Macro Briefing | 16 August 2019

Trump defends his economic policy as recession worries mount: Reuters
N. Korea launches missiles and rejects talks with S. Korea: BBC
Economists raise US Q2 GDP growth outlook to median +2.1%: CNBC
St Louis Fed President: inverted yield curve bearish only if it persists: CNBC
US jobless claims rose to 6-week high last week: MW
US homebuilder optimism strengthens in August: HousingWire
US manufacturing output fell in July following two months of growth: Reuters
Fed bank mfg surveys strenghen in August: CNBC
Retail sales in US increased 0.7% in July, a four-month high: MW

And Then There Were Two (Inverted Yield-Curve Recession Signals)

One of the crowd’s favorite yield curve pairings (the spread on 10-year less 3-month Treasuries) has been signaling elevated US recession risk since May. As of yesterday (Aug. 14), the 10-year/2-year spread has gone over to the dark side too. That alone doesn’t insure that economic output will slump in the near term, but it’s a clear message that the crowd has increased its collective bet that a US downturn is approaching.

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Macro Briefing | 15 August 2019

China set to retaliate against new US tariffs: Bloomberg
Trump suggests ‘personal meeting’ with China’s Xi over Hong Kong crisis: CNBC
Warning signs suggest global economic slowdown is accelerating: WSJ
Chinese paramilitary exercise near Hong Kong — a ‘clear warning’: Reuters
US moves to block release of Iranian oil tanker in Gibraltar: CNN
Business inflation expectations steady at 2.0% in August: Atlanta Fed
US import prices rose in July but trend remains weak: Reuters
10yr-2yr Treasury yield curve inverts, issuing a new recession warning: BBG

Macro Briefing | 14 August 2019

Trump delays Chinese tariffs, igniting stock market rally: WSJ
China refuses port visits in Hong Kong for US warships: Bloomberg
Calm returns to Hong Kong airport after protests: CNN
Five of world’s major economies at risk of recession: CNN
German economy contracted in second quarter: BBC

China’s industrial production in July posts slowest growth since 2002: Reuters
US small business optimism ticked up in July, close to post-recession high: NFIB
US core consumer inflation edged higher in July to +2.2% annual pace:

Bond Market Smells Recession. Will The Real Economy Follow?

Asset pricing is often mysterious as a source of figuring out exactly what Mr. Market is discounting, but in the case of bonds these days there’s no ambiguity about the crowd’s outlook. Recession is effectively a forgone conclusion, the yield curve is predicting. But while the real economy has slowed, growth remains strong enough to dispute the market’s forecast, at least for now. The question is when or if the hard data will align with market’s dark expectations?

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Macro Briefing | 13 August 2019

Hong Kong leader: protests have unleashed ‘chaos and panic’: Reuters
Fears of Argentina’s default trigger widespread selling: Bloomberg
Will Trump’s crackdown on immigration damage California’s economy? LA Times
China’s central bank weakens yuan/$ midpoint reference rate for 4th day: CNBC
German economic survey indicates ‘significant deterioration’ in outlook: ZEW
60% of S&P 500 stocks offer dividend yield above 10-year Treasury yield: WSJ
Bond market’s recession signal set to strength if 10yr-2yr gap inverts: CNBC
10yr Treasury yield sinks to 1.65% as risk-off sentiment strengthens:

Macro Briefing | 12 August 2019

Hong Kong cancels all flights due to protests: CNBC
Goldman Sachs economists see rising US recession risk due to trade war: Reuters
Argentina’s president loses primary, casting doubts on his re-election: Reuters
US government debt yields are sharply lower today: CNBC
Here’s a list of key events for next several weeks that could rock stocks: MW
Could it happen here? Sliding US yields raise concerns about negative rates: WSJ
US wholesale inflation in July remained subdued at 1.7% annual pace: MW

Book Bits | 10 August 2019

The Skyscraper Curse: And How Austrian Economists Predicted Every Major Economic Crisis of the Last Century
By Mark Thornton
Summary via publisher (Ludwig von Mises Institute)
In the wake of the financial crisis of 2008, the economics profession suffered a blow to what reputation it had. But unlike most of his colleagues, Mark Thornton was vindicated by 2008. Mark has been a voice of sanity at times when the wild interventions of the Federal Reserve have caused otherwise sensible people to lose their minds. This collection serves the valuable purpose of defending the market economy against the conventional view that freedom has failed us and we need still more controls. We had plenty of rules and bureaucrats on the eve of the financial crisis. A lot of good that did us. Pretty much none of them saw any problems on the horizon. Maybe we should consider a real free market, with sound money and market interest rates, and abolish the giant bubble machine once and for all.
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