Escape to Bermuda…

The usual routine is on hiatus while The Capital Spectator takes a holiday by way of a slow boat to Bermuda. Your seafaring editor returns as a landlubber on Monday, August 3, when the focus on macro and finance resumes anew.

Meantime, fair winds to all…

Book Bits | 25 July 2015

The Global Economy in Turbulent Times
By See-Yan Lin
Summary via publisher (Wiley)
In Global Economy in Turbulent Times, Harvard economist Dr. See-Yan Lin offers his timely and incisive views on today’s key economic issues. Adapted from his hugely popular column in the Malaysia Star newspaper, these articles offer fresh and entertaining perspectives on perennial economic problems. The discussion covers the world economy, with particular attention to the US, EU, Japan, and the international monetary system, as Dr. Lin explains how the economy is broken and offers multiple paths to repair. Coverage includes emerging East Asia, ASEAN (especially Malaysia), and BRICS nations, plus the author’s own views on global demography, the need for quality education, corporate governance in Malaysia, and more.
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PMI: Modest US Manufacturing Growth Rate Ticked Up In July

Manufacturing activity picked up a bit this month, according to July’s flash estimate of the sector’s purchasing managers’ index (PMI). The sentiment benchmark inched up to 53.8 after June’s 53.6 reading—a 20-month low. Any value above the neutral 50 mark represents growth. Today’s update still shows this cyclically sensitive sector in a relative funk compared with last year’s pace. Yet it’s also clear that the early data for this month suggests that manufacturing remains firmly in an expansion mode, albeit at a subdued rate.
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Q2:2015 US GDP Estimate: +1.9% | 24 July 2015

Next week’s “advance” GDP report (due on July 30) for the second quarter is projected to show that the US economy increased 1.9% (seasonally adjusted annual rate),  based on The Capital Spectator’s average estimate for several econometric-based forecasts. Today’s updated average forecast, which is slightly above last month’s Q2 estimate, marks a rebound after Q1’s 0.2% decline.
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Early US Macro Clues For July Look Encouraging

There’s precious little hard data at this point for profiling the US economy in July, but the preliminary numbers so far suggest that growth will prevail and the manufacturing sector’s recent weakness will give way to a modestly stronger trend. We’ll know more when we see today’s flash July data for the US manufacturing purchasing managers index (PMI), scheduled for release at 9:45 am eastern–the consensus forecast sees the moderate growth rate in June ticking up slightly, according to Econoday.com. Meanwhile, the available July figures at the moment imply that the stronger pace of growth in June will carry over into this month.
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Chicago Fed: US Growth Returns To Historical Trend Rate

The Chicago Fed National Activity Index’s three-month average (CFNAI-MA3) increased to -0.01 in June, reflecting US economic growth that’s effectively at the historical trend rate (i.e., a reading of zero). The rise marks the third consecutive month of modest improvement in economic output, according to this metric in today’s report from the Chicago Fed. The revised data for last month “suggests that growth in national economic activity was very close to its historical trend,” the bank noted in a press release.
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Recent Data Points To A Rebounding US Housing Market

The housing market continue to show signs of recovery after a soft first quarter. The latest hint: yesterday’s better-than-expected rise in existing home sales. Purchases advanced at the strongest pace in over eight years, reaching a new post-recession seasonally adjusted high of 5.49 million units in June. The update follows last week’s bullish news that new residential construction in June is close to a post-recession high while sentiment in the home-building industry this month is near a ten-year high.
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Chicago Fed Nat’l Activity Index: June 2015 Preview

The three-month average of the Chicago Fed National Activity Index (CFNAI) is expected to rise fractionally in the June update that’s scheduled for tomorrow (July 23), based on The Capital Spectator’s average point forecast for several econometric estimates. The projection for -0.12 is slightly above the -0.16 reading for May, which reflects a below-average pace of economic growth for the US relative to the historical trend. Only negative values below -0.70 indicate an “increasing likelihood” that a recession has started, according to guidelines from the Chicago Fed. Using today’s estimate for June as a guide, CFNAI’s three-month average is expected to reflect an expansion that’s below the historical trend rate but still well above the tipping point that marks the start of a new recession.
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