Sunday , October 13 2019
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WARREN MOSLER

Warren Mosler

Warren Mosler is an American economist and theorist, and one of the leading voices in the field of Modern Monetary Theory (MMT). Presently, Warren resides on St. Croix, in the US Virgin Islands, where he owns and operates Valance Co., Inc.

Articles by Warren Mosler

Bank loans, CEO confidence, India

1 day ago

Tariffs have caused a global economy (that has a pro cyclical bias) to turn south.
It’s always an unspent income story. When decisions to not spend income (decisions to ‘save’) are not sufficiently ‘offset’ by agents spending more than their incomes GDP (sales/income) decelerates until said deficit spending- private or public- expands to fill the gap.

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JOLTS, Wholesale trade

4 days ago

Heading south:

Sales in contraction year over year and inventories again elevated:

Highlights
Wholesale inventories rose 0.2 percent in August which is down from an initial estimate of 0.4 percent posted late last month. Inventories in July rose 0.2 percent.
Sales at the wholesale level are subdued, unchanged in August to keep the stock-to-sales ratio in the sector unchanged at 1.36. For GDP, wholesale inventories in the first two months of the third quarter rose roughly in line with the second-quarter build which would be neutral for the inventory component of third-quarter GDP.

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Small business, Japan, Rails

5 days ago

Highlights
Small business optimism continues to ease, down 1.3 points in September to a slightly lower-than-expected 101.8. No components rose in the month with six down and three unchanged. The report notes that uncertainty is up and respondents are more reluctant to make major spending commitments. Tariffs are cited by 30 percent of the sample as a negative for their business. Labor compensation continues to rise in contrast, however, to selling prices which are comparatively flat.

Global trade continuing to contract:

Japan’s current account surplus came in at JPY 2.16 trillion in August 2019, widening from last year’s JPY 1.82 trillion and above market expectations of JPY 2.07 trillion. The goods account switched to a JPY 0.05 trillion surplus from a JPY 0.26

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Employment, Vehicle sales

9 days ago

Weakness continues and new tariffs kicking in will only make it worse:

Highlights
Is there slack in the labor market or isn’t there? Judging by September’s 3.5 percent unemployment rate, a rate that falls below Econoday’s consensus range, there may not be much available capacity at all. Yet wage pressures, as measured by average hourly earnings, eased significantly in September for a 2.9 percent year-on-year growth rate that is the lowest since July last year.
Payroll growth itself is running a notch or two below last year and is well under 200,000, but it is still very solid as well as steady and would look to further test the labor market’s available capacity. Nonfarm payrolls rose 136,000 in September with August revised sharply higher, up an additional 38,000 to

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Employment, Vehicle sales, Consumer durables, NYC

11 days ago

Rapid deceleration:

BEA: September Vehicles Sales increased to 17.2 Million SAAR
“The job market has shown signs of a slowdown,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “The average monthly job growth for the past three months is 145,000, down from 214,000 for the same time period last year.”

Negative year over year:

BEA: September Vehicles Sales increased to 17.2 Million SAAR
BEA released their estimate of September vehicle sales this morning. The BEA estimated sales of 17.19 million SAAR in September 2019 (Seasonally Adjusted Annual Rate), up 1.1% from the August sales rate, and down 0.7% from September 2019.
Sales in 2019 are averaging 16.96 million (average of seasonally adjusted rate), down 1.1% compared to the same period in

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ISM Manufacturing, Construction, Trump Fed comments

12 days ago

The deceleration that’s been going on all year due to the tariffs seems to finally be getting some media attention after US manufacturing reports that it’s in contraction. Something like the 10th plague…

Highlights
Contraction in export orders is severe and is pulling composite activity for ISM manufacturing’s sample under water. September’s 47.8 headline is more than 1 point under Econoday’s consensus which is significant, since nearly all forecasters take a stab at this report. And bleeding at a troubled rate are new export orders which at 41.0 posted their the third straight month of contraction that echoes the very substantial contraction being suffered by the PMI manufacturing sample in Germany right now.
Total new orders in September’s report are at 47.3 and also

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UK, China, Philli Fed index, Flipper lending

13 days ago

Still contracting:
This indicator is flashing recession again. Last time this happened a few years ago the numbers were subsequently revised higher:

Not a good sign:

Lending to house flippers hits a 13-year high as prices and competition heat up

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Home prices, Richmond Fed, Consumer confidence

19 days ago

More deceleration:

US Home Price Growth Slows to New 7-Year Low
The S&P CoreLogic Case-Shiller 20-city home price index in the US rose 2% year-on-year in July, missing market expectations of 2.2%. It was the smallest annual gain in house prices since August 2012. Phoenix recorded the biggest increase in home prices, followed by Las Vegas and Charlotte, while the smallest gains were seen in San Francisco, New York and Los Angeles. Prices in Seattle continued to drop.

Highlights
The consumer confidence index had been showing exceptional strength but did fall back unexpectedly in September to 125.1 which is down sharply from a revised 134.2 in August and 135.8 in July. Nevertheless, this index has been trending higher this year in continued contrast to the rival consumer

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ECB trade comments, US rates, UK, Germany, France, Japan

19 days ago

Someone else agrees with me about the tariffs and the global trade collapse:

CNBC: The trade war is weighing ‘like a big, dark cloud’ on the global economy, says Christine Lagarde.

And this would function like a tax increase:

Bloomberg: President Trump Doubles Down on Call for Negative Interest Rates.

Today’s tariff induced bad news:

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Chicago Fed, US PMI, Euro area

20 days ago

Highlights
A snapback for manufacturing production led a jump into the positive column for the national activity index which at 0.10 marks the second positive score in three months. Yet the 3-month average, at minus 0.06, remains in the negative column for the seventh straight month.
Manufacturing has been the center of weakness for this indicator but posted a strong gain in August’s industrial production report. Offsetting this strength was a drop below 50 to 49.1 for the ISM manufacturing report. And speaking to broad weakness, the other three components of the index (employment, sales/orders/inventories, consumption & housing) all posted marginal declines on the month of minus 0.2 percent.
This report has been running well below GDP, offering an alternative and not

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Rails, Bank loans, Oil rig count, Trump comments

21 days ago

Still contracting:
Commercial loan growth has flattened this year:

Oil capex seems to be headed south again. Might take higher prices to bring it back. And the way the decline curves work output should be peaking soon and then declining:

Highlights
The Baker Hughes North American rig count is down 33 rigs in the September 20 week to 987. The U.S. rig count is down 18 rigs from last week to 868 and is down 185 rigs from last year at this time. The Canadian count is down 15 rigs from last week to 119 and, compared to last year, is down 78 rigs.
For the U.S. count, rigs classified as drilling for oil are down 14 rigs at 719, gas rigs are down 5 at 148 and miscellaneous rigs are up 1 at 1. For the Canadian count, oil rigs are down 11 at 82 and gas rigs are down 4 at 37.

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Trump initiatives

23 days ago

Today happens to be the eco strike:

Trump grants tariff exemptions to plastic straws, dog leashes and more from China

Must be some defense agreement no one else knows about:

Trump sanctions Iran’s central bank in wake of strikes on Saudi oil facilities

No end to tariffs in sight, and no interest in helping Trump politically:

China officials have changed their travel schedule and were headed back to China earlier than planned, according to Nicole Rolf, the Montana Farm Bureau Federation’s director of national affairs.
Nebraska department of agriculture also said the Chinese team called off a visit to farms in Nebraska.
U.S. Secretary of Agriculture Sonny Perdue confirmed just Thursday the meetings were in the works as a way for China to build goodwill with American

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New home sales, Manufacturing surveys, Trump on Fed, Pence, Turkey

24 days ago

Up some for the month, but remain weak and depressed historically, especially on a per capita basis:
Manufacturing surveys continue to forecast weakness:
I think what he wants rate cuts because he (and most everyone else) believes that will make the dollar go down which he further believes will reduce the trade deficit and support economic growth:

And the VP isn’t far behind the big guy:

Pence says other countries should ‘emulate’ US economic policies to catch up
Vice President Mike Pence said Thursday that other countries should “emulate” US policies.However, he also said the US should imitate the policy of other nations who keep their interest rates anchored near zero.

Looks to me like Turkey has got it right- inflation will fall and the currency firm as they cut

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Japan, China, Housing starts

25 days ago

The global trade collapse from tariffs continues:

They all have it backwards- it’s the 5th deadly innocent fraud- as the great global trade collapse continues:

Blackstone’s Schwarzman: China’s economic ‘miracle’ came at the expense of the US and the West
“That leads the developed world to say to China: ‘We’ve got to rebalance this. It’s working for you. It’s not working for us,’” says Blackstone CEO Stephen Schwarzman.

Up a bit this month, but levels remain historically depressed, and it’s likely some demand was moved forward by the sudden drop in rates. Also note that the chart isn’t population adjusted.

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Industrial production, China, NY Fed

26 days ago

Up a bit this month but the chart isn’t looking promising:

New York Fed’s New SCE Household Spending Survey Shows Expected Growth Of Household Spending Will Slow
Today, the Federal Reserve Bank of New York’s Center for Microeconomic Data updated its Survey of Consumer Expectations (SCE) Household Spending Survey, which provides information on individuals’ experiences and expectations regarding household spending.

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Retail sales, Consumer Sentiment, Rails, Sea containers, Wholesale sales, Employment, Hours worked

September 13, 2019

Up a bit but still looking a lot lower than a few months ago:
“Deep in contraction”

Analyst Opinion of Container Movements
Simply looking at this month versus last month – there were only marginal changes to weak numbers. The year-over-year rate of growth improved for imports and marginally worsened for exports. Still, year-to-date growth for both imports and exports remain deep in contraction.
The three-month rolling averages for exports and imports are also in contraction.
Imports container counts give an indication of the U.S. economy’s state and the soft data continues to indicate a weak U.S. economy. Exports are saying the global economy is weak as well.
Container data is consistent with other transport data indicating a weak economy.

Contraction:

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Rail traffic, China, Weather politicization, CNN comments

September 9, 2019

Contraction:

The tariff induced collapse of global trade continues:

Politicization of weather forecasting:

NOAA staff warned in Sept. 1 directive against contradicting Trump
Elliott Management, a top activist shareholder firm, announced Monday that it has a $3.2 billion stake in AT&T. WarnerMedia, which owns CNN, is under AT&T.
“Great news that an activist investor is now involved with AT&T. As the owner of VERY LOW RATINGS @CNN, perhaps they will now put a stop to all of the Fake News emanating from its non-credible ‘anchors,’” Trump claimed in a tweet. “Also, I hear that, because of its bad ratings, it is losing a fortune.”
“But most importantly, @CNN is bad for the USA,” the president continued in a follow-up tweet. “Their International Division spews bad information

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Employment

September 6, 2019

Still decelerating hard due to the tariffs causing a collapse in global trade:

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Trade, ISM NY, Profits

September 4, 2019

Highlights
Going into the accelerated trade tensions of August and before the US-China tariff hikes of September, US trade was improving, at least slightly. July’s trade deficit came in at $54.0 billion which is well down from June’s revised $55.5 billion total but still marginally over the $53.9 billion monthly average of the second quarter. This comparison gets net exports off to a slow start for third-quarter GDP.
The bilateral goods deficit with China rose sharply in July, to an unadjusted $32.8 billion from June’s $30.0 billion reflecting a fall in exports and a rise in imports. Yet year-to-date (which helps smooth unadjusted data), this deficit is down, at $196.8 billion versus $222.6 billion this time in 2018. This is a positive for 2019 GDP.
Total international

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Factory orders, Construction, Vehicles, Trump comments

September 3, 2019

This was before the new round of tariffs took effect, which will only make things worse:

US Factory Activity Contracts for 1st Time since 2016
The ISM Manufacturing PMI in the US fell to 49.1 in August from 51.2 in the previous month, missing market expectations of 51.1. The reading pointed to the first contraction in the manufacturing sector since January 2016 as new orders and employment declined amid US-China trade dispute.

Serious contraction here:

Congress has some work to do tightening up the institutional structure:

Trump reportedly promised pardons to aides who break the law to build border wall by 2020 election

And the President is now lashing out at criticism that exists only in his imagination:

Trump lashes out at former intel officials for criticism of

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Personal income and expenditures, Consumer sentiment, Chicago PMI, Trump comments

August 30, 2019

With personal income decelerating shouldn’t surprise anyone if personal consumption does same, not to forget benchmark revisions just took employment down by 500,000 dampening that source of personal income:
US Personal Income Grows the Least in Nearly a Year
Personal income in the United States increased 0.1 percent month-over-month in July of 2019, following an upwardly revised 0.5 percent gain in June and below market expectations

Seems tariffs have reversed trumped up expectations:

Somehow he keeps getting more absurd, displaying delusional notions of cause and effect:

President Donald Trump on Friday argued “badly run and weak companies” have blamed his trade war with China for flagging business in order to mask “bad management.”His tweet comes as more

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Pending home sales, Trade, Trump comments

August 29, 2019

Back down:

Highlights
After jumping sharply in June, pending home sales sank sharply in July, falling 2.5 percent which is well below expectations. Yet the 105.6 showing for the index is nevertheless among the best showings of the last year. Today’s results will hold down August forecasts for existing home sales which had been mostly flat before jumping sharply in July.

Tariffs not having the intended result yet:

Trump reportedly promised pardons to aides who break the law to build border wall by 2020 election

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