201605.31
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It’s Not Stupidity, It Is Apathy (For Now)

Ten days ago, it was reported that the Bank of Japan for the first time set aside reserves against expected losses should its massive portfolio of JGB’s finally move toward QQE success. The main part of all this “stimulus” has been the accumulation of primarily government bonds at massive premiums. If it were ever to…

201605.31
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Mood Swings

The ISM Chicago Business Barometer PMI fell back below 50 again in May, the ninth time in the past sixteen months that the index came out under the supposed dividing line. It is more likely, however, that US businesses especially in manufacturing just don’t know what to make of the past year and a half…

201605.31
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The Pressure Builds

Two weeks ago, Chinese stock futures traded in Hong Kong flash crashed. Between 2:14pm and 2:16pm local time on May 17, the Hang Seng China Enterprises Index suddenly liquidated due to an intense burst of sell orders that crashed through the whole of the futures market depth. At the start, the index was trading at…

201605.29
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Bi-Weekly Economic Review

Economic Reports Scorecard The standout reports from the last two weeks are mostly real estate related. The Housing Market Index kicked things off two Mondays ago with a solid reading of 58 (this is a sentiment index with 50 as the dividing line between positive and negative). Homebuilders are not gaga with optimism but this…

201605.27
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Converting Into The (So Far) Broken Correlation

The Chinese exchange rate has traded lower for five consecutive days, and aside from essentially no change last Friday would have been eight in a row. That contrasts with the downward pattern that existed ever since the turn in mid-April where only the general direction was down in not so much a straight line. The…

201605.27
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Investment Risk These Days Includes The Census Bureau

When I started in this business more than twenty years ago, I fully expected to be a profession investor in the purest sense of the term. I envisioned spending my days tearing apart corporate financials, especially balance sheets, and matching them to common sense expectations of new products and imaginative advances. It was the 1990’s,…

201605.26
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Even More Recovery Was Erased

As if something out of bad dream, the economy continues to shrink. Actually, the economy has been shrunken this whole time, it is only the full recovery narrative that has shriveled as each drastic data revision blasts apart what little is left of the positivity. We are made to believe that government data providers go…

201605.25
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The Money of Oil

The Ricardian theory of free trade has dominated economics philosophy for good reason. It has a sound basis in common sense and offers a theoretical guide to understand the nature of exchange from a systemic standpoint. It does not, however, cover all such basis for all such manner of trade. Comparative advantage is somewhat straightforward…

201605.25
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The End of The Beginning, Updated

Markit’s Services PMI fell to just 51.2 in May, dropping a rather large 1.6 points from 52.8 in April. That meant the combined US Composite PMI, which puts together both manufacturing and services, was barely above 50, registering just 50.8. As with all PMI’s the distinction around 50 is unimportant, what matters is the direction…

201605.25
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The Remarkable Accuracy of The Ticking Clock

The People’s Bank of China today fixed the CNY exchange (reference) rate below 6.56 for the first time since early February. That means all the tremendous effort that went into erasing December and January’s “dollar” pressure (not devaluation) has been unwound, as the currency now trades just about where it was at the start of…