The latest inflation data is sticky, but the markets have only delayed rather than canceled expectations for that the Federal Reserve will start trimming interest rates in the near future. Some analysts are pushing back on the idea, including forecasts in some quarters that the Fed may leave rates higher for longer. But judging by implied market estimates for changes in monetary policy, the central bank is still on track to cut in the near term.
Macro Briefing: 21 February 2024
* Conference Board abandons long-running US recession call
* US consumers’ food spending’s share of disposable income rises to 30-year high
* China’s economic fallout taking a toll on global banks
* Vietnam set for world’s sharpest increase in wealth, consultancy forecasts
* America’s commercial casinos report record year for revenue in 2023
* Hedge funds pared exposure to Magnificent Seven megacap tech stocks in Q4
* US Leading Economic Index “continues to signal headwinds” in January:
Estimating US Recession Risk Using Economic Data For States
What are the choices for monitoring and estimating recession risk? Slightly lower than the number of stars in the universe. Ok, I’m exaggerating, but not much. The good news: the search for robust, relatively reliable indicators narrows the field dramatically. But there’s always more to learn, in part because the supply of data sets is vast, increasingly so. Which brings me to another indicator that looks promising: state coincident indexes.
Macro Briefing: 20 February 2024
* Delinquent commercial property loans exceed reserves at largest US banks
* Boom in EV battery metals showing signs of turning into a bust
* China banks cut key interest rate as economy falters
* Germany likely in recession, advises the country’s central bank
* Capital One will buy Discover, uniting two of the largest credit card firms
* SoftBank’s Masayoshi Son looks to raise $100 billion for new AI chip venture
* Goldman Sachs lifts S&P 500 target to 5,200 in 2024 on upbeat profits outlook:
Hail To The Chiefs: 19 February 2024
Macro Briefing: 19 February 2024
* ‘Soft landing’ debate for US economy in focus again after latest reports
* New signs emerge that America’s shale-oil boom is peaking
* US says it will react if China dumps goods on global markets
* China reports record upsurge in travel, which may presage stronger growth
* China’s central bank leaves key policy rate unchanged
* Regional banks are vulnerable to risk tied to commercial real estate lending
* US natural gas prices plunge amid warm winter weather
* US producer price inflation rose more than expected in January:
Book Bits: 17 February 2024
● Goodbye Globalization: The Return of a Divided World
Elisabeth Braw
Summary via publisher (Yale U. Press)
A bold new account of the state of globalization today—and what its collapse might mean for the world economy. After the Cold War, globalization accelerated at breakneck speed. Manufacturing, transport, and consumption defied national borders, companies made more money, and consumers had access to an ever-increasing range of goods. But in recent years, a profound shift has begun to take place. Business executives and politicians alike are realising that globalization is no longer working. Supply chains are imperilled, Russia has been expelled from the global economy after its invasion of Ukraine, and China is using these fissures to leverage a strategic advantage. Given these pressures, what will the future of our world economy look like? Elisabeth Braw explores the collapse of globalization and the profound challenges it will bring to the West.
Moderate Slowdown Expected For US Q1 GDP Growth
Growth remains on track to soften in the first quarter, based on the median GDP nowcast for a set of estimates compiled by CapitalSpectator.com. Although recession risk is still low, output looks set to downshift for a second straight quarter.
Macro Briefing: 16 February 2024
* Partial government shutdown on March 1 possible without political compromise
* US homebuilder sentiment improves for third straight month in February
* Industrial output in US ticked down in January, remaining soft for second month
* Regional Fed mfg surveys (Philly and NY) for February show mix results
* US jobless claims drop to one-month low as layoffs stay low
* US retail sales fell more than expected in January:
The Sloppy Dance Between The US 10-Year Yield And Inflation
Yesterday I outlined the case that several ‘fair-value’ models suggest the current US 10-year Treasury yield appears high relative to the fundamentals. As a quick follow-up, what does a simple empirical review of historical suggest vis-à-vis the 10-year rate and the latest offending inflation data point that triggered a sharp rise in the benchmark yield on Tuesday?