Archive for January 2016

While US exports to China are just 1% of GDP, China’s slowdown still matters. Countries that export raw materials to China (like Australia), that have substantial two-way trade with China (like Japan), or that compete with China in the selling of finished goods (like Indonesia) will all see capital take flight, economies weaken, and currencies…

Total international arms sales were $71.8 billion in 2014, up slightly from $70.1 billion in 2013. The US was the top arms exporter at $36.2 billion, followed by Russia at $10.2 billion, Sweden at $5.5 billion, France, $4.4 billion and China, $2.2 billion. South Korea was the biggest buyer with purchases totaling $7.8 billion, just…

The Powerball jackpot is $1.5 billion, the largest US lottery jackpot ever. If taken as a lump-sum, and assuming you don’t share the pot, the after-tax payout would be about $531 million. The odds of winning: 292.2 million to one. Dividing $531 million/292.2 million = $1.81, less than the $2 ticket price. So, it’s not…

Friday’s job report was good! Payrolls grew by 292,000, and prior month numbers were upwardly revised by 50,000. Q4 was the best quarter for job growth in 2015, a year which averaged 221,000 new jobs/month, the second best since 1999. While wage growth was flat in December (due largely to temporary holiday hiring and also…

The Friday File: If you love chemistry, there is now more to love. Until recently there were 114 elements, now there are 118! These new “superheavy” elements exist very briefly. Ununtrium (atomic number 113) exists for less than a thousandth of a second, much like my paycheck. The other elements have been give temporary names…

Chinese equity markets are declining because their economy is looking increasingly weak. Worse, the policy of chronically devaluing the yuan, despite a $600 billion trade surplus, has many convinced the government has simply run out of ideas. That, in turn, has led to a growing lack of confidence in the government which is causing capital…

A combination of cheap financing, longer car notes (84 months), employment growth and an old fleet culminated in sales of 17.5 million cars in 2015, breaking the record of 17.3 million set in 2000 let alone the 2009 trough of 10.4 million. Yet manufacturing has been in recession for two months! It’s because agriculture, energy,…

While 2016 should be marginally better than 2015, there are several serious downside risks. The first is more rapid slowing than expected in China, followed closely by the deteriorating American manufacturing sector which is now in recession. The third is fear of a wider conflagration in the Middle East, and the last is rising concern…

The Fed may experience increased dissention this year. It’s because the Fed bank presidents that vote change annually and this year’s group contains three interest rate hawks and one dove, replacing three doves and a hawk. However, it’s the seven permanent governors of the Fed that matter and they rarely break with the Chair. Despite…