Breaking Below the Shelf
In our recent missive on junk bonds, we inter alia discussed the fact that the growth rate of the narrow money supply aggregate M1 had declined rather noticeably from its peak in 2011. Here is a link to the chart.
As we wrote:
“We also have confirmation of a tightening monetary backdrop from the narrow money supply aggregate M1, the annualized growth rate of which has been immersed in a relentless downtrend since peaking at nearly 25% in 2011. We expect that this trend will turn out to be a a leading indicator for the recently stagnant (but still high at around 8.3% y/y) growth rate in the broad true money supply TMS-2.”
Photo credit: Bari Goodman
An Addendum to Recent Data Points – The Message from Lumber
We have recently discussed the manufacturing sector’s problems several times, as well as the trends in employment data. As a general remark to this, it seems that the sectors that have lately contributed especially strongly to employment growth were health care & social services, leisure & hospitality and construction.
The echo boom in construction may be running out of steam though. Interestingly, this is once again happening even before a rate hike cycle has begun – in a sector that traditionally benefits disproportionately from low interest rates. Data on housing starts, permits and construction are admittedly quite erratic from month to month. However, there are a number of signs that the sector may be about to cool down. Said erratic data on starts and permits have just nosedived again from what remains a historically low base.
Let’s Buy Sweden and Put it on our Front Lawn
Or rather, let’s not. As Bloomberg reports, the officially admitted to amount of bad loans in China’s banking system has by now swelled to approx 4 trillion yuan, or $628 billion, which is roughly equivalent to Sweden’s total economic output per year.
While the Stock Market is Partying …
There are seemingly always “good reasons” why troubles in a sector of the credit markets are supposed to be ignored – or so people are telling us, every single time. Readers may recall how the developing problems in the sub-prime sector of the mortgage credit market were greeted by officials and countless market observers in the beginning in 2007.
Photo credit: Getty Images
The Battle Between Inflationary and Deflationary Forces
At the meeting of the Incrementum Fund’s Advisory Board in early October, there was once again a wide-ranging amd in-depth discussion of the economy and financial markets in light of the increasingly evident tensions between the forces of deflation and the countervailing inflationary measures taken by central bankers all over the world.
A Lagging and Imprecise Indicator
As we have pointed out in our most recent update on manufacturing data, last Friday’s payrolls report will eventually be revised out of recognition (in previous months, a number of reports have at first been subject to an upward revision, only to be revised significantly downward again a month later. The final numbers will take still longer to arrive, up to a year if memory serves).
Hammer guy is included the non-farm payrolls report, Ms. Sickle isn’t …
Photo via magic-ays.com
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