Archive for July 2019

Earlier today, the Fed did what markets expected; cut rates by a quarter-point. However, the Fed was very sloppy in elucidating why. I might call its explanation “coalescing around some convenient potential rationales” like global slowing. Thus, Powell was utterly unable to explain to markets what variables the Fed will be paying close attention to,…

19Q2 GDP came in at 2.1%, which, while a big decline from 3.1% in 19Q1, is in line with the 2.3% average over the entire record-breaking 121-month recovery we are enjoying. Business spending was negative, the first time since 16Q1, and exports declined due to trade tensions, slowing global growth and waning tax cut impacts.…

While markets were calm today, the rest of the week, maybe not. Tomorrow, the Fed’s favorite inflation measure (core personal consumption expenditure inflation) comes out, on Wednesday the Fed probably announces a quarter-point cut in rates (first time since 2008); on Friday, July job growth is announced. All are temporally profoundly important data points at…

The Friday File: Assuming each player makes 40 moves, there are conservatively about 10120 possible chess games. Ignoring silly moves, the number falls to a more manageable 1050. For example, after each player has moved just five times, there are already 69,352,859,712,417 (69.35 trillion) possible games that could have been played. As a comparison, the…

Besides lifting the debt ceiling until at least 7/21 and avoiding a government shutdown till 10/1/21, the recently agreed upon two-year budget deal boosts FY2020 discretionary spending by a total of $49 billion compared to FY2019. Defense spending will rise by $22 billion to $738 billion; non-defense spending will rise by $27 billion, to $632…

In the year ending 3/19, foreign purchases of US residential real estate declined to $77.90 billion, down from a peak of $153.01 billion two years ago, their weakest level in six years. Chinese buying activity declined the most; by 50% or $13 billion in just one year. Slowing global growth, a Chinese trade fight, and…

I’m not sure what problem Facebook’s newly proposed cryptocurrency, Libra, solves. For those with a bank account and credit card, Libra solves no problem. For the unbanked, theoretically it’s great, but how do you buy Libra absent a credit card or a bank account; Facebook doesn’t take cash. Facebook’s attempt at skirting regulatory oversight is…

During the first nine months of FY2019, the deficit rose $140 billion, or 23.1%, to $747.1 billion. Meanwhile, revenues totaled $2.61 trillion, up 3%, while spending hit $3.36 trillion, up 7%, both record highs. The jump in receipts included a 78% increase in duties to $52 billion, due primarily to rising tariffs on Chinese imports.…

The Friday File: Tomorrow at 4:17pm EDT is the 50th anniversary of Neil Armstrong and Buzz Aldrin’s lunar landing! Armstrong subsequently set foot on the Moon at 10:56pm EDT; Aldrin joined him 19 minutes later. That ended the Space Race with the USSR and fulfilled President Kennedy’s national goal. Ten other US astronauts subsequently walked…

June retail sales rose a surprising 0.4% and are probably running at their best sustained pace in five years! June manufacturing activity rose a solid 0.4%, June job growth was excellent, and the trade wars are calming down. All this suggests an interest rate cut isn’t necessary. But housing starts and permits remain anemic at…