Displaying items by tag: economy

Friday, 15 June 2018 10:13

World Growth is Decoupling

(New York)

It was a golden period, but it seems it only lasted less than a year. 2017 was a great year for the global economy. For the first time since the Crisis, the whole world seemed to be growing in unison. Even Europe, long in the doldrums after its sovereign debt crisis, had blossomed. But just as that growth was finally harmonizing, it is changing again. US growth still looks solid, but the rest of the world, especially Europe, is beginning to stagnate. China, too, leaks weaker, and both the ECB and Chinese central bank have held off on any rate rises.


FINSUM: We wonder if a global recession is coming. The US still looks strong, but then again we are coming off a very strong late stage tax cut.

Published in Macro
Monday, 16 April 2018 08:58

Will Growth Collapse or Just Slide?

(New York)

If you have been reading the news, you will have seen that many are starting to worry that a recession is on the way. While the economy still seems to be in good shape, at the fringes are some data that could foretell a period of contraction. The question is how sharp a contraction might come at the end of this long bull market and economic cycle. Well, Wall Street economists think that the contraction will be slow rather than a steep drop off. Most economists see solid global growth this year of between 3-4%, but thereafter is when things could get dicey.


FINSUM: The big troubling sign to us is that both the US and Europe, which were on different cycles, both seem to be slowing this year, which could portend a recession sooner rather than later.

Published in Macro
Friday, 06 April 2018 10:42

Poor Jobs Report May Signal Recession

(Washington)

This morning the US released a jobs report that was expected to be very strong, with unemployment maybe falling under 4%. However, the opposite happened, and we have a definitively weak report on our hands. The economy only created 103,000 jobs versus expectations of 178,000 and unemployment held steady at 4.1% rather than falling to 4%. The Labor Department also revised previous months downward, worsening the overall picture.


FINSUM: This is an interest result and one that seems more likely to keep the Fed leaning towards dovishness. We would say this is clearly bullish for bonds, and a little bearish for stocks.

Published in Eq: Total Market
Tuesday, 03 April 2018 09:52

The Economy Might Be Starting to Freeze Up

(New York)

We at FINSUM have been keeping a close eye on the economy, and in particular, looking for any signs of the end of the current business cycle. Today, we might have found one. One of the big worries of economists and investors of late has been the slowdown in consumer spending—a concern in its own right, but not conclusive. Today, we might be seeing why. Lenders all over the US have been tightening their businesses and lending out less cash. That has left less money available for purchases. From 2011 through the end of 2016, credit standards had loosened, but since then they have tightened, even as wages have grown and unemployment has fallen.


FINSUM: This decline in lending seems to show that many lenders think there is more risk than reward in the economy, which may in turn bring on the recession they sense is coming.

Published in Eq: Total Market
Tuesday, 27 March 2018 09:49

Metals are Sending a Bad Signal on the Economy

(New York)

Sometimes looking at raw materials is a great way to get a signal on the economy, especially as they are frequently leading indicators for what is coming. Well, one metal is screaming of bad times to come—silver. Gold is priced at 82x silver, the highest level in two years, which is a seen as a poor indicator. “Money managers tend to favor gold when they think markets might turn rocky and discard silver when they are worried about slower global growth crimping consumption”, says the Wall Street Journal. 55% of demand for silver is for industrial purposes, which links it more with fundamental metals like copper.


FINSUM: So this is an interesting insight, but because silver is not a pure industrial commodity (it is also somewhat of a value store), this comparison does not seem quite as pertinent. Gold to copper would be more interesting.

Published in Comm: Precious
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