopping 11% of GDP - the worst since August 1999, but its government debt soared to 63.4% in 2014, up from 56.7% a year ago, and the highest since at least 2006. In short - the entire economy is now on the verge of total collapse.
Hilsenrath claims a little birdie (Fed insider) told him that rates will be raised later this year. We expect the Fed is just jerking him around. There is nothing fundamentally or otherwise to suggest rates will move up. We're not sure if Hilsenrath is part of the game or just a gullible fool who is being used to keep the market off balance. Why would the Fed want the market off balance? The Fed does so intentionally because theory suggests such a strategy will improve the effectiveness of monetary policy. Regardless of what the Fed says, the reality is that interest rates are not moving up anytime soon. Here's why...