201710.18
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Sinking Apartments (Not From Storms)

Housing construction continues to slow in 2017, dragged down by fewer multi-family projects. Total permits and starts have essentially flatlined since 2015, a further slowdown from one already slowdown. The single-family market is still growing but at a historically tepid pace, leaving the pace of construction overall to be dictated by weakness in apartment development….

201710.18
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A Derivatives Look At What Happened To ‘Reflation’

The Office of the Comptroller of the Currency (OCC) reports that total gross notional derivatives contracts owned and outstanding by domestic banks rose for the second straight quarter. The OCC statistics are one quarter behind, meaning that though banks themselves are reporting Q3 numbers with earnings all figures shown here are from the official compilation…

201710.18
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Dollar Denial

At this point in the longer term process of unwinding the Fed’s prior emergency activities, the yield curve was supposed to flatten. That was the plan all along. If monetary policy was successful, or had even run into just dumb luck somewhere in the last ten years, here where policymakers declare the economy to be…

201710.17
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Distinct Lack of Good Faith, Part ??

It was a busy weekend in retrospect, starting with Janet Yellen and other central bankers uncomfortably facing a global media that has become (for once) increasingly unconvinced. Reporters, really, don’t have much choice. The Federal Reserve Chairman might not be aware of just how much she has used the “transitory” qualifier since 2015, but others…

201710.17
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Less Than Square One

Goldman Sachs was the latest Wall Street bank to jump on low volatility. Despite an enormous gain in prop trading, most of the rest of the firm’s results were moving in the wrong direction. In its market making segment, for example, the firm booked $2.1 billion in net revenue in the third quarter, 22% less…

201710.17
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Broader Slowing In IP

Industrial Production rose 1.6% year-over-year in September 2017. That’s up from 1.2% growth in August, both months perhaps affected to some degree by hurricanes. The lack of growth and momentum, however, clearly predated the storms. The seasonally-adjusted index for IP peaked in April 2017, and has been lower ever since. This pattern, the disappointment this…

201710.16
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What Else Needs To Be Said? Why It Will Continue, Con’t

If the essence of modern eurodollar money is bank balance sheet capacity, then we need not wonder what has gone wrong or why. The very heart of this global currency system no longer beats so healthy and strong. Global banks shrink rather than expand at a breakneck pace, their desire to do the latter restrained…

201710.16
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Global Inflation Continues To Underwhelm

Chinese producer prices accelerated in September 2017, while consumer price increases slowed. The National Bureau of Statistics reported this weekend that China’s PPI was up 6.9% year-over-year, a quicker pace than the 6.3% estimated for August and a 5.5% rate in July. Earlier in the year producer prices were driven mostly by 2016’s oil rebound,…

201710.13
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Enforcing A Global Speed Limit

Chinese imports rose 18.7% in September 2017 year-over-year. That’s up from 13.5% growth in August. While near-20% expansion sounds good if not exhilarating, it isn’t materially different from 13.5% or 8% for that matter. In addition, Chinese trade statistics tend to vary month to month. What is becoming very clear is that China’s economy is…