The Last Time Economic Data Disappointed This Much, Bernanke Unleashed Operation Twist

For the 13th straight week, US economic data disappointed (already downgraded) expectations, sending Citi's US Macro Surprise Index to its weakest since August 2011 (crashing at a pace only beaten by the periods surrounding Lehman and the US ratings downgrade). The last time, Us economic data disappointed this much, Ben Bernanke immediately unleashed Operation Twist... but this time Janet Yellen is hiking rates and unwinding the balance sheet?

 

As Citi notes, breaking down this move, we can see that the recent data disappointments have been driven by a steady fall in the underlying data, rather than overly exuberant expectations. In other words, economists have been adjusting expectations downwards, but the data has been falling at a faster rate.  

And this week once again saw 'hard' data collapse ( for example: inflation, retail sales, housing, industrial production) as 'surveys' held steady...

 

For now, stocks don't care...

 

And in case you are hoping for a sudden turnaround... any minute now, don't bet on it - the lagged response to China's collapsing credit impulse is just beginning to have its effect on the rest of the world...

 

Still not convinced, look at this week's US trade data...YoY gains in import and export prices are also rolling over notably tracking the decline in China's credit impulse.

 

And this is the environment in which Janet Yellen is hiking interest rates?

Comments

Angry White Guy Fri, 06/16/2017 - 14:34 Permalink

The Fed did everything it could to prop up Obongo the magic ni66er, but now that Trump is in it's time to finally tank the economy...AGAIN...like they always do.I wonder if the American public will EVER rise up and behead this band of vipers.Andrew Jackson was the last president that balls enough to take on the banking cartel and demolish it.

Too-Big-to-Bail Angry White Guy Fri, 06/16/2017 - 14:47 Permalink

I disagree -- I think the FED know this time is it, so no matter who is in as president doesn't matter -- this time they need to keep the illusion going for as long as possible since they know once the next systemic crash comes and the dominos all start falling, that's it -- the end. That's why all the central banks aroound the world have been pulling out all stops to keep the ecomony alive. 

In reply to by Angry White Guy

Endgame Napoleon Angry White Guy Fri, 06/16/2017 - 15:55 Permalink

Sure, Trump should try to help the community bankers who will actually loan a little bit to small businesses, especially when people have collateral, like a house that a mommy gets for a failed marriage. She can borrow against that for a business. They loan to those who have a spousal income or unearned income, like child support. They most certainly do not just loan on good credit. You need to have money, and paying off a past business loan on time is nothing, even when your shop stayed afloat and solvent the whole time. In other words, if you already have income, you can get the loan. The other way is to fit a loan request into an identity-politics narrative or a narrative of womb-based feminism, like a minority woman seeking a Community Advantage loan for a daycare to help women work jobs that do not pay as much as it costs the government to pay for the daycare. If you are willing to live in the area -- in the community -- you can get one from SBA-sponsored banks for that womb-based, feminist purpose. I do not think Andy Jackson would approve of that sort of top-down social engineering via the federal government. Even a Hamiltonian central bank type would probably reject the illogical underpinning of that type of propagandistic lending.

In reply to by Angry White Guy

izzee Fri, 06/16/2017 - 14:34 Permalink

Not this time around.
It's Poltics
2011 - Pres Barack Obama - Friend of Bankers - TBTF no prosecution Justice Dept -- a "failure" of the Obama Presidency is Not in the interests of TBTB.

2017 - Donald Trump

just the tip Fri, 06/16/2017 - 14:45 Permalink

what?  economic data disappointing?  you've GOT to be kidding me?not at airbus.  everything is just rosy.  you don't think so?The European manufacturer explains the need for 35,000 new aircraft by a number of factors: the increasing number of passengers flying for the first time, the increase in disposable income for air transport, the expansion of tourism, the growth in the world economy, the opening of new lines and the evolution of airline business models.yep.  35K planes over 20 years.  that's 4.86 planes a day!  spare me the quiries of what 0.86 of a plane looks like.  this author just goes on and on about his glass being 2.5 times full.  whatever he is drinking, i want no part of.http://www.airlinerpulse.com/blog/2017/06/airbus-expects-35000-new-airc… just one big fucking fantasy in the sky!

Batman11 Fri, 06/16/2017 - 14:50 Permalink

The Central Banks had got it all round the wrong way.Lifting the markets up and expecting the real economy to rise to meet the valuations had everything round the wrong way.The real economy should drive the markets, the markets don't drive the real economy.Crash it and get the bad debt out of the system.It’s the only way this baby is ever going to fly again.

Anonymous (not verified) Fri, 06/16/2017 - 14:52 Permalink

 Why waste time on this alligator when the swamp’s most critical economic and political problems revolve around the hegemony of a global corporate cartel, which is headquartered in the US because this is where their dominant military force resides. The US Constitution is therefore the “kingpin” of an all-inclusive global financial empire. These fictitious entities now own the USA and command its military infrastructure by virtue of the Federal Reserve Corporation, regulatory capture, MSM propaganda, and congressional lobbying. The Founders had to fight a bloody Revolutionary War to win our right to incorporate as a nation – the USA. But then, for whatever reason, our Founders granted the greediest businessmen among them unrestricted corporate charters with enough potential capital & power to compete with the individual states, smaller sovereign nations, and eventually to buy out the USA itself. The only way The People can regain our sovereignty as a constitutional republic now is to severely curtail the privileges of any corporation doing business here. To remain sovereign we have to stop granting corporate charters to just any “suit” that comes along without fulfilling a defined social value in return. The "Divine Right Of Kings” should not apply to fictitious entities just because they are “Too Big To Fail”. We can't afford to privatize our Treasury to transnational banks anymore. Government must be held responsible only to the electorate, not fictitious entities; and banks must be held responsible to the government if we are ever to restore sanity, much less prosperity, to the world. It was a loophole in our Constitution that allowed corporate charters to be so easily obtained that a swamp of corruption inevitably flooded our entire economic system. It is a swamp that can't be drained at this point because the Constitution doesn’t provide a drain. This 28th amendment is intended to install that drain so Congress can pull the plug ASAP. As a matter of political practicality we must rely on the Article 5 option to do this, for which the electorate will need overwhelming consensus beforehand. Seriously; an Article 5 Constitutional Convention is rapidly becoming our only sensible option. This is what I think it will take to save the world; and nobody gets hurt: 28th Amendment 28th Amendment: Corporations are not persons in any sense of the word and shall be granted only those rights and privileges that Congress deems necessary for the well-being of the People. Congress shall provide legislation defining the terms and conditions of corporate charters according to their purpose; which shall include, but are not limited to: 1, prohibitions against any corporation; a, owning another corporation; b, becoming economically indispensable or monopolistic; or c, otherwise distorting the general economy; 2, prohibitions against any form of interference in the affairs of; a, government, b, education, c, news media; or d, healthcare, and 3, provisions for; a, the auditing of standardized, current, and transparent account books; b, the establishment of state and municipal banking; and c, civil and criminal penalties to be suffered by corporate executives for violation of the terms of a corporate charter.    

giorgioorwell Fri, 06/16/2017 - 15:43 Permalink

But, but, but, didn't our almightyeader just say the GDP and economy were "very good" and that great numbers were coming.  What a funny little orange jokester he is.

gold rubeberg Fri, 06/16/2017 - 19:28 Permalink

"... but this time Janet Yellen is hiking rates and unwinding the balance sheet?"

Well, how much good did eight years of ZIRP and $4T of QE do?

Time to try something different???