Posts tagged 'US'

Have EM outflows only just begun?

SocGen’s cross-asset research team believes that when it comes to EM outflows they may have only just begun:

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Inflated worries, part 1 — an overview of US inflation pressures

Here’s a rough sketch of the variables influencing US inflation, which has been remarkably low for two years running:

1) The remaining labour market slack, including a staggering and resilient long-term unemployment problem. The amount of slack remains tough to know given the difficulty of measuring the cyclical vs secular components of the fall in the labour force participation rate. Much more on this later.

2) The output gap. This isn’t a well-defined idea, we know, but few people would argue that the US economy is producing at potential. The US economic recovery does appear to have accelerated in the final two quarters of last year (the December jobs report notwithstanding), and the conditions for growth look better than they have in years. If the nascent acceleration proves sustainable, then the labour market may well tighten up and push wages higher. Obviously this is related to the first point about labour market slack, and plenty of caveats are needed given the head-fakes of the last four winters. Read more

Party like it’s 1999

As we’ve noted before it’s all feeling a little 1999 out there.

Lombard Street ‘s Dario Perkins agrees. He’s just released research entitled “Party like it’s 1999″, in he notes: Read more

Extremely cheap shots, House recalcitrance edition

Here’s a list of the 144 Nays on last night’s House debt ceiling vote (so implicitly, then, 144 votes to find out how long the US could have gone before defaulting). Click to enlarge.

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Schrodinger’s T-bill

The FT’s Tracy Alloway and Michael Mackenzie report on Thursday that banks are making contingency plans to deal with the potential impact on the $5tn “repo market” of the US government missing a payment on its debt.

Which basically means determining when we should start treating a US Treasury Bill as a potentially defaulted security. Currently, you could say, the T-bill’s status exists in a quantum state. It could be the best collateral in the world, but then again it might not be. Which one it is depends entirely on an externality, and to some degree how we choose to observe it.

This is probably welcome news given that the role played by distressed collateral and repo markets back in 2008 is still poorly understood. Read more

USAA+, stable

Clearly, the planet — on tenterhooks since S&P cut the world’s biggest AAA-rated credit two years ago — can breathe easily once more.

This is the key bit of why Standard & Poor’s put its rating for the United States of America on a stable outlook again (they also don’t see a repeat of the debt ceiling threatening debt service this year): Read more

Stock market wags economy, or not?

This is is a guest post from Philip Pilkington, a writer and research assistant at Kingston University.

After a few days of volatility the S&P 500 rebounded on the back of better than expected jobs data last Friday. Meanwhile the Nikkei, the decline of which the previous week seems to have precipitated the shakiness in the S&P 500, started to stabilize on Monday. And so the classic question rears its head once more: do stock markets drive the economy or vice versa? Read more

For the US, it’s only a ‘lost half-decade’

John Calverley and team at Standard Chartered have a big report out looking at how a selection of developed economies are doing post-2008. The short answer is that the US has largely recovered from the crisis, with growth there likely to be above trend in 2014. The UK and Japan, meanwhile, are still behind in terms of balance sheet adjustment and effective monetary policy, while poor Spain “still has a long way to go.” Read more

The rise of rail oil

An interesting chart from the American Enterprise Institute showing to what degree oil shipments by rail have risen in the last two years:

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