• Good GDP

    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 … [Read More...]

  • Nifty NASA

    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. … [Read More...]

  • Right Rate

    When the Fed last met, economic data was looking good. Now, not so much. Manufacturing is probably in recession, inflation is weakening, the yield curve is inverted, the dollar is strong, and trade concerns are elevated. However, equities are near records, unemployment is ridiculously low, and … [Read More...]

  • Tiananmen Tragedy

    30 years ago today the Chinese government murdered hundreds, if not thousands, of student protestors across China, but particularly in Tiananmen Square, agitating for nothing more than freedom and democracy. In China, this event has been completely expunged. The Tiananmen Massacre was when the … [Read More...]

  • Troubling Tariffs

    Existing tariffs on Chinese imports and Chinese retaliatory tariffs reduce US GDP by 0.15 of a point. Last week’s tariff increase from 10% to 25% on $200 billion of Chinese goods will decrease GDP by another 0.15. A further 25% tariff on another $325 billion of Chinese imports would lower GDP by … [Read More...]

Aug
23

Greenland Gander

The Friday File: Buying Greenland from Denmark is not so outlandish. The US purchased the USVI from Denmark in 1917 for $25 million so there’s precedent. As for Greenland, if the US offered $560 billion, each of its 56,000 inhabitants would receive a cool $10 million! Were a referendum held on the … [Read more...]

Aug
22

Rate Reduction

Despite just a thin majority of Fed interest rate setters supporting the last Fed cut, they will again cut rates in mid-September. This is because trade concerns have worsened, and more importantly, job growth for the year ending 3/31/19 was just revised down by 42,000/month! This means despite tax … [Read more...]

Aug
21

Beefy Buck

The US dollar is today very highly valued compared to other currencies and is approaching highs last seen in 2002. In part, it’s because interest rates in the US are higher than elsewhere, and that increases demand for dollars by foreign investors. However, it’s also due to large US budget deficits … [Read more...]

Aug
20

Retail Rescue

Industrial production in China slowed to 4.8% in July, the lowest since 2/02, and 19Q2 GDP grew 6.2%, the slowest since 1992. British GDP shrank at an annualized rate of 0.8% in 19Q2, and German GDP fell 0.1% in 19Q2. But US retail sales grew by a spectacular 0.7% in July and 19Q3 US GDP growth … [Read more...]

Aug
19

Daunting Debt

19Q2 marked the 20th consecutive quarter of increasing household debt. During the quarter, debt increased by $192 billion, to $13.86 trillion. Mortgage debt rose by $162 billion to $9.406 trillion, surpassing the previous high of $9.294 trillion in 08Q3. Total debt is now $1.2 trillion, or 9.3% … [Read more...]

Aug
16

Sneaker Stupidity

The Friday File: Very recently, a pair of unworn 1972 Nike waffle racing flat ‘moon’ shoes sold at auction for $437,500, surpassing the previous sneaker record of $190,373 set in 2017 for a pair of signed Converse sneakers worn by Michael Jordan in the 1984 Olympic basketball final. Recently, a lot … [Read more...]

Aug
15

Curve Concern

While the yield curve has inverted and the yield on the 10-year Treasury has fallen by half, it’s higher than in most of 2016 when it didn’t suggest a recession. The problem, in retrospect, was the Fed raised rates too much in 2018 thinking that the tax cut would do better for the economy than it … [Read more...]

Aug
14

GDP Germaneness

In 19Q1, US GDP was $21.06 trillion. The largest part was consumption, which totaled $14.25 trillion or 67.7% of GDP. Investment in structures, equipment and intellectual property was $3.81 trillion or 18.1%; government spending was $3.60 billion or 17.1% of GDP. Finally, net exports were -$603.4 … [Read more...]

Aug
13

Abode Affliction

In 19Q2, the homeownership rate fell to 64.1% from 64.3% in 18Q2, the first Y-o-Y decline since 2016. And high home prices are why. They’re high partly because inventory, which had been marginally improving for 10 straight months, was disappointingly flat in June, and because new construction … [Read more...]

Aug
12

Beijing Battle

The direct effects of the China-US trade spat on the US are small. It’s secondary effects, like weakening global growth, declining equities, Chinese retaliation, and falling US consumer and business confidence leading to reduced capital investment that’ll hurt. Moreover, the newest potentially … [Read more...]