By Tom McClellan
Housing Starts – Lumber’s Message
November 19, 2015
There are a lot of leading economic indicators in use these days, but the one I like the best is lumber futures prices. Perhaps this is because almost no one else seems to pay attention to them as an economic gauge. Lumber prices tell us pretty reliably and ahead of time about what is going to happen to real estate prices and activity, plus interest rates. They can even tell us about what unemployment is going to do.
Continue reading Housing Starts – Lumber’s Message
By Jeffrey Snider @ Alhambra
Japan’s Continual Recession Reveals Something Important About US Consumers
Japan fell back into recession again in Q3, expected this time, which is actually being charitable to Abenomics and especially QQE. To even believe that this monetary insanity has produced even marginal benefits, it has to be given “credit” of at least mini-recoveries in between these “technical recessions.” It is a problem far worse than that, as even a technical recession exists only in the media. By all that truly counts, Japan has never left its QQE-induced hysteria, and thus the Japanese economy has remained distinctly subdued throughout.
Japan’s economy contracted in the third quarter as business investment fell, confirming what many economists had predicted: The nation fell into its second recession since Prime Minister Shinzo Abe took office in December 2012.
Gross domestic product declined an annualized 0.8 percent in the three months ended Sept. 30, following a revised 0.7 percent drop in the second quarter, meeting the common definition of a recession. Economists had estimated a 0.2 percent decline for the third quarter.
Going back all the way to the fourth quarter of 2013, not long after QQE began, Japan’s GDP has averaged a very slightly negative rate. Owing to compounding effects and time, Japan’s real GDP level in Q3 2015 is actually slightly above what it was when QQE began. In other words, where even GDP has not grown for more than two years you can count that as a single and ongoing recession with variation in between that does not change the overall trajectory. The fact that the quarterly levels appear highly unstable only produces the common QE element, one which, as everyone should appreciate, is being reproduced by the US and Europe.
Continue reading Japan’s Recession and US Consumers
By Jeffrey Snider @ Alhambra
The Common Economy of 2015
With financial markets sharply glued to the “dollar’s” renewed mischief, that means everything lies at the feet of the global economy. The US economy is supposed to be the one colorful and lively example in that otherwise souring picture, even if it has been temporarily pushed from ideal. In fact, despite all that has happened this year, and “unexpectedly” continues to happen, there are those still welded to the idea of “overheating” as the largest risk. That is, of course, the remnants of last year’s idealism in but a few highly adjusted figures.
In September 2014, just as the “dollar’s” full weight and fury was being lined up for the first time, Jared Bernstein argued this dichotomy in the Washington Post.
Continue reading The Common Economy…
Do not subscribe to NFTRH!
At least not yet, anyway… I am going to release it publicly for the first time in probably 5 years. Coming at what is a key juncture in most markets (talking the next 2 weeks), it seems like the right time to get this view of the current multi-market status out there before a wider audience.
NFTRH does not make predictions because they flunked me out of guru school and took away my crystal ball. But we always follow the analysis and probabilities and intuitively self-correct in real time if/as needed.
NFTRH 366 lays out the parameters of this key, potentially pivotal time in global markets. Generally, we have been right on the market’s turns ever since it resolved into the August drop and finally, things became ‘in motion’, which is the best environment to gauge and plan. Right now the motion is ‘up’, exactly as expected.
If you would like to have NFTRH 366 with no commitment and no strings attached, simply email me at gt<at>biiwii.com or use the ‘Contact’ link above and request so. If you find it is right for your needs I would welcome the opportunity to be among your market intelligence service providers going forward!
By Doug Noland
Credit Bubble Bulletin: Look Back in Anger
October 16 – Wall Street Journal (Alan S. Blinder and Mark Zandi): “Don’t Look Back in Anger at Bailouts and Stimulus… Logic dictates that the size of any stimulus be proportional to the expected decline in economic activity—which was enormous in the Great Recession. The Recovery Act and other stimulus measures were costly to taxpayers, and thus much-maligned. But the slump would have been much deeper without them. The Federal Reserve has also come under attack for its unprecedented actions, especially its quantitative easing or bond-buying programs. Yet QE lowered long-term interest rates and boosted stock and housing prices—all to the economy’s benefit. Yes, QE has possible negative side-effects, but for the most part they have yet to materialize. Policy makers who botched the regulatory job before the crisis and shifted to fiscal restraint prematurely in 2011 can hardly be considered flawless. Yet one major reason why the U.S. economy has outperformed the plodding European and Japanese economies is the timely, massive and unprecedented responses of U.S. policy makers in 2008-09. So let’s get the history right.”
Continue reading Look Back in Anger
By Michael Ashton
Walmart Traffic may be Down but Wall Street Traffic is Up
Walmart (WMT) didn’t have its best day today. The bellwether retailer forecast a profit decline of 6-12% in its 2017 fiscal year, in some part because of a $1.5bln increase in wage expenses; the stock dropped 10% to its lowest level since 2012 and off about 33% from the highs (see chart, source Bloomberg).
Continue reading Walmart Traffic Down, Wall St. Traffic Up
By Michael Ashton
Yesterday, I mentioned the likelihood that a recession is coming. The indicators for this are mostly from the manufacturing side of the economic ledger, and they are at this point merely suggestive. For example, the ISM Manufacturing Index is at 50.2, below which level we often see deeper downdrafts (see chart, source Bloomberg).
Continue reading Recession Won’t Be Fun, But Better Than Last Time
By Michael Ashton
The Employment Report on Friday was bad – but it wasn’t the unmitigated disaster that the consensus seems to have spun it into. It is true that there were no bright spots. It is true that the net number of new jobs added was worse than consensus and indeed worse than some of the more pessimistic expectations. But 142k new jobs is not a recessionary collapse (yet). Let us remember that one or two months every year fall below that figure (see chart, source Bloomberg).
Continue reading The Sky is Not Falling…Yet