Analysis Topic: Economic Trends Analysis
The analysis published under this topic are as follows.
Monday, July 08, 2019
Slowing Western economies will force new QE: Trading Setups and Deep analysis / Economics / Global Economy
By: QUANTO
The world is slowing down dramatically. At the same time, the largest economy is hurtling towards an election. Al governments who go to election will try to massage the numbers and pump the stock markets. So while the economy slows, the governmment is buzy pumping markets higher with his tweets.
The slowing down economy can be seen in numerous metrics and we believe central banks will be forced to begin a new round of QE. This time they will need to face up to inflation even as they pump in money.
Key metrics and charts shown below.
Read full article... Read full article...
Friday, July 05, 2019
Modern Monetary Theory – Applications in the 21st Century / Economics / Economic Theory
By: Andy_Sutton
Perhaps one of the biggest frauds perpetrated on the citizens of the world in the 20th century was Keynesianism. For those of you who are new to the discourse, Keynesianism was essentially the ramblings of a well-respected (at the time) economist named John Maynard Keynes and it dealt with deficit spending at the level of the federal government. It was a justification for something governments around the world were beginning to do anyway. The point of Keynes’ work was to give this very dangerous and ill-advised practice legitimacy. Sadly, it worked, and 85 years later, the developed nations of the world are mired in debt the likes of which the world has never before seen and may well never see again.
Before we get to the true purpose of this paper: an analysis of MMT, we must lay some foundational work. Please bear with us. If you have been an active reader of our previous articles and research, feel free to proceed directly to the portion where MMT is addressed.
Interestingly enough, the topic of this paper; (another consequence of treating economics as a debating society instead of a science) the foundations of modern monetary theory (hereafter MMT) actually originated long before Keynes wrote his seminal work in 1936. MMT as it is being rehashed today was actually first described by a German economist name Georg Friedrich Knapp in 1905. Originally coined ‘chartalism’ by Knapp, this perversion of economics was pushed in Knapp’s 1905 ‘State Theory of Money’. The term comes from the Latin root charta, which means ‘token’ or ‘ticket’.
Read full article... Read full article...
Wednesday, July 03, 2019
Freight Slowdown Is a Terrible Sign for the Economy / Economics / US Economy
By: Patrick_Watson
Just as an army moves on its stomach, an economy moves on ships, trucks, and planes. They carry the goods whose purchase adds up to growth.Nowadays many goods are digital, delivered electronically. But we still need lots of physical stuff which must travel to the customer.
Fewer goods in motion mean lower growth… and that’s exactly what is happening.
With technology, businesses have grown adept at managing inventory. Goods don’t typically sit on store shelves very long. Retailers stop ordering quickly when demand falls.
Lower freight volume is a symptom of a disease that’s getting worse.
Read full article... Read full article...
Wednesday, July 03, 2019
New US-Sino Trade Truce: Tougher Talks, More Economic Damage / Economics / Protectionism
By: Dan_Steinbock
During the G20 summit, China and US agreed to re-start the trade talks. As the US trade war is slowing China’s growth, the collateral damage is now spreading in the US economy, while undermining global prospects.Despite the White House’s efforts to lobby other countries against Huawei, President Trump also said that US companies can supply the technology giant, which the US, Department of Commerce blacklisted last month.
After Osaka, the negotiators face challenging obstacles, despite still another temporary timeout. Deep bilateral disagreements prevail about major structural issues.
Read full article... Read full article...
Monday, July 01, 2019
Zimbabwe's Inflation is Still Surging / Economics / Inflation
By: Steve_H_Hanke
The most important price in an economy is the exchange rate between the local currency and the world’s reserve currency — the U.S. dollar. As long as there is an active black‐market (read: free market) for currency and the data are available, changes in the black‐market exchange rate can be reliably transformed into accurate estimates of countrywide inflation rates—if the annual inflation rates exceed 25%. The economic principle of Purchasing Power Parity (PPP) allows for this transformation.
I compute the implied annual inflation rates with high‐frequency data and report them on a daily basis. PPP is used to translate changes in the black‐market exchange rates into annual inflation rates. For the countries that I follow each day, the table below shows the annual rates for the five countries with the highest inflation rates.
Read full article... Read full article...
Tuesday, June 25, 2019
Today’s Pets.com and NINJA Loan Economy / Economics / Global Debt Crisis 2019
By: Michael_Pento
The NASDAQ bubble that existed two decades ago contained a plethora of internet companies, such as Pets.com, that proved in the end to having a non-viable business model. Yet, because they enjoyed access to cheap credit, it allowed them to exist for a long time without generating positive cash flow. This, in turn, created artificial and temporary demand for all kinds of capital goods investments such as, fiber optic cable and routing equipment, which in turn served to provide a significant boost to economic growth. The consumption derived from equity prices that generated huge capital gains also proved to be a temporary and artificial support for GDP.
The same dynamic was true for the Real Estate bubble circa 2008. Subprime home buyers purchased multiple properties with no income, no job, and no assets behind their loans. This caused home prices to soar and propelled owners to extract a massive amount of equity from elevated property values that proved to be fictitious. This employed an army of lawyers, real estate brokers, and construction workers; and at the same time was a boon for the basic materials industry, home furnishing stores, etc.
Read full article... Read full article...
Tuesday, June 25, 2019
The Next Great Depression in the Making / Economics / Great Depression II
By: Harry_Dent
They lie, cheat, and steal? No way!With all eyes focused on Facebook’s cryptocurrency reveal tomorrow, what the Fed will do this Wednesday, and Slack’s IPO on Thursday, all of which we’ll address in the coming days, let’s turn our attention to another major issue that is silently unfolding: the great baby bust. More than any of the current hot events, it will have a significant impact on the future of our economy and the success of your investments…
Decades before births peaked in 2007, I was projecting it would happen. But how could I know that? Easy. Because births fall when the economy slows, especially in the Economic Winter Season, which we’re in the latter part now.
Read full article... Read full article...
Monday, June 24, 2019
The Bad News About Record-Low Unemployment / Economics / US Economy
By: Robert_Ross
Unemployment is the lowest it’s been in 50 years.
That means most people who want to work can find a job. It also means people are making more money and buying more stuff.
All good. More people working is always positive. But a low unemployment rate is a double-edged sword.
See, the unemployment rate is cyclical. It’s always moving up or down. And at this point—3.6%—there’s almost no room for it to drop more.
That’s where the trouble starts: When the unemployment rate bottoms out, like it’s doing now, it means the economy has peaked. And a recession is probably coming…
Monday, June 24, 2019
Trump’s Trade War Is Paralyzing Business / Economics / Protectionism
By: Patrick_Watson
Last week the Business Roundtable, an organization of large company leaders, released its quarterly CEO Economic Outlook Index.The index tracks what executives expect for sales, capital spending, and hiring over the next six months.
The good news is the index has been above its historic average for 10 consecutive quarters. The bad news is, it fell the last five of those quarters.
CEO optimism peaked in Q1 2018, following a climb that began in Q4 2016. Now in Q2 2019, much of the confidence is gone.
Read full article... Read full article...
Thursday, June 20, 2019
The Longer the US Sino-Tariff Wars Go On, the Harder It Will Be to Undo the Damage / Economics / Protectionism
By: Dan_Steinbock
Compared to pre-2008 crisis levels, world economic growth has plummeted by half and is at risk of a long-term, hard-to-reverse stagnation. Returning to global integration and multilateral reconciliation could dramatically change the scenarioSince spring 2017, the US-led tariff wars have effectively undermined the global recovery. In the past years, global economy has navigated across several scenarios. Now it is approaching the edge.
I have been following four generic scenarios on the prospects of global economic growth since the U.S. 2016 election. The first two scenarios represent variants of “recoupling." In these cases, global integration prevails, despite tensions. In the next two scenarios, global integration will fail, either in part and regionally or fully and globally.
Read full article... Read full article...
Sunday, June 16, 2019
Why Hedge Fund Manager Ray Dalio Is Wrong on Capitalism / Economics / Economic Theory
By: John_Mauldin
Ray Dalio is the thoughtful, somewhat controversial founder of the world’s largest hedge fund, Bridgewater Associates, which he started in 1975.
While much of his writing is private, I (and many others) peruse every word we can of his and the Bridgewater team’s thinking. I find it to be some of the most interesting market commentary I read.
Read full article... Read full article...
Saturday, June 15, 2019
Will the US Economy Fall into Recession? Or Will It Accelerate? / Economics / US Economy
By: Arkadiusz_Sieron
The current economic expansion has just equaled with the longest boom in the US history. Is that not suspicious? We invite you to read our today’s article, which provide you with the valuable lessons from the 1990s expansion for the gold market and find out whether the US economy will die of old age.
Lessons from the 1990s Expansion for the Economy and the Gold Market
The current economic expansion has just equaled with the longest boom in the US history. Unless the sky falls in the next few weeks, we will celebrate a new record in July. Is that not suspicious?
Read full article... Read full article...
Friday, June 14, 2019
The American Dream Is Alive and Well - in China / Economics / China Economy
By: Ellen_Brown
Home ownership has been called “the quintessential American dream.” Yet today less than 65% of American homes are owner occupied, and more than 50% of the equity in those homes is owned by the banks. Compare China, where, despite facing one of the most expensive real estate markets in the world, a whopping 90% of families can afford to own their homes.
Over the last decade, American wages have stagnated and U.S. productivity has consistently been outpaced by China’s. The U.S. government has responded by engaging in a trade war and imposing stiff tariffs in order to penalize China for what the White House deems unfair trade practices. China’s industries are said to be propped up by the state and to have significantly lower labor costs, allowing them to dump cheap products on the U.S. market, causing prices to fall and forcing U.S. companies out of business. The message to middle America is that Chinese labor costs are low because their workers are being exploited in slave-like conditions at poverty-level wages.
Read full article... Read full article...
Wednesday, June 12, 2019
The Privatization of US Indo-Pacific Vision - Project 2049, Armitage, Budget Ploys and Taiwan Nexus / Economics / Asian Economies
By: Dan_Steinbock
In the Shangri-La Summit, the Trump administration introduced a new, muscular Indo-Pacific strategy. It is fueled by private interests of corporations, defense contractors and foreign governments - not by the interests of the United States, China or emerging Asia.Recently, the Pentagon and State Department informally notified Congress of a potential $2 billion deal with Taiwan, which includes the first-time sale of one of the US Army’s top tanks, drawing protests from China.
In the Shangri-La Dialogue, which took place only days before, Acting Defense Secretary Patrick Shanahan pledged the United States would no longer "tiptoe" around Chinese behavior in Asia and warned about the new US “toolkit of coercion.”
Here’s the real key to the new Indo-Pacific stance, however: While emphasizing US commitment to the region, Shanahan urged US allies and partners to increase defense spending. What the Trump administration calls “burden sharing” is predicated on the idea that Asian economies should increasingly "buy American" military hardware from Pentagon contractors, even if it would split the region and undermine the promise of the Asian Century.
Read full article... Read full article...
Friday, June 07, 2019
US China Trade War Will Start a Recession, or Worse… / Economics / Protectionism
By: Patrick_Watson
The logic of Donald Trump’s multi-front trade war, if there is any, is increasingly obscure.
The tangled mix of policies isn’t accomplishing its stated goals and seems unlikely to ever do so. Meanwhile, it hurts the Americans it should supposedly help.
Regardless, it’s happening, and it has consequences… none of them good.
The president’s latest move to impose escalating tariffs on imports from Mexico is the trade equivalent of “going nuclear.”
Judging by his tweets, Trump thinks it will solve multiple problems: trade, drugs, immigration, and crime.
Thursday, June 06, 2019
Trump Is Making the Same Trade Mistake That Started the Great Depression / Economics / Great Depression II
By: John_Mauldin
We all wonder if Trump’s trade actions are as random as they appear or if there is a broader strategy.
Some of my contacts argue that the relatively strong US economy allows the administration to take a harder line than would normally be advisable.
The thinking is that we can ride out a trade war better than China can.
Wednesday, June 05, 2019
US Inflation and House Prices Trend Forecast / Economics / Inflation
By: Nadeem_Walayat
Official US CPI inflation remains marginally below the Fed's 2% target at 1.9%. Generally where house prices are concerned the higher the inflation rate the better as long as the economy is growing. Nothing much screams out from this chart other than at 2% inflation on balance is supportive of house prices.
Read full article... Read full article...
Tuesday, June 04, 2019
Recession Is a Psychological Thing: It Will Happen When We Say It Happens / Economics / Recession 2020
By: Jared_Dillian
We haven’t had a recession in a while in the United States.
The last one was pretty bad, so it stands to reason we might want to avoid a repeat of that experience.
President Trump is working very hard to ensure that we do not have a recession (at least until the 2020 election). The Fed no longer seems to believe that inflation is the greater risk. We are basically running the economy at full speed all the time.
It is hard to have a recession when monetary and fiscal policy have buried the needle.
Tuesday, June 04, 2019
Could the Trade War Help Ignite the Coming Recession? / Economics / Recession 2020
By: Robert_Ross
Dear Reader,
Another of the many moving parts in the economy right now is the escalating trade war between America and China.
The costs are starting to be felt. In fact, the latest tariffs should cost the average American household $831 this year, according to the Federal Reserve Bank of New York.
Read full article... Read full article...
Monday, June 03, 2019
How China Wins Trade War / Economics / Protectionism
By: Richard_Mills
The trade feud between the US and China has deteriorated into trench warfare, with tariffs used as bayonets to bludgeon the other’s economy into submission. China’s Huawei has been blacklisted and US firms ordered to stop doing business with the telecom giant, further souring the bilateral relationship. For Part 1 of this series read:
US is winning trade war with China...for now
Recent decisions made by the Trump and Xi administrations to either pile on more tariffs or increase the rate on existing ones, mean there is virtually no more tariff leverage either side can exert on the other, to extract the concessions needed for a deal.
The United States earlier this month raised tariffs on $200 billion worth of Chinese goods from 10% to 25%, effective June 1; China retaliated with $60 billion worth of 25% tariffs on American products. The Trump administration is reportedly “very strongly” considering tariffs on the remaining $325 billion of Chinese imports.
Read full article... Read full article...