Book Bits: 13 July 2024

Shocks, Crises, and False Alarms: How to Assess True Macroeconomic Risk
Philipp Carlsson-Szlezak and Paul Swartz
Excerpt via Harvard Business Review
In 2022, when U.S. interest rates climbed, a cascade of emerging-market defaults were predicted—but they didn’t materialize. Also in 2022, and again in 2023, public discourse cast an imminent recession as “inevitable.” Instead a resilient U.S. economy not only defied the doomsayers but delivered strong growth.
For executives and investors such whiplash comes with two types of costs: financial and organizational. Consider the financial cost to automakers that reduced their semiconductor orders in 2020 because they misread the Covid-19 recession as a protracted economic depression. That meant they missed out on sales during the roaring recovery. And leaders can lose the trust of their organizations if they overreact to false alarms with abrupt reversals in strategy, operations, and communications. Clearly, getting the macro call right really matters.

Continue reading

Macro Briefing: 12 July 2024

* Futures estimate of first rate cut on Sep. 18 rises to 90%-plus probability
* Rate cuts may be appropriate, says San Francisco Fed president Mary Daly
* Jobless claims in US fell to a 6-week low last week
* US consumer inflation’ 1-year trend falls to 3.0% in June–lowest in over 3 years
* US 10yr Treasury yield drops to 4.22%, lowest close since March:

Continue reading

Macro Briefing: 11 July 2024

* Near-zero rates era is “probably over,” says Fed Chairman Powell
* Federal Trade Commission set to sue big pharma over high drug costs
* Gen X retirement crisis looms, new survey suggests
* CFTC chairman reiterates that Bitcoin and Ether are commodities
* Asia stock surge, led by tech stocks rallied including chipmaking giant TSMC
* US stock market (S&P 500) rises sharply, setting yet another record high:

Continue reading

Macro Briefing: 10 July 2024

* Fed Chair Powell says keeping rates too high for too long threatens growth
* Financial stocks lead S&P 500 to new record high
* There’s a case for international investing for long-term investors
* China inflation remains soft in June, reflecting weak consumer demand
* China auto exports surge, helping offset sales slump at home
* Workers to strike indefinitely at South Korea tech giant Samsung
* US corporate bankruptcy filings in June rise above previous peak in 2020:

Continue reading

Is The US Economy Flirting With Recession?

Judging by the analysis in some circles, a recession is a forgone conclusion. More cautious types argue that the expansion continues, but just barely, and that a formal recession will likely start at some point in the next several months. As usual, it’s impossible to fully discount any given forecast. But a review of a broad range of economic and financial data still leaves room for debate. Yes, macro risk is rising for the US, but the economy has not yet reached the tipping point.

Continue reading