201711.17
1
4

Chart of the Week; Deconstructing and Applying BRL

Last week’s Chart of the Week kicks off this week’s, though it will have to wait for a series of explanations to get us from that one to this. A week ago, we noted the growing divergence between leveraged loan prices and WTI, two risk indicators that used to be pretty well correlated for obvious…

201711.17
2
1

It’s Approaching A Record, But Not For Expansion

Home construction activity bounced back in October from several months of appreciable weakness. It may have been hurricane related where plans and projects delayed by the path of Harvey and Irma were finally cleared to resume. More likely, in my view, it was just the normal variation that the construction figures always have exhibited. Total…

201711.17
2
3

A TIC Look At Qualitative Contraction

The latest update of the Treasury Department’s Treasury International Capital (TIC) estimates clarified a few things. To begin with, for the month of September the Chinese sold UST’s again for the first time in seven months. Between the end of January and the end of August, the Chinese had added $149.4 billion in UST holdings….

201711.16 2

Huge Crude Stakes

There is a titanic struggle going on right now in the oil market. On the one side of the futures market are the usual pace setters, the money managers. Last week, the latest COT data available, they went the most net long since March. If it continues, it will close in on the most positive…

201711.16
0
3

Industrial Production Still Reflating

Industrial Production benefited from a hurricane rebound in October 2017, rising 2.9% above October 2016. That is the highest growth rate in nearly three years going back to January 2015. With IP lagging behind the rest of the manufacturing turnaround, this may be the best growth rate the sector will experience. Production overall was still…

201711.15
3
0

Can’t Hide From The CPI

On the vital matter of missing symmetry, consumer price indices across the world keep suggesting there remains none. Recoveries were called “V” shaped for a reason. Any economy knocked down would be as intense in getting back up, normal cyclical forces creating momentum for that to (only) happen. In the context of the past three…

201711.15
4
0

Symmetry Matters, Or The (Small) Progress of Stating The Obvious

Chicago Fed President Charles Evans is this year a voting FOMC member. Normally, that might not make much difference but in times like this where dissension is building beneath the surface of even the typically stoic central bank, this time it might. Apparently we can count Evans among the list dissatisfied with the current state…

201711.15
5
2

Retail Sales (US) Are Exhibit #1

In January 2016, everything came to a head. The oil price crash (2nd time), currency chaos, global turmoil, and even a second stock market liquidation were all being absorbed by the global economy. The disruptions were far worse overseas, thus the global part of global turmoil, but the US economy, too, was showing clear signs…

201711.14 6

What Central Banks Have Done Is What They’re Actually Good At

As a natural progression from the analysis of one historical bond “bubble” to the latest, it’s statements like the one below that ironically help it continue. One primary manifestation of low Treasury rates is the deepening mistrust constantly fomented in markets by the media equivalent of the boy who cries recovery. That narrative “has ruffled…

201711.14
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Historical Precedence For How A Bond ‘Bubble’ Ends

The UK government tried very hard to hold on. They had been able to raise $200 million from JP Morgan, a significant sum at that time under those circumstances. The British had also secured an almost equal amount from banks in France. The new National Government had produced a budget slashing spending by £70 million,…