Macro Briefing: 18 December 2018

Xi calls for China to ‘stay the course’: CNBC
World stocks fall on Tues as Fed appears set to raise rates: Reuters
S&P 500 dropped to 14-mo low on Monday: Reuters
German business confidence eased for 4th straight month in Dec:
US consumer demand for credit declined for year through Oct: Reuters
NY Fed manufacturing index fell to 19-month low in Dec: MW
Researchers: politicians caused pay ‘collapse’ for bottom 90% of workers: WaPo
US home builder confidence dropped to 3-1/2 year low in Dec: MW

Macro Briefing: 17 December 2018

White House prepares for government shutdown: LA Times
China tightens control on economic data as economy weakens: SCMP
US on Monday criticizes China’s ‘unfair competitive practices’: Reuters
Saudi Arabia blasts US Senate resolutions on Khashoggi, Yemen: Reuters
Eurozone inflation in Nov eases more than initially estimated: MW
Oil giant ConocoPhillips supports tax on carbon emissions: Axios
US private-sector output in Nov rose at slowest pace since May 2017: IHS Markit
Rise in inventories for US in Oct may add to Q4 economic growth: Reuters
Industrial output in US for Nov picked up to strongest gain in 3 months: MW
All major investment markets have lost ground in 2018: NY Times
US retail spending’s 1-year change ticked down to 4.2% in Nov:

There’s Only One (Sane) Solution Left For UK’s Brexit Mess

It’s the worst alternative, except when compared to everything else, which is why Britain should take the get-out-of-Brexit-free card offered by the European Court of Justice (EOJ). Last week, ECJ judges ruled that Britain can unilaterally cancel Brexit. Wouldn’t that run afoul of the 2016 referendum that delivered a 52%-to-48% win in favor of leaving the European Union? No, because the UK can revoke its plans to leave the EU and announce a commitment to develop a new Brexit going forward. The new plan, ideally, would have the benefit of agreement between Parliament and Prime Minister Theresa May (or her successor). At that point, assuming it ever comes, Britain can present the plan to the EU and begin fresh negotiations with Brussels.
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Book Bits | 15 December 2018

Shadow Networks: Financial Disorder and the System that Caused Crisis
By Francisco Louçã and Michael Ash
Summary via publisher (Oxford University Press)
The 2007-08 financial crisis surprised many economists and the public. But how did the crisis come about, why was it so deep, and why has the clean-up been so slow and painful? Many accounts of the crisis focus on renegade activity in marginal financial sectors. Shadow Networks challenges this pervading view and sets out to demonstrate that, far from a dissident branch, the shadow finance that initiated the crisis is tightly networked with, and highly profitable for, bank-based finance. The collapse was not an accident, but baked into the system of finance from the start. Shadow Networks traces the complex web of power that caused crisis and gives vivid descriptions of the actors in the quarter century leading up to 2007 to explain how the now decade-long crisis took shape.
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US Financial Markets Stress Index Ticks Up To 2-1/2 Year High

An estimate of financial stress in US financial markets edged up last week to the highest level since April 2016, based on the St. Louis Fed Financial Stress Index (STLFSI). Although the benchmark remains well below zero, which implies a below-average level of stress, the steady rise in recent months suggests that financial conditions are on a path of becoming less favorable for markets and the economy in 2019.
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Macro Briefing: 14 December 2018

China’s retail and industrial sectors post sharply softer growth in Nov: Reuters
Eurozone growth slips to slowest pace in over 4 years in PMI survey: IHS Markit
EU offers no concessions to UK’s embattled PM for Brexit deal: CNBC
ECB announces end of bond-buying program: CNBC
White House will delay tariff hikes on Chinese goods till March 1: Bloomberg
Survey: economists expect Fed to raise rates next week: Bloomberg
US import prices in Nov post biggest slide in three years: Reuters
US jobless claims fell sharply last week, near 50-year lows again: MW

Lehman’s Lessons

The tenth anniversary this past September of the collapse of Lehman Brothers inspired a blizzard of commentary, including some deeply misguided observations. One misunderstanding is that Lehman’s demise caused the Great Recession. In fact, the downturn started months earlier in the US, as NBER’s recession dates show. But there’s room for debate on the question of whether the government’s decision to let economic gravity have its way with Lehman turned what might have been a moderate downturn into the deepest contraction since the Great Depression.
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Macro Briefing: 13 December 2018

Pelosi secures deal to be next Speaker of the House: Slate
Developments in Mueller probe whip up impeachment talk among Dems: Fox
UK prime minister survives leadership vote: CNBC
Britain’s weakened prime minister heads to Brussels for help: Reuters
IEA: US influence in global oil market set to rise: CNBC
Rising US-China tensions over South China Sea stocking fears of clash: SCMP
Criticism of indexing (still) falls flat: Barry Ritholtz
US consumer inflation (headline) slowed to 2.2% annual rate in Nov: MW