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G10 and BRICs Economic Surprise Indices Set to Converge

November 17, 2017

Bloomberg – Goldman Bullish on EM Into 2018 as Growth to Overcome Valuations The emerging-market recovery cycle is still in early innings and strong growth will outweigh rich valuations into 2018, Goldman Sachs analysts led by Zach Pandl wrote in a November 17 note. “EM asset valuations are no longer as compelling as early-2016 or post the ‘Trump… Continue reading G10 and BRICs Economic Surprise Indices Set to Converge

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Higher Oil Prices Out of Reach for Central U.S. Shale Oil

November 17, 2017

Higher international oil prices are pulling U.S. shale oil toward the gulf. Land locked producers are left behind.

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More On The High Yield Selloff

November 17, 2017

The Financial Times – Junk bond funds suffer biggest outflows since 2014 Funds that invest in junk-rated corporate bonds suffered withdrawals of $5.1bn in the week to November 15, the largest single week of outflows since market turbulence around the Russian invasion of Ukraine in August 2014, according to data from EPFR. For the year, more… Continue reading More On The High Yield Selloff

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Inflation is Brewing, but the Pot Won’t be Ready Until Mid-2018

November 17, 2017

Summary Search trends within major U.S. metros are suggesting consumers and businesses are beginning to see inflation. However core inflation growth is a slow moving beast with a rebound not likely until mid-2018. Lagging discretionary spending by consumers remains a sticking point. Comment The chart below shows Google search trends for ‘inflation’ by major U.S.… Continue reading Inflation is Brewing, but the Pot Won’t be Ready Until Mid-2018

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E-Commerce Driving Performance in U.S. Retail

November 17, 2017

E-commerce is a lonely bright spot in a dark retail world. Real estate investments tied to e-commerce operations continue to outperform.

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TIC Update – China And Japan’s Treasury Holdings Fall

November 17, 2017

The Financial Times – China and Japan’s US Treasury holdings dip in September The value of US Treasuries held by China and Japan, the US’s two largest creditor nations, dipped in September alongside a selloff in the country’s debt. Treasuries held by China slipped by $19.7bn to $1.18tn, while US sovereign notes and bonds owned by… Continue reading TIC Update – China And Japan’s Treasury Holdings Fall

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Central Bank Forward Guidance

November 17, 2017

Bloomberg View – Komal Sri Kumar: Forward Guidance Hasn’t Made Markets Less Volatile Forward guidance has not achieved its objective of keeping investors informed about central banks’ intentions. Perhaps the most famous instance of a message gone wrong was the statement by Bernanke in his congressional testimony on May 22, 2013, when he said the… Continue reading Central Bank Forward Guidance

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The Fed’s Toolkit Needs A Revamp

November 17, 2017

Bloomberg View – Conor Sen: The Fed Is Back in Its Pre-Recession Pickle The yield curve inverted in the last cycle in early 2006, around the same time that housing market activity was peaking, and less than two years before recession began. With the Fed likely to raise interest rates in December, and then perhaps another… Continue reading The Fed’s Toolkit Needs A Revamp

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More Cautionary Tales from the Bank of Canada

November 17, 2017

Bloomberg Markets – The Bank of Canada Gives Its Most Detailed Explanation Yet for Caution The Bank of Canada gave its most detailed explanation to date about why policy makers have become more cautious about the interest rate outlook, saying one reason is the desire to avoid a policy reversal.  Speaking Wednesday in New York, Senior… Continue reading More Cautionary Tales from the Bank of Canada

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Atlanta Fed’s GDPNow And New York Fed’s Nowcast Both Forecast 3.2% For Q4 2017 GDP 

November 17, 2017

FRB Atlanta – Latest forecast: 3.2 percent — November 15, 2017 The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2017 is 3.2 percent on November 15, down from 3.3 percent on November 9. After this morning’s retail sales report from the U.S. Census Bureau, the forecast of real consumer spending growth remained… Continue reading Atlanta Fed’s GDPNow And New York Fed’s Nowcast Both Forecast 3.2% For Q4 2017 GDP 

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Productivity Still Matters

November 17, 2017

The Financial Times – Lawrence Summers: Productivity still matters for median worker’s pay The data support the first conclusion: increases in productivity largely translate into increases in pay holding all else equal. In times of higher productivity growth the typical American worker has seen higher pay growth, as shown in figure 2 (for both the median… Continue reading Productivity Still Matters

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A Case For Large Cap Stocks Being Reasonably Priced

November 17, 2017

Bloomberg View – Nicholas Colas: Large-Cap Stocks Are Reasonably Priced. That’s No Joke Even in a worst-case scenario, where big companies only hit their most pessimistic profit estimates, price-to-earnings ratios wouldn’t be out of line. Nothing happens in vacuum. If every most-pessimistic analyst proves right, it will mean that the global economy has slowed meaningfully from… Continue reading A Case For Large Cap Stocks Being Reasonably Priced