Wednesday , February 26 2020

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

Capital expenditures, Philly Fed, Tariffs

6 days ago

The Philadelphia Fed’s survey just gapped up, much like some of the others. Could be that manufacturing has stabilized at current levels, but too soon to say:

White House Admits That Trump Trade Stance Did Depress Economy

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Housing starts, Stock buybacks

7 days ago

Reversed some but still higher than expected, and still historically depressed:
However, the weather was very nice again in January (just like in December), and the weather probably had a significant impact on the seasonally adjusted housing starts number. The winter months of December and January have the largest seasonal factors, so nice weather can really have an impact.

A huge driver of stock prices got off to its worst start in 7 years, but that could change
Share buybacks got off to a slow start in 2020, with the $13.7 billion total in January the lowest since 2013.

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NY PMI, Walmart, Japan, Oil

8 days ago

Another move up that may or may not reverse:

Walmart earnings and outlook fall short as holiday season disappoints

This price drop will negatively effect capital expenditures as well as the value of oil being produced, both negatives for GDP:

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Bank loans, Containers, Bloomberg

8 days ago

Largely unchanged for over a year now:

Historically depressed, and adjusted for inflation and population growth real estate lending growth isn’t much above 0:
This much credit tightening has historically been followed by recession:

Still no candidates showing an understanding of monetary operations, so it’s not a distinction 🙁

Bloomberg unveils plans for Americans’ Social Security, retirement savings

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JOLTS, Small business index, Household debt, Wholesale inventories and sales, Germany

15 days ago

The number of job openings in the US fell by 364,000 to 6.423 million in December 2019 from a revised 6.787 million in November and well below market expectations of 7.0 million. It was the lowest level since December 2017, as openings slumped by 332 thousand in the private sector and were down by 32 thousand in government. Over the year, the job openings level declined by 14.9 percent.

Still with the trumped up expectations, but working its way lower:
Growth seems to be moderating as the economy has moderated:

Sales have gone flat at best:

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Employment, Mtg purchase apps, Rails, Germany

19 days ago

Year over year growth declined, at least for now reversing a small move up in the context of a larger move lower. Decelerating employment growth generally coincides with decelerating GDP, as has been the case:

Another indicator that’s been perking up. May be weather related:

Intermodal traffic’s prolonged contraction shifted to expansion last month:

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20 days ago

Jan 2019 printed 312,000 net hires, so anything less in tomorrow’s report means the year over year growth was lower. The average for the rest of the year was about 200,000, well below prior years:

This is how it stands before tomorrow’s release:

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Vehicle sales, ISM services, ADP employment

21 days ago

Typical collapse prior to recessions:

Still working its way lower:

Another example of a small move up after a long downtrend that are touted to be a ‘reversal’:

Another somewhat misleading headline, as per the year over year chart:

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Durable good orders, ISM NY, Mexico PMI

22 days ago

Up a bit this month but still trending lower. And on an inflation adjusted basis well below prior highs. The chart is not inflation adjusted:
A blip up this month, but remains in contraction (below 50):

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Manufacturing indexes, Construction spending

23 days ago

Another one of those small blip ups we’ve been seeing;

US Factory Activity Posts 1st Growth in 6 Months
The ISM Manufacturing PMI for the US jumped to 50.9 in January from 47.8 in December, beating market forecasts of 48.5. The reading pointed to the first increase in factory activity in six months. A recovery was seen for new orders, export orders and production and employment fell at a slower pace. In contrast, inventories dropped more and price pressures intensified. Moreover, sentiment regarding near-term growth was moderately positive.

Markit survey:
This one went a bit lower and isn’t adjusted for inflation:

US Construction Spending Posts First Fall in 6 Months
US construction spending fell 0.2 percent from a month earlier in December 2019, following an upwardly

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GDP, Philly Fed

27 days ago

A modest annual increase from 3 month ago’s report, but still looks to have been trending lower as the tariffs took effect:

US GDP Grows 2.1% in Q4, Matches Forecasts
The US economy grew 2.1% in Q4, the same as in Q3 and matching forecasts, advance estimates showed. The expansion was supported by consumer and government spending, residential fixed investment, and exports. In contrast, negative contributions came from private inventory investment and nonresidential fixed investment. Considering full 2019, the economy advanced 2.3%, the least since 2016 and missing Trump administration’s 3% target for the 2nd year.

This is not looking good either:

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Durable goods, Richmond Fed

29 days ago

Downward revisions, and down when excluding military orders:
Orders for defense aircraft and parts went up 168.3 percent, offsetting a 74.7 percent plunge in demand for civilian aircraft and a 0.9 percent fall in demand for motor vehicles and parts. Excluding transportation, new orders decreased 0.1 percent and excluding defense, orders dropped 2.5 percent. Also, new orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, fell 0.9 percent. Considering full 2019, durable goods orders declined 1.5 percent, after an 8.1 percent rise in 2018.

This chart is looking up! Maybe ‘one time’ military orders here as well???

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Jobs, Vehicle sales, Housing starts, Industrial production

January 21, 2020

Rolled over and heading lower:

Rolling over and heading south:

Had been rolling over but then this year end/good weather spike in December housing starts and lower rates probably worked to move activity forward from 2020. Permits had a small spike a bit earlier, and have since leveled off, and no house is built without a permit:

Deeper into negative territory as tax cut tailwind shifted to tariff headwind:

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Earnings, Small business index

January 14, 2020

Earnings went up with the tax cuts but have decelerated sharply with the tariffs:

Working its way lower as trumped up expectations recede only gradually:

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Rails, Bank loans

January 13, 2020

Deep in contraction:

AAR: December Rail Carloads down 9.2% YoY, Intermodal Down 9.6% YoY
Still decelerating:

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Trade, Durable goods, India GDP, Gasoline prices, ISM services

January 8, 2020

Both imports and exports falling as per the global trade collapse. Falling imports are also an indication of consumer weakness:

New orders heading south with tariffs:

Familiar pattern:

Fire related maybe:

Australia Construction PMI Contracts Further
The Ai Group Australian Performance of Construction Index declined to 38.9 in December 2019 from 40 in the previous month, falling to the lowest level since May 2013 and adding weight to calls for fiscal stimulus. The activity index fell sharply again in December with its biggest monthly drop in 12 months (down 4.4 points to 36.5). second month (up 0.8 points to 50.8). In contrast, apartment building remained deep in negative territory (up 0.9 points to 37.4). There is now a clear danger of a self-Meanwhile, new orders

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Rails, Margin debt, Iraq exit

January 6, 2020

Got to give Trump credit, the assassination got us out of Iraq!

Iraqi parliament calls for US troops to be expelled —coalition suspends operations against ISIS

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