Archive for December 2015

While the Chinese economy is cooling, Chinese buyers are pouring into US real estate. In 2015, their $30 billion in purchases will equal all purchases by Canadians, Indians, Mexicans, and the British, the next four most popular nationalities. Chinese buyers also account for the most number of transactions with 16% of foreign purchases, followed by…

Given that consumer spending accounts for two-thirds of GDP and retail sales account for one-third of that, the 0.2% rise in November retail sales was superficially disappointing. But Y-o-Y inflation is zero! Were inflation just 2.3%, retail sales growth would have been double what it was! Moreover, Y-o-Y retail sales are up 3.6%, and non-store…

The Friday File: This Monday, Governor Terry Branstad of Iowa will become the longest serving governor in US history at 7,640 days, almost 21 years, and will surpass the long held record of Vice President and Revolutionary War General George Clinton of NY. Number three is William Janklow of SD at a mere 5,851 days…

It’s remarkable that several Republican presidential candidates advocate a return to the gold standard. Doing so would outsource our money supply growth and thus monetary policy to the world’s largest gold producers including China, Russia, Peru and South Africa. And even a return to the quasi-gold standard of the Bretton-Woods system, which ran from 1945-1971,…

With a Fed rate hike a forgone conclusion, the next three issues of concern are: how gradually will the Fed raise rates, when does the Fed stop reinvesting interest and principal from their $4 trillion portfolio of Treasuries and agency debt (Fannie and Freddie), and, last but not least, do we return to a zero…

Since bailing out Fannie and Freddie to the tune of $188 billion, the Treasury has taken all their profit and is slowly taking all their capital. By 2018, F&F will have none. Unfortunately, F&F are becoming less profitable as they shrink their portfolios of mortgage-backed securities and focus on issuing guarantees. With no capital, a…

Friday’s labor numbers were excellent! 211,000 net new jobs, upward revisions totaling 35,000 for September and October, an increase in the labor force participation rate from 62.4% to 62.5%, and decent year-over-year wage growth of 2.3%. Better yet, construction added 46,000 jobs, its best showing since 1/14 and retail, which had shown signs of weakness,…

The Friday File: After closely observing three pre-agricultural groups, one from Tanzania, one from southern Africa and one from Bolivia, researchers learned that these peoples averaged 6.5 hours of sleep/day. Moreover, the groups stayed awake for an average of 3.3 hours after nightfall, rarely napped in the afternoon and barely suffered from insomnia. This suggests…

To boost European economic activity, the ECB lowered the rate it pays banks that have deposits with it from -0.2% to -0.3%! These negative returns may encourage more lending, but I’m skeptical. It will, however, weaken the euro, boosting exports and inflation as imported goods rise in price. It will also dampen US interest rate…

US manufacturing activity contracted in November, the first monthly decline since 11/12, the second since 07/09. Manufacturing is sputtering due to the strengthening dollar, anemic global growth, low commodity prices and poor capital spending due to lousy corporate profit growth. The last time the Fed raised rates while manufacturing was shrinking was in 1980. That…