While the yield curve turning negative is getting a lot of attention and seems to be the main excuse for yesterdays stock market drop, there are other financial indicators that are also signaling weaker economic growth ahead. The primary one is quality spreads as the yield on corporate bonds are rising relative to treasuries. This is driven by investors fear that in a weak economy, recession environment the risk of corporate defaults rises and bond...
Read More »Traffic Jam in Shenzhen, China
” The long line of trucks is a traffic jam of military trucks. Shenzhen (China), to state the obvious, is across the border and located just north of Hong Kong (see map). This show of force could still be a well poised threat to Hong Kong warning them to discontinue their protests or else. Shenzhen is an approximate 20 miles from Hong Kong and can be traveled by rail, bus, or limo. Click on the images to enlarge. On a business trip, I was scheduled to...
Read More »Real average and aggregate wage growth for July 2019: yellow flag for aggregate wages
Real average and aggregate wage growth for July 2019: yellow flag for aggregate wages Now that we have the July inflation reading, let’s take a look at real wages. First of all, nominal average hourly wages in June increased +0.2%, while consumer prices increased +0.3%, meaning real average hourly wages for non-managerial personnel decreased -0.1%. This results in a slight decline of real wages to 97.0% of their all time high in January 1973: On a...
Read More »My preliminary long leading forecast through midyear 2020
by New Deal democrat My preliminary long leading forecast through midyear 2020 This post is up at Seeking Alpha. This is my first look at economic conditions into next summer. I suspect that it is contrary to most punditry that you will read. In any event, as usual clicking over and reading helps reward me for the effort I put in to this endeavor.
Read More »Goats and Dogs, Eco-Fascism and Liberal Taboos
When remembered at all, Edward Abbey is mostly thought of as an environmentalist and anarchist but there is no gainsaying the racism and xenophobia on display in his 1983 essay, “Immigration and Liberal Taboos.” The opinion piece was originally solicited by the New York Times, which ultimately declined to publish it — or to pay him the customary kill fee. It was subsequently rejected by Harper’s, The Atlantic, The New Republic, Rolling Stone, Newsweek,...
Read More »Q2 Credit conditions were decidedly mixed
by New Deal democrat Q2 Credit conditions were decidedly mixed Credit conditions are one of my categories of long leading indicators. I track the Chicago indexes weekly, but the more comprehensive Senior Loan Officer Survey only comes out once per quarter. The 2nd Quarter Survey was published earlier this week. I have a post describing what it shows up at Seeking Alpha. As usual, clicking on the link at reading should give you good information, and...
Read More »Long Treasuries vs The Long Wave
Since the early 1990s, I published this chart every month on the back cover of my publication until I retired a couple of years ago. I thought it was a great piece of marketing to remind readers that I was a long run bull on interest rates. Readers might not pay much attention or remember claims that I was bullish, but they would pay attention to and remember this. I even had bond managers walk out over this chart in the middle of my presentation. Now...
Read More »Notes on the June JOLTS report: weakness but no imminent downturn
Notes on the June JOLTS report: weakness but no imminent downturn I’m still on vacation, so continue to expect light posting. But I thought I’d take a look at the one piece of data that came out this week, the June JOLTS report. First of all, the “hiring leads firing” mantra continues to be true: [Note: data averaged quarterly to cut down on noise.] Interesting that hiring has been essentially flat for a full year, and total separations (“firing”) for...
Read More »Krugman on Trump and Trade: Not Tariffic
Krugman on Trump and Trade: Not Tariffic I’m no fan of the Trump tariff tantrum, but weak criticism of it does no one a service. And while I agree with Paul Krugman on a lot of things, he has a long history of being misguided on trade policy. Alas, his op-ed in today’s New York Times continues the legacy of the Bad Krugman, not the good one. Before getting to the theoretical meat, let’s take a moment to observe the holes in his argument that should...
Read More »Economy may be weaker than generally recognized
Note how the survey data is weakening more than the payroll data The survey data tends to lead the payroll: In 2019 payroll employment — what Wall Street pays attention to –is the weakest since 2012. Moreover, hours worked has flattened out: Finally, average hourly wage growth is also weak.
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