Category: Economic Conditions

Dollar and Oil Gains Begin a Week Light on News


The US dollar is retracing part of its pre-weekend losses against the European currencies and dollar-bloc today while falling equity prices are underpinning the yen. 

Brent is nearing $40 a barrel, and WTI is pushing through $36.  Iron ore prices were limit up in China.  US 10-year Treasury yield is three bp higher to poke through 1.90% level for the first time since February 4.  European bond yields are mostly 2-3 bp lower, with notable exceptions of Portugal and Greece. 

The Spotlight Shines on the ECB This Week


Sometimes the news stream drives prices, and sometimes the price action drives the narratives.  We argued that the sharp decline in equities at the start of the year was fanned the doom and gloom in the media and market commentary.  Many had been taking about a new financial crisis and parallels were drawn between the price action now and the 2007-2008 period.

The Jobs Report: Details or Headline?


The US dollar is mixed ahead of the US employment data.  The Antipodeans and Scandis are doing best while sterling and the Canadian dollar are under-performing.

There are Data Today, but the Markets Await U.S. Employment Tomorrow


The global capital markets are quiet today, as investors await fresh impetus, which could come in the form of tomorrow’s US national employment figures.  There is also next week’s ECB meeting that looms large for investors. 

The Demographic Cliff


About 30 years ago, I was able to predict the U.S. would see a major generational spending peak in 2007, all from my demographic indicator, the Generational Spending Wave.  On a 46-year lag from the time they were born, that’s when the peak number of baby boomers would peak in spending for the average household.

After that, they would slow in spending, ultimately sending the economy over a “demographic cliff.” Remember, 70% of the economy relies on consumer spending! When it slows, everything falls with it.

The Deflation Sky May Not Be Falling


Deflation is portrayed as the great economic scourge.  It exacerbates debt-servicing costs and encourages consumers to defer purchases.  Central banks in Japan and Europe have responded with aggressive, unorthodox measures, often combining asset purchase programs with negative interest rates. 

Healing Wounds with a Recovery


The angst that characterized the first several weeks of the year continues to dissipate.  Major equity markets are extending their two-week recovery into a third week. Immediate concerns about the US falling into a recession have eased.

Weak Demand Yes, but What of Capacity?


Many economists argue that the key challenge is that of insufficient aggregate demand.  That is why world growth is slow.  Hobbled with debt, households have pulled back.  Business investment is weak.  Household and business savings have offset government dissavings.  The solution offered by some economists is a large public investment program.

Solid Ground, or So It Seems


It could have been a disaster.  US faltered yesterday, with the S&P 500 again struggling in the 1945-1950 area, and China’s PMIs were weaker than expected.  However, after initial weakness Asian shares turned higher.  The nearly 0.9% rise allowed the MSCI Asia Pacific Index to close at its best level in five sessions.

G20 Meeting Disappointment Trickles In


It seemed that it was only after Asian equity markets fell did reports begin suggesting disappointment with the G20 meeting.  The narrative followed the price action rather than the other way around.  Before that, at least, one newswire claimed China was the winner of at the G20 meeting.