By Louis S. Barnes Friday, August 21st, 2015
Calm
down. Think it over, figure it out. Just because we see confusion and panic out
there doesn’t mean we have to sign up.
The
media focus is on the stock market. If for no other reason than that, don’t pay
much attention to the stock market. If it goes nuts in either direction, the
authorities have to get involved, but we’re miles from that.
However,
there is one useful hint from the stock market this week: for many months
stocks have traded up on bad economic news, thinking that would mean the Fed
staying on hold. This week’s news has been awful — so bad that even if the Fed
does lift off in September it will likely be an immaterial one-and-done. Now,
the benefit of Fed on hold has been overwhelmed by something else, worse than
Fed tightening.
We
have several choices for that honor: Europe has entered a new, German-driven
Greek deal which is ridiculous on its face. Greece will have new elections, but
not really a government (or an economy). Pyongyang’s Fat Boy threatens war.
Japan’s GDP “unexpectedly” shrank 1.6% in the 2nd quarter despite fantastic QE
by the BOJ. A new, modest tsunami of currency devaluations ripple from Asia,
too many to count.
At
the center: China, of course. China drives everybody crazy because it’s the
Saturday Night Live Liar of economic data. The economic/market upset underway
would not be so troublesome if we had straight data and clear government
intentions. Best I can figure, China began last year a multi-pronged effort to
rebalance its economy toward consumption and open markets and away from
state-driven investment and credit — and every effort has failed and left each
sector in worse shape than to begin with. China used to have a stock market;
now it doesn’t. Weaning from state credit has left it with more state credit
outstanding and deeper reliance on it. The reputation of the leadership and
Party has suffered accordingly.
China
is not likely to land hard. If we’ve learned anything in the last decade, it’s
that central banks can create relatively stable mountains of IOUs under their
carpets. But the chain of events leading to broad market and economic upsets is
in play anyway, China’s devaluation the immediate signal that global trade may
be in trouble.
China’s
consumption of commodities has crested, but the emerging-nation supply chain
was calibrated for further increase. The emerging nations are also customers of
China, and will buy less, increasing pressure on China. China is a customer of
Europe and the US, and will buy less; hence so will they. In the last 25 years
global trade has grown faster than GDP, everyone now everyone else’s customer.
That global trade conveyor has made everybody rich, especially big corporations
with global turnstiles enjoying unimaginable profit margins.
Ordinary
cyclical oops-a-daisies are not a big deal, and that’s what this is likely to
be. However, markets have the screaming bejabbers at the moment for fear of a
reinforcing spiral driven by an incipient trade war becoming a currency race to
the bottom. Even that is recurrent and recoverable. The part that’s not: we’ve
never gone though an adjustment like this with so much debt outstanding, and
deflation nearby.
Back
to the Fed. Minutes of its meeting only three weeks ago were released Wednesday,
and reveal the Fed properly uncertain then. Today, I assume jaw-dropped.
Exclusion
is one way to get close to the heart of the matter. Things about the Fed that
are not true: it did not miss its chance to lift off last fall, winter,
or spring; if the world is too shaky now for liftoff, then lifting off earlier
would leave it too tight now. The Fed’s zero-percent policy and QE did not
cause current difficulty — without its heroics 2008-9 we’d be living in caves.
Nor the goofy plan to hike now so it can cut later.
The
Fed does not have to lift off now, although it might just to shut up the
irresponsible jackdaws and their financial creationism. The only element of the
US economy flashing red is apparent “full employment,” and the need for pre-emptive
liftoff. Nothing else is even amber. Keep it simple: the Fed doesn’t matter
now.
The
risk to the global trade conveyor exceeds all other risk combined.
Calm down. Think it over, figure it out. Just because we see confusion and panic out there doesn’t mean we have to sign up.
The
media focus is on the stock market. If for no other reason than that,
don’t pay much attention to the stock market. If it goes nuts in either
direction, the authorities have to get involved, but we’re miles from
that.
However,
there is one useful hint from the stock market this week: for many
months stocks have traded up on bad economic news, thinking that would
mean the Fed staying on hold. This week’s news has been awful — so bad
that even if the Fed does lift off in September it will likely be an
immaterial one-and-done. Now, the benefit of Fed on hold has been
overwhelmed by something else, worse than Fed tightening.
We
have several choices for that honor: Europe has entered a new,
German-driven Greek deal which is ridiculous on its face. Greece will
have new elections, but not really a government (or an economy).
Pyongyang’s Fat Boy threatens war. Japan’s GDP “unexpectedly” shrank
1.6% in the 2nd quarter despite fantastic QE by the BOJ. A new, modest
tsunami of currency devaluations ripple from Asia, too many to count.
At
the center: China, of course. China drives everybody crazy because it’s
the Saturday Night Live Liar of economic data. The economic/market
upset underway would not be so troublesome if we had straight data and
clear government intentions. Best I can figure, China began last year a
multi-pronged effort to rebalance its economy toward consumption and
open markets and away from state-driven investment and credit — and
every effort has failed and left each sector in worse shape than to
begin with. China used to have a stock market; now it doesn’t. Weaning
from state credit has left it with more state credit outstanding and
deeper reliance on it. The reputation of the leadership and Party has
suffered accordingly.
China
is not likely to land hard. If we’ve learned anything in the last
decade, it’s that central banks can create relatively stable mountains
of IOUs under their carpets. But the chain of events leading to broad
market and economic upsets is in play anyway, China’s devaluation the
immediate signal that global trade may be in trouble.
China’s
consumption of commodities has crested, but the emerging-nation supply
chain was calibrated for further increase. The emerging nations are also
customers of China, and will buy less, increasing pressure on China.
China is a customer of Europe and the US, and will buy less; hence so
will they. In the last 25 years global trade has grown faster than GDP,
everyone now everyone else’s customer. That global trade conveyor has
made everybody rich, especially big corporations with global turnstiles
enjoying unimaginable profit margins.
Ordinary
cyclical oops-a-daisies are not a big deal, and that’s what this is
likely to be. However, markets have the screaming bejabbers at the
moment for fear of a reinforcing spiral driven by an incipient trade war
becoming a currency race to the bottom. Even that is recurrent and
recoverable. The part that’s not: we’ve never gone though an adjustment
like this with so much debt outstanding, and deflation nearby.
Back
to the Fed. Minutes of its meeting only three weeks ago were released
Wednesday, and reveal the Fed properly uncertain then. Today, I assume
jaw-dropped.
Exclusion is one way to get close to the heart of the matter. Things about the Fed that are not
true: it did not miss its chance to lift off last fall, winter, or
spring; if the world is too shaky now for liftoff, then lifting off
earlier would leave it too tight now. The Fed’s zero-percent policy and
QE did not cause current difficulty — without its heroics 2008-9 we’d be
living in caves. Nor the goofy plan to hike now so it can cut later.
The Fed does not
have to lift off now, although it might just to shut up the
irresponsible jackdaws and their financial creationism. The only element
of the US economy flashing red is apparent “full employment,” and the
need for pre-emptive liftoff. Nothing else is even amber. Keep it
simple: the Fed doesn’t matter now.
The risk to the global trade conveyor exceeds all other risk combined.
- See more at: http://pmglending.com/blog/market-commentary/credit-news-by-lou-barnes-august-21-2015#sthash.nvaZrQ6n.dpuf
Calm down. Think it over, figure it out. Just because we see confusion and panic out there doesn’t mean we have to sign up.
The
media focus is on the stock market. If for no other reason than that,
don’t pay much attention to the stock market. If it goes nuts in either
direction, the authorities have to get involved, but we’re miles from
that.
However,
there is one useful hint from the stock market this week: for many
months stocks have traded up on bad economic news, thinking that would
mean the Fed staying on hold. This week’s news has been awful — so bad
that even if the Fed does lift off in September it will likely be an
immaterial one-and-done. Now, the benefit of Fed on hold has been
overwhelmed by something else, worse than Fed tightening.
We
have several choices for that honor: Europe has entered a new,
German-driven Greek deal which is ridiculous on its face. Greece will
have new elections, but not really a government (or an economy).
Pyongyang’s Fat Boy threatens war. Japan’s GDP “unexpectedly” shrank
1.6% in the 2nd quarter despite fantastic QE by the BOJ. A new, modest
tsunami of currency devaluations ripple from Asia, too many to count.
At
the center: China, of course. China drives everybody crazy because it’s
the Saturday Night Live Liar of economic data. The economic/market
upset underway would not be so troublesome if we had straight data and
clear government intentions. Best I can figure, China began last year a
multi-pronged effort to rebalance its economy toward consumption and
open markets and away from state-driven investment and credit — and
every effort has failed and left each sector in worse shape than to
begin with. China used to have a stock market; now it doesn’t. Weaning
from state credit has left it with more state credit outstanding and
deeper reliance on it. The reputation of the leadership and Party has
suffered accordingly.
China
is not likely to land hard. If we’ve learned anything in the last
decade, it’s that central banks can create relatively stable mountains
of IOUs under their carpets. But the chain of events leading to broad
market and economic upsets is in play anyway, China’s devaluation the
immediate signal that global trade may be in trouble.
China’s
consumption of commodities has crested, but the emerging-nation supply
chain was calibrated for further increase. The emerging nations are also
customers of China, and will buy less, increasing pressure on China.
China is a customer of Europe and the US, and will buy less; hence so
will they. In the last 25 years global trade has grown faster than GDP,
everyone now everyone else’s customer. That global trade conveyor has
made everybody rich, especially big corporations with global turnstiles
enjoying unimaginable profit margins.
Ordinary
cyclical oops-a-daisies are not a big deal, and that’s what this is
likely to be. However, markets have the screaming bejabbers at the
moment for fear of a reinforcing spiral driven by an incipient trade war
becoming a currency race to the bottom. Even that is recurrent and
recoverable. The part that’s not: we’ve never gone though an adjustment
like this with so much debt outstanding, and deflation nearby.
Back
to the Fed. Minutes of its meeting only three weeks ago were released
Wednesday, and reveal the Fed properly uncertain then. Today, I assume
jaw-dropped.
Exclusion is one way to get close to the heart of the matter. Things about the Fed that are not
true: it did not miss its chance to lift off last fall, winter, or
spring; if the world is too shaky now for liftoff, then lifting off
earlier would leave it too tight now. The Fed’s zero-percent policy and
QE did not cause current difficulty — without its heroics 2008-9 we’d be
living in caves. Nor the goofy plan to hike now so it can cut later.
The Fed does not
have to lift off now, although it might just to shut up the
irresponsible jackdaws and their financial creationism. The only element
of the US economy flashing red is apparent “full employment,” and the
need for pre-emptive liftoff. Nothing else is even amber. Keep it
simple: the Fed doesn’t matter now.
The risk to the global trade conveyor exceeds all other risk combined.
- See more at: http://pmglending.com/blog/market-commentary/credit-news-by-lou-barnes-august-21-2015#sthash.nvaZrQ6n.dpuf
Calm down. Think it over, figure it out. Just because we see confusion and panic out there doesn’t mean we have to sign up.
The
media focus is on the stock market. If for no other reason than that,
don’t pay much attention to the stock market. If it goes nuts in either
direction, the authorities have to get involved, but we’re miles from
that.
However,
there is one useful hint from the stock market this week: for many
months stocks have traded up on bad economic news, thinking that would
mean the Fed staying on hold. This week’s news has been awful — so bad
that even if the Fed does lift off in September it will likely be an
immaterial one-and-done. Now, the benefit of Fed on hold has been
overwhelmed by something else, worse than Fed tightening.
We
have several choices for that honor: Europe has entered a new,
German-driven Greek deal which is ridiculous on its face. Greece will
have new elections, but not really a government (or an economy).
Pyongyang’s Fat Boy threatens war. Japan’s GDP “unexpectedly” shrank
1.6% in the 2nd quarter despite fantastic QE by the BOJ. A new, modest
tsunami of currency devaluations ripple from Asia, too many to count.
At
the center: China, of course. China drives everybody crazy because it’s
the Saturday Night Live Liar of economic data. The economic/market
upset underway would not be so troublesome if we had straight data and
clear government intentions. Best I can figure, China began last year a
multi-pronged effort to rebalance its economy toward consumption and
open markets and away from state-driven investment and credit — and
every effort has failed and left each sector in worse shape than to
begin with. China used to have a stock market; now it doesn’t. Weaning
from state credit has left it with more state credit outstanding and
deeper reliance on it. The reputation of the leadership and Party has
suffered accordingly.
China
is not likely to land hard. If we’ve learned anything in the last
decade, it’s that central banks can create relatively stable mountains
of IOUs under their carpets. But the chain of events leading to broad
market and economic upsets is in play anyway, China’s devaluation the
immediate signal that global trade may be in trouble.
China’s
consumption of commodities has crested, but the emerging-nation supply
chain was calibrated for further increase. The emerging nations are also
customers of China, and will buy less, increasing pressure on China.
China is a customer of Europe and the US, and will buy less; hence so
will they. In the last 25 years global trade has grown faster than GDP,
everyone now everyone else’s customer. That global trade conveyor has
made everybody rich, especially big corporations with global turnstiles
enjoying unimaginable profit margins.
Ordinary
cyclical oops-a-daisies are not a big deal, and that’s what this is
likely to be. However, markets have the screaming bejabbers at the
moment for fear of a reinforcing spiral driven by an incipient trade war
becoming a currency race to the bottom. Even that is recurrent and
recoverable. The part that’s not: we’ve never gone though an adjustment
like this with so much debt outstanding, and deflation nearby.
Back
to the Fed. Minutes of its meeting only three weeks ago were released
Wednesday, and reveal the Fed properly uncertain then. Today, I assume
jaw-dropped.
Exclusion is one way to get close to the heart of the matter. Things about the Fed that are not
true: it did not miss its chance to lift off last fall, winter, or
spring; if the world is too shaky now for liftoff, then lifting off
earlier would leave it too tight now. The Fed’s zero-percent policy and
QE did not cause current difficulty — without its heroics 2008-9 we’d be
living in caves. Nor the goofy plan to hike now so it can cut later.
The Fed does not
have to lift off now, although it might just to shut up the
irresponsible jackdaws and their financial creationism. The only element
of the US economy flashing red is apparent “full employment,” and the
need for pre-emptive liftoff. Nothing else is even amber. Keep it
simple: the Fed doesn’t matter now.
The risk to the global trade conveyor exceeds all other risk combined.
- See more at: http://pmglending.com/blog/market-commentary/credit-news-by-lou-barnes-august-21-2015#sthash.nvaZrQ6n.dpuf
Calm down. Think it over, figure it out. Just because we see confusion and panic out there doesn’t mean we have to sign up.
The
media focus is on the stock market. If for no other reason than that,
don’t pay much attention to the stock market. If it goes nuts in either
direction, the authorities have to get involved, but we’re miles from
that.
However,
there is one useful hint from the stock market this week: for many
months stocks have traded up on bad economic news, thinking that would
mean the Fed staying on hold. This week’s news has been awful — so bad
that even if the Fed does lift off in September it will likely be an
immaterial one-and-done. Now, the benefit of Fed on hold has been
overwhelmed by something else, worse than Fed tightening.
We
have several choices for that honor: Europe has entered a new,
German-driven Greek deal which is ridiculous on its face. Greece will
have new elections, but not really a government (or an economy).
Pyongyang’s Fat Boy threatens war. Japan’s GDP “unexpectedly” shrank
1.6% in the 2nd quarter despite fantastic QE by the BOJ. A new, modest
tsunami of currency devaluations ripple from Asia, too many to count.
At
the center: China, of course. China drives everybody crazy because it’s
the Saturday Night Live Liar of economic data. The economic/market
upset underway would not be so troublesome if we had straight data and
clear government intentions. Best I can figure, China began last year a
multi-pronged effort to rebalance its economy toward consumption and
open markets and away from state-driven investment and credit — and
every effort has failed and left each sector in worse shape than to
begin with. China used to have a stock market; now it doesn’t. Weaning
from state credit has left it with more state credit outstanding and
deeper reliance on it. The reputation of the leadership and Party has
suffered accordingly.
China
is not likely to land hard. If we’ve learned anything in the last
decade, it’s that central banks can create relatively stable mountains
of IOUs under their carpets. But the chain of events leading to broad
market and economic upsets is in play anyway, China’s devaluation the
immediate signal that global trade may be in trouble.
China’s
consumption of commodities has crested, but the emerging-nation supply
chain was calibrated for further increase. The emerging nations are also
customers of China, and will buy less, increasing pressure on China.
China is a customer of Europe and the US, and will buy less; hence so
will they. In the last 25 years global trade has grown faster than GDP,
everyone now everyone else’s customer. That global trade conveyor has
made everybody rich, especially big corporations with global turnstiles
enjoying unimaginable profit margins.
Ordinary
cyclical oops-a-daisies are not a big deal, and that’s what this is
likely to be. However, markets have the screaming bejabbers at the
moment for fear of a reinforcing spiral driven by an incipient trade war
becoming a currency race to the bottom. Even that is recurrent and
recoverable. The part that’s not: we’ve never gone though an adjustment
like this with so much debt outstanding, and deflation nearby.
Back
to the Fed. Minutes of its meeting only three weeks ago were released
Wednesday, and reveal the Fed properly uncertain then. Today, I assume
jaw-dropped.
Exclusion is one way to get close to the heart of the matter. Things about the Fed that are not
true: it did not miss its chance to lift off last fall, winter, or
spring; if the world is too shaky now for liftoff, then lifting off
earlier would leave it too tight now. The Fed’s zero-percent policy and
QE did not cause current difficulty — without its heroics 2008-9 we’d be
living in caves. Nor the goofy plan to hike now so it can cut later.
The Fed does not
have to lift off now, although it might just to shut up the
irresponsible jackdaws and their financial creationism. The only element
of the US economy flashing red is apparent “full employment,” and the
need for pre-emptive liftoff. Nothing else is even amber. Keep it
simple: the Fed doesn’t matter now.
The risk to the global trade conveyor exceeds all other risk combined.
- See more at: http://pmglending.com/blog/market-commentary/credit-news-by-lou-barnes-august-21-2015#sthash.nvaZrQ6n.dpuf
Calm down. Think it over, figure it out. Just because we see confusion and panic out there doesn’t mean we have to sign up.
The
media focus is on the stock market. If for no other reason than that,
don’t pay much attention to the stock market. If it goes nuts in either
direction, the authorities have to get involved, but we’re miles from
that.
However,
there is one useful hint from the stock market this week: for many
months stocks have traded up on bad economic news, thinking that would
mean the Fed staying on hold. This week’s news has been awful — so bad
that even if the Fed does lift off in September it will likely be an
immaterial one-and-done. Now, the benefit of Fed on hold has been
overwhelmed by something else, worse than Fed tightening.
We
have several choices for that honor: Europe has entered a new,
German-driven Greek deal which is ridiculous on its face. Greece will
have new elections, but not really a government (or an economy).
Pyongyang’s Fat Boy threatens war. Japan’s GDP “unexpectedly” shrank
1.6% in the 2nd quarter despite fantastic QE by the BOJ. A new, modest
tsunami of currency devaluations ripple from Asia, too many to count.
At
the center: China, of course. China drives everybody crazy because it’s
the Saturday Night Live Liar of economic data. The economic/market
upset underway would not be so troublesome if we had straight data and
clear government intentions. Best I can figure, China began last year a
multi-pronged effort to rebalance its economy toward consumption and
open markets and away from state-driven investment and credit — and
every effort has failed and left each sector in worse shape than to
begin with. China used to have a stock market; now it doesn’t. Weaning
from state credit has left it with more state credit outstanding and
deeper reliance on it. The reputation of the leadership and Party has
suffered accordingly.
China
is not likely to land hard. If we’ve learned anything in the last
decade, it’s that central banks can create relatively stable mountains
of IOUs under their carpets. But the chain of events leading to broad
market and economic upsets is in play anyway, China’s devaluation the
immediate signal that global trade may be in trouble.
China’s
consumption of commodities has crested, but the emerging-nation supply
chain was calibrated for further increase. The emerging nations are also
customers of China, and will buy less, increasing pressure on China.
China is a customer of Europe and the US, and will buy less; hence so
will they. In the last 25 years global trade has grown faster than GDP,
everyone now everyone else’s customer. That global trade conveyor has
made everybody rich, especially big corporations with global turnstiles
enjoying unimaginable profit margins.
Ordinary
cyclical oops-a-daisies are not a big deal, and that’s what this is
likely to be. However, markets have the screaming bejabbers at the
moment for fear of a reinforcing spiral driven by an incipient trade war
becoming a currency race to the bottom. Even that is recurrent and
recoverable. The part that’s not: we’ve never gone though an adjustment
like this with so much debt outstanding, and deflation nearby.
Back
to the Fed. Minutes of its meeting only three weeks ago were released
Wednesday, and reveal the Fed properly uncertain then. Today, I assume
jaw-dropped.
Exclusion is one way to get close to the heart of the matter. Things about the Fed that are not
true: it did not miss its chance to lift off last fall, winter, or
spring; if the world is too shaky now for liftoff, then lifting off
earlier would leave it too tight now. The Fed’s zero-percent policy and
QE did not cause current difficulty — without its heroics 2008-9 we’d be
living in caves. Nor the goofy plan to hike now so it can cut later.
The Fed does not
have to lift off now, although it might just to shut up the
irresponsible jackdaws and their financial creationism. The only element
of the US economy flashing red is apparent “full employment,” and the
need for pre-emptive liftoff. Nothing else is even amber. Keep it
simple: the Fed doesn’t matter now.
The risk to the global trade conveyor exceeds all other risk combined.
- See more at: http://pmglending.com/blog/market-commentary/credit-news-by-lou-barnes-august-21-2015#sthash.nvaZrQ6n.dpuf
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