Thursday , December 12 2019

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

Employment, Wholesale inventories and sales

5 days ago

Still in a down draft with additional tariffs scheduled to kick in Dec 15. Decelerating employment growth translates into decelerating personal income growth, etc. etc. etc.

Similar pattern for wages- up some with tax cuts, down with tariffs:

Meanwhile seems the crowd is making a big deal over the larger than expected headline number of data that’s both volatile and subject to large revisions:

The 266,000 jobs added in November is an important number since it defies expectations, at least for one month, that the labor market is slowing down. The report was way better than the 187,000 jobs expected by economists.
The end of the GM strike helped inflate the number, with 41,300 jobs added in motor vehicles and parts, but the overall gain in payrolls was still about

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Trade, Vehicle sales, Air cargo

6 days ago

The details show a weakening US consumer:

The US trade deficit narrowed to USD 47.2 billion in October of 2019 from a downwardly revised USD 51.1 billion in the previous month, and below market expectations of a USD 48.7 billion. It is the lowest trade gap since May of 2018. Imports slumped 1.7 percent to the lowest value in two years amid falling purchases of pharmaceutical preparations, auto parts, vehicles and cell phones Exports edged down 0.2 percent.

Still working their way lower:

Air cargo industry braces for worst year since financial crisis as holidays fail to perk up demand

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ADP, ISM services, Bank lending, Euro area earnings forecasts, ISM NY

7 days ago

US Companies Add the Least Jobs in 6 Months: ADP
Private businesses in the US hired 67K workers in November, well below market expectations of 140K and compared with a downwardly revised 121K in October. The service-providing sector added 85K jobs, driven mostly by education & health; professional & business; leisure & hospitality and other services. Meanwhile, the goods-producing sector shed 18K jobs, the third straight month of falling employment and the sixth in 2019.

The chart shows how the tariffs caused a serious deceleration of hiring:

The collapse from the current tariffs is still underway, with new ones scheduled to kickin Dec 15. And the President measure the success by how much tax the US is collectingfrom the tariffs, which he believes is being paid by

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Euro area business climate, US small business employment, Japan retail sales, Australia

12 days ago

Happy Thanksgiving to all!

Who would’ve thought?;)

Australia Q3 Private Investment Falls More than Estimated
Private capital expenditure in Australia dropped by 0.2 percent quarter-on-quarter in the three months to September 2019, following a revised 0.6 percent fall in the previous period and compared with market expectations of a 0.1 percent drop. This was the third straight quarter of decline in private investment, mainly due to a decrease in capital expenditure for equipment, plant and machinery (-3.5 percent vs 2 percent in Q2). On the other hand, spending for building and structure rebounded (2.7 percent vs -3 percent). Through the year to the third quarter, private capital expenditure shrank 1.3 percent.

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Durable goods orders, Personal consumption and spending, Richmond Fed, Chicago PMI, Chemicals

14 days ago

In contraction:

Deceleration that was temporarily interrupted by the tax cuts has resumed with the tariffs:

The Manufacturing Activity Index in the US fifth district including the District of Columbia, Maryland, North Carolina, South Carolina, Virginia, and most of West Virginia decreased to -1 in November 2019 from 8 in the previous month, missing market expectations of 6. Shipments (-2 vs 4 in October), new orders (-3 vs 7) and backlog of orders (-11 vs 6) declined while employment softened (5 vs 13).
In contraction:

Both now showing contraction:

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Trucks, Chemicals, Oil, Fed comments

16 days ago

America’s largest truck-engine manufacturer just announced 2,000 layoffs — and it’s another sign of the trucking ‘bloodbath’ that’s slamming the $800 billion industry

Volvo announces mass layoffs due to lack of demand for trucks

US Chemical Output Slows in October As Manufacturing Cools

Oil Drillers Continue to Remove Rigs From Permian Basin
Total US Rig Count Declines: Rigs engaged in the exploration and production of oil and natural gas in the United States totaled 803 in the week through Nov 22, lower than the prior-week count of 806. The current national rig count is also below the prior year’s 1079.

US Refiners Reduce Crude Processing for First Time Since 2009

Fed’s Powell:However, Powell added that the Fed does see some risks, including: –Trade. “Business

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Top news, Chicago Fed, Dallas Fed, Philly Fed, Fed coincident indicators

16 days ago

Top news!!!;)
Deceleration most everywhere:

Chicago Fed National Activity Index Falls Unexpectedly
The Chicago Fed National Activity Index fell to -0.71 in October from -0.45 in September and below market forecasts of -0.43. That was the lowest reading since April, as all four categories made negative contributions to the index. Production-related indicators contributed the most to decline followed by employment.

In contraction as rig counts continue to decline:

The Federal Reserve Bank of Dallas’ general business activity index for manufacturing in Texas rose to -1.3 in November 2019 from -5.1 in the previous month, above market consensus of -11.3. The production index, a key measure of state manufacturing conditions, dipped into negative territory for the first time

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US PMI’s, KC Fed, Euro area services, UK services, Germany services and GDP

19 days ago

Tariffs taking their toll and no end in sight as global deceleration continues for both goods and services.
These surveys are up a bit this month but still very low and too soon to suggest a reversal:

Note how this blipped up last month but then resumed the downtrend:
Deceleration resumes after a small blip up last month:

Germany Private Sector Contracts for 3rd Month
The IHS Markit Germany Composite PMI increased to 49.2 in November 2019 from 48.9 in the previous month and below market expectations of 49.4, preliminary estimates showed. Still, it is the third consecutive month of contraction in the private sector, as manufacturing output continued to shrink and services activity growth slowed to a 38-month low. New orders went down for the fifth straight month while

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Home sales, Philly Fed, Claims, Fed staffers, US leading index, Australia

20 days ago

Historically depressed and rolling over:

The Philadelphia Fed Manufacturing index for current general activity rose by 4.8 points from the previous month to 10.4 in November 2019, beating market expectations of 7.0. Meanwhile, the indexes for current shipments and new orders fell 17.8 points and 9.1 points respectively. In addition, the current employment index decreased 11.4 points to 21.5. Both the unfilled orders and delivery times indexes remained positive this month, suggesting higher unfilled orders and slower delivery times.

US Jobless Claims Unchanged at 5-Month High
The number of Americans filling for unemployment benefits was unchanged at 227 thousand in the week ended November 16th, the highest level since the week ended June 22nd, and compared with market

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Housing, Eurozone construction, Singapore, Consumer comfort, Air freight

22 days ago

You can see from the charts how depressed this cycle has been, and how housing has stalled out overall for the last few years, and all with ultra low mortgage rates:
Permits which are more volatile have ‘spiked’ back to 1965 levels when the population was about half:

A relatively small economy but the drop in exports is telling:
Singapore’s non-oil domestic exports (NODX) tumbled 12.30 percent year-on-year in October 2019, following an 8.1 percent drop in September and compared with market consensus of a 10.40 percent decrease. It was the eighth straight month decline in NODX and the steepest drop since June, as sales of non-electronics products fell faster (-11.0 vs -2.3% in September), of which primary chemicals (-47.3%); pharmaceuticals (-36.0%), and petrochemicals

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Rig count, Retail sales, Industrial production, NY Manufacturing, Atlanta Fed

23 days ago

More bad news for oil related capital expenditures:

U.S. Rig Count Crashes Again: Loses Nearly 100 Rigs In 3 Months

The Baker Hughes North American rig count is down 17 rigs in the November 15 week to 940. The U.S. rig count is down 11 rigs from last week to 806 and is down 276 rigs from last year at this time. The Canadian count is down 6 rigs from last week to 134 and, compared to last year, is down 63 rigs.
For the U.S. count, rigs classified as drilling for oil are down 10 at 674, gas rigs are down 1 at 129, and miscellaneous rigs remain unchanged at 3. For the Canadian count, oil rigs are down 9 at 88 but gas rigs are up 3 at 46.

Serious weakness underway:

The headline edged above expectations but the details of the October retail sales

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Employment, Vehicle sales, Factory orders, Headlines, US and Japan services, US and Euro area trade, Credit standards

November 6, 2019

Job openings now in full retreat:

The contraction continues:

Unit vehicle sales, at a much lower-than-expected annual rate of 16.5 million, proved very soft in October and will lower expectations for next week’s retail sales report. October’s pace is the slowest since April reflecting sharp slowing in light truck sales. Vehicle sales have been soft this year, averaging a 16.9 million pace versus 17.2 million and 17.1 million in the two prior years. Despite this, 2019 has been a good year for overall consumer spending and is the fundamental reason why the Federal Reserve stepped back last week from signaling any further rate cuts.

Typical headlines:
Service sectors following manufacturing into contraction:

Global trade collapse- imports and exports going

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Factory orders, ISM NY, Euro area

November 4, 2019


September factory orders fell 0.6 percent with durable goods orders falling 1.2 percent (revised from an initial 1.1 percent decline in last week’s advance data) and nondurable goods (the new data in today’s report) up 0.1 percent. Total unfilled orders have been flat this year and were unchanged in September while inventories rose 0.3 percent in contrast to shipments which fell 0.2 percent. Orders for commercial aircraft, pulled down by the grounding of the Boeing 737 Max, have been struggling this year and were down 11.8 percent in September.

Remains in contraction (below 50):

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Employment, Construction, ISM manufacturing, Chicago Fed

November 1, 2019

The slow motion train wreck continues unabated and when employment goes bad, it all goes bad:

On the low side of expectations but not at increasing rates of contraction are the results of ISM’s manufacturing report for October. At 48.3, the index missed Econoday’s consensus by 1 point but gained a 1/2 point from September. New orders improved nearly 2 points in October but, at 49.1, are still under breakeven 50. New export orders, however, improved markedly, up more than 9 points and back over 50 at 50.4. Yet total backlogs are a major weakness for ISM’s sample, down another point and in deep contraction at 44.1.
Elsewhere contraction is roughly as deep as September, including production down nearly a point to 46.2 and employment up 1.4 points but still under

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Rails, Trade, Chicago Fed, Dallas Fed

October 28, 2019

Deep contraction:

The good news is that the trade deficit in goods narrowed sharply in September to a much lower-than-expected $70.4 billion, but the bad news is both exports and imports, in an indication of economic slowing, fell sharply. Exports dropped 1.6 percent in the month for year-on-year contraction of 3.0 percent, showing an oversized 12.6 percent monthly decline in foods, feeds & beverages that will raise talk of issues with China. Exports of autos were also down sharply, down 7.2 on the month in what may be tied in part to the GM strike which began mid-month September. Imports fell 2.3 percent on the month with this year-on-year decline at a steep 4.6 percent, with consumer goods falling 5.0 percent in the month and with capital goods down 2.3

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Durables, Manufacturing employment, US composite PMI, Euro area manufacturing

October 24, 2019

The global collapse continues unabated:

An emphatically weak set of durable goods headlines for September raises the alarm for the health of the manufacturing sector while unexpectedly substantial contraction in capital goods orders deepens specific questions on the outlook for business investment. Durable goods orders fell a monthly 1.1 percent in September, on its face significantly weak but roughly near expectations in contrast to ex-transportation orders which fell 0.3 percent to just make the bottom end of Econoday’s consensus range. Well below the bottom of expectations is a 0.5 percent drop in core capital goods orders (nondefense ex-aircraft), one intensified by a downward revision to August which now shows a 0.6 percent monthly decline that followed no

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France, Inventory cycle, Unemployment benefits, Architectural billings

October 23, 2019

Never seen so many charts that look pretty much like this:

Much harder to get this cycle means that unemployment and benefits as defined are lower than otherwise, and that the counter cyclical stabilizing effect has been disabled:

Most Unemployed People In 2018 Did Not Apply For Unemployment Insurance Benefits
from the Bureau of Labor Statistics
In 2018, 77 percent of the unemployed people who had worked in the previous 12 months had not applied for unemployment insurance benefits since their last job. Of the unemployed who had not applied, 3 out of 5 did not apply because they did not believe they were eligible to receive benefits.

Still below 50 which means contraction, and still trending lower:

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Existing home sales, UK, Euro area budget and exports

October 22, 2019

Rolling over:

Fiscal this tight means they are entirely dependent on exports for growth, and exports have been collapsing with US tariff policy:

From the ECB:

“Currently extra-euro area imports and exports of goods and services amount to around half of euro area GDP.”

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