Archive for May 2018

Seasonally adjusted annualized April housing starts were 1.287 million. While that is up 10.5% Y-o-Y, and 8% YTD, housing growth is painfully weak, and all because of single-family activity. Multifamily has fully recovered and will henceforth move sideways. However, single-family starts of 894,000 are at solidly recessionary levels despite being 107 months into the current…

The recent tax cuts and spending increases will push up business and household spending, which will necessarily boost imports, which in turn will hurt our trade deficit. At the same time, these policies will also widen the budget deficit. And, looking back in history, every $1 billion rise in the budget deficit leads to the…

Several developing markets including Argentina, Indonesia, and Turkey, are getting whacked! While each is unique, these developing nations generally suffer from high externally denominated public and corporate indebtedness, large deficits, and high inflation. What lit the fuse is the greenback’s recent unexpected strengthening, which has caused money to pour out of these nations chasing higher…

The Friday File: 86% of Americans will celebrate Mother’s Day, spending an average of $180, taking total spending to $23.1 billion, just slightly below last year’s record-level and equal to the GDP of Iceland. Individuals 35-44 will be the biggest spenders, averaging $224, edging out the average man who will spend $216. Mother’s Day was…

The flattening yield curve, or the declining differential between long-term and short-term rates, is giving many heartburn. Since 1970, every time it’s inverted (and short rates have exceeded long rates), a recession has followed. Are we near a recession? Very unlikely! The current flattening suggests nothing more than continued short-end Fed rate hiking, little inflation…

After declining 0.25% in December, 0.68% in January, and 0.23% in February, inflation-adjusted retail sales jumped 0.62% in March and are now, solidly back at trend growth. Moreover, because those months are volatile, looking at Y-o-Y growth is preferable. Y-o-Y real retail sales growth troughed in 5/16 and have steadily risen since and are now…

April’s employment numbers were good. The unemployment rate fell to 3.9%, its best rate since 12/00, and the broadest measure of unemployment fell to 7.8%, best since 12/01. Yet wage growth was unchanged from earlier months, easing fears of inflation. And, that’s surprisingly good because job growth of just 164,000, and the upward revision of…

The US has set a mid-May deadline to complete NAFTA negotiations with Mexico and Canada. On 5/22, $50 billion in tariffs can be imposed on Chinese imports, and on 6/1, steel and aluminum tariffs will be levied on the EU if they are not again delayed. Add the May 12th Iran nuclear decision and imminent…

The Friday File: American Pharoah, the 2015 winner of the 141st running of the Kentucky Derby, the first Triple Crown winner since Affirmed in 1978, and one of only 12 such winners, is popular. The now six-year-old stallion has impregnated well over 100 mares at a fee last reported to be $200,000/session. As for tomorrow,…

While the Fed didn’t raise rates in the meeting that concluded yesterday, the big news is the Fed won’t overreact (which means raise rates much faster) if inflation modestly exceeds 2%. That is, the Fed remains on track to raise rates two, or more likely three, more times this year unless inflation rises above 2.5%,…