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Archive for the 'Valance' Category

Valance Weekly Report 11.9.2011

Posted by WARREN MOSLER on 9th November 2011

Valance Weekly Report

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Highlights
US – Underwhelming payroll report
EU – ECB cut rates; Greece and Italian Prime Ministers agree to step down
JN – Exports improve
UK – Negative effect from Euro-area crisis
CA – BoC renewed its inflation target.
AU – RBA cut Growth/CPI forecast
NZ – Unemployment continued to edged up

Posted in Economic Releases, Valance | 8 Comments »

Valance Weekly Report 11.2.2011

Posted by WARREN MOSLER on 2nd November 2011

Valance Weekly Report

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Highlights
US – Consumer Confidence contrasting moderate growth
EU – Data and inadequate political solutions presenting a scary picture
JN – Jobless Data improves, Industrial Production & Retail Sales decline
UK – Uncertain Q3 GDP Estimate
CA – GDP continues to expand
AU – RBA finally eased
NZ – RBNZ not clear about tightening

Posted in Economic Releases, Valance | 6 Comments »

Valance Weekly Report 10.26.2011

Posted by WARREN MOSLER on 26th October 2011

Valance Weekly Report

(To download PDF, right click link and select save link as)

Highlights
US – Consumer Confidence erosion mirroring Europe’s
EU – Business and Consumer Confidence at cycle lows
JN – Exports improve although domestic conditions remain weak
UK – Manufacturers’ optimism dropped sharply
CA – BoC cut its 2011/12 growth forecast
AU – Inflation moderated in Q3
NZ – RBNZ may delay hikes

Posted in Economic Releases, Valance | No Comments »

Valance Weekly Report 10.19.2011

Posted by WARREN MOSLER on 19th October 2011

Valance Weekly Report

(To download PDF, right click link and select save link as)

Highlights
US – Core CPI eases
EU – EU CPI at three year high; Greek austerity plan to be voted on tomorrow
JN – Data softens, gov’t cuts economic view
UK – BoC sees Q4 growth close to zero
CA – Mfg continues to support the economy
AU – RBA ready to cut rates?
NZ – RBNZ signals a likely need to hike

Posted in Economic Releases, Valance | No Comments »

Valance Weekly Report 10.12.2011

Posted by WARREN MOSLER on 12th October 2011

Valance Weekly Report

(To download PDF, right click link and select save link as)

Highlights
US – Payroll report eases recession fears but still weak
EU – ECB held rates at 1.5%
JN – Machinery Orders better than expected
UK – Largest number of unemployed since 1996
CA – Unemployment Rate lowest since 2008
AU – Confidence has improved

Posted in Economic Releases, Valance | No Comments »

Valance Weekly Report 10.5.2011

Posted by WARREN MOSLER on 5th October 2011

Valance Weekly Report

(To download PDF, right click link and select save link as)

Highlights
US – Personal income fell for the first time in nearly two years
EU – Italy downgraded
JN – Data improves but remains weak
UK – Q2 GDP close to stalling
CA – Second positive GDP in a row
AU – Will RBA cut rates?
NZ – Double downgraded

Posted in Economic Releases, Valance | 1 Comment »

Valance Weekly Report 9.28.2011

Posted by WARREN MOSLER on 28th September 2011

Valance Weekly Report

(To download PDF, right click link and select save link as)

Highlights
US – Political battles on both sides of the Atlantic overshadowing data
EU – Markets slightly more optimistic resolution will be reached
JN – Light week of data
UK – The IMF lowered its 2011 growth projections
CA – Retail Sales worse than expected
NZ – Economy nearly stalled in Q2

Posted in Valance | 30 Comments »

Valance Weekly Report 9.14.2011

Posted by WARREN MOSLER on 15th September 2011

Valance Weekly Report

(To download PDF, right click link and select save link as)

Highlights
US – Initial Claims disappointed
EU – The ECB cut its growth forecast
JN – Q2 Real GDP Revised Lower
UK – Jobless-benefit claims continue to rise
CA – Lost jobs in August
AU – Unemployment rate rising
NZ – Manufacturing sales fell in Q2

Posted in Economic Releases, Valance | No Comments »

Valance Chart Review

Posted by WARREN MOSLER on 11th September 2011

Looks to me like things continue to modestly improve with the first three quarters of this year showing sequential improvement.
Good for corporate earnings, not so good for people in general.

see attached charts and comments

Posted in Valance | 3 Comments »

Valance Weekly Report 8.31.2011

Posted by WARREN MOSLER on 1st September 2011

Valance Weekly Report

US – QE3 gaining momentum
EU – Confidence weakening
JN – Core CPI Prices increase, deflation still expected
UK – Very weak Q2 growth
CA – Economy contracted in Q2
NZ – Strong retail sales beat expectations

Posted in Economic Releases, Valance | 1 Comment »

Valance Weekly Report 8.24.2011

Posted by WARREN MOSLER on 25th August 2011

Valance Weekly Report

US – Philly Fed collapse
EU – Confidence weakening
JN – Corp Service Prices Unchanged, Industry Activity Increased
UK – Weak Retail, factory orders improving
CA – Positive CPI met expectations
AU – “Currency intervention isn’t warranted”
NZ – Exodus continues

Posted in Economic Releases, Valance | 5 Comments »

Valance Weekly Economic Reports

Posted by WARREN MOSLER on 8th July 2011

When I look at the charts in general things do not look good, and today’s employment report looks like more of same as well.

The problem remains a massive lack of aggregate demand.

Valance Weekly Report

Highlights
US – Manufacturing confidence rebounds
EU – Consumer Prices held at 2.7% in June
JN – Q2 Tankan Survey weak; BoJ reports regional improvements
UK – Mfg PMI followed the global trend
CA – Real GDP stalled in April
AU – RBA held rates still but turned dovish
NZ – Business surveys were upbeat

Posted in Employment, Uncategorized, Valance | No Comments »

Valance Chart Review

Posted by WARREN MOSLER on 31st May 2011

Have we hit a soft spot?

Posted in Deficit, Government Spending, Interest Rates, TREASURY, USA, Valance | 5 Comments »

Valance Chartbook update- Weather or not the US is leveling off?

Posted by WARREN MOSLER on 13th February 2011

Chart Book

Posted in BRIC, China, Deficit, Economic Releases, Fed, GDP, Inflation, Japan, Valance | 31 Comments »

Warren on CNBC

Posted by WARREN MOSLER on 16th February 2010


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Posted in Bonds, China, Deficit, Employment, GDP, Political, Valance | 103 Comments »

valance chart review

Posted by WARREN MOSLER on 10th August 2009


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Not a lot to say in this short review.

Looks like credit worthiness is on the mend thanks to federal deficit spending.

While what’s been done hasn’t been my first choice for public policy, it nonetheless has added net financial assets to the non govt sectors and helped bring down debt ratios.

As they used to say, when Detroit sneezes the economy catches a cold.

The Great Mike Masters Inventory Liquidation that began in July ended around year end.

The weakening economy caused the federal deficit to rise the very ugly way via the automatic stabilizers.

By year end the deficit was high enough to turn the tide.

The rising federal deficits added to savings of net financial assets and began easing debt ratios.

Headwinds remain, including US domestic loan loss issues and China looking like markets could take a breather with talk of government action to slow credit expansion, but as long as US federal deficit spending persists at sufficiently high levels, it looks like the worst is behind us for US GDP, with unemployment likely to peak later this year at about 10%.

This is creating unwelcome social tensions for the administration, with the apparent winners being banks, corporations, the investor class in general, and higher income earners.

State and local governments are also in a bind, as they lay off essential employees while funding a few ‘shovel ready’ federal infrastructure projects.

Health care reform held the promise of adding to aggregate demand but it now looks like the final bill will be ‘revenue neutral.’


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Posted in China, Comodities, Deficit, GDP, Valance | 8 Comments »

Starts/Permits/Chain Store

Posted by WARREN MOSLER on 19th May 2009

Karim writes:

  • Safe to say we have corrected for the 65.6% rise in multi-family starts in February as we have now had back-to-back months of -46.1% (today’s #) and -23.0%
  • Single family starts up 2.8% in April and overall starts -12.8%
  • Permits, a leading indicator of starts, -3.3% overall, +3.6% single family, and -19.9% multi-family
  • Single family starts -45.6% y/y and multi-family -72.3% y/y
  • Chain store sales look down about 0.2% m/m so far; important as May represents peak month for stimulus measures as it relates to personal income

Posted in Housing, Karim, Valance | 1 Comment »

Imperfect competition in the copper markets?

Posted by WARREN MOSLER on 13th March 2009


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Copper fell with the Master’s inventory liquidation but then bottomed about the same time crude did. While gasoline demand started recovering from its modest declines back then it is doubtful if the same has happened with copper, as construction has continued to decline since then.

Market action feels like the producers got together and decided to cut back on supply.

Political leaders who understood markets would be looking into it.

Investors who recognize the economic value of oligopoly collusion might also look into it.


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Posted in Valance | No Comments »

Valance Chart Book review Mar 7, 2009

Posted by Sada Mosler on 8th March 2009


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Valance Chartbook update Mar 7, 2009- The Automatic Stabilizers are Quietly doing their Job

Q2 08 was the last up quarter (real growth up 2.8% annually), supported by the $170 billion fiscal adjustment.

Looks like all the last Congress had to do was keep doing a fiscal adjustment each quarter as needed to sustain positive output and employment growth.
Doesn’t seem like a lot to ask of them- spend more or cut taxes?

The subsequent declines could have easily been avoided.

Interesting the auto execs didn’t blame Congress for the falling car sales and the financial crisis.

Almost all of the indicators look like this. Demand that had been slowly weakening for a long time fell apart sometime in July 2008.

Like all recession’s I’ve seen, this one seems to have been characterized by inventory liquidation. Inventories now look to be very low.

The bulge in existing home sales was from the supply from foreclosures, which is also part of the inventory liquidation process.

In addition to crude oil, the entire commodity basket was subject to the Great Mike Masters Inventory Liquidation. The charts seem to indicate that liquidation had run its course by late December 2008.

The Saudis and OPEC had to let the inventory liquidation run its course before regaining control of price late in Dec 08. Price is now going back to wherever they want it to be, as they set price to their liking and let output adjust. And with the latest data showing US gasoline consumption up 2% year over year it looks like demand for Saudi output may actually climb even as prices rise.

These commodity currencies have also gone sideways.

Coincident with the precipitous inventory liquidation and economic weakness, the automatic stabilizers kick in just as hard, increasing federal deficit spending via falling tax revenue and rising transfer payments.

This adds to private sector ‘savings’ of financial assets to the penny-

The accounting identity is government deficit = non-government ‘surplus’ of financial assets. (non-government includes residents and non-residents)

Less debt is mathematically the same as more savings.

Think of it this way. At the macro level, government deficit up= non-government net debt down.

Meanwhile, the government deficit spending works to sustain personal income which works to support spending.

That’s how the automatic stabilizers work to keep recessions from turning into depressions.

There is some evidence beginning to surface, in addition to the above income and spending data, that maybe suggesting we are starting to move sideways rather than down.

While unemployment will most likely continue to grow, as it takes at least maybe 2% real GDP growth for total hours worked to increase, there is some evidence at the margin that the rate of decline has peaked after a post year end spike from businesses that didn’t want to cut staff before the year-end holidays.

There is also some marginal evidence that the worst of the housing setback is behind us.

While the deflationary forces remain elevated by excess capacity in general, there is some evidence prices are selectively firming.

With low inventories prices get supported by replacement cost, which include costs of raw materials and unit labor costs, as well as productivity gains.

The new fiscal package isn’t my first choice, to be polite, but it isn’t ‘nothing’ either, and will further act to support demand and end this down cycle.

But it does nothing for near term energy consumption, and therefore risks rising commodity prices and rising CPI, even as unemployment remains unacceptably elevated.

This can put us back to where we started from- some growth but both weakness and inflation, this time with a backdrop of a much larger output gap, along with policy makers who don’t understand monetary operations and reserve accounting.


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Posted in Valance | No Comments »

Something went wrong in July

Posted by WARREN MOSLER on 26th January 2009


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Something went wrong in July. Most of the charts look like this:

2009-01-26 Capacity Utilization, ISM Manufacturing

It might have been the fall off of the q2 fiscal adjustment, the Olympics, the Lehman collapse, and/or, of course, the GMIL (Great Masters Inventory Liquidation).

2009-01-26 Capacity Utilization, ISM Manufacturing

And inventories also took a dive, from not all that high levels, adding to the slowdown.
Low inventories also mean the slow down need not last long when demand picks up with the coming fiscal adjustments.

2009-01-26 Capacity Utilization, ISM Manufacturing

What the car companies need is higher sales. Capital injections won’t go far with demand looking like this.

2009-01-26 Capacity Utilization, ISM Manufacturing

Notice personal income turning south with the Fed rate cuts, as interest income takes its toll. Yes, I know correlation doesn’t prove anything, but that’s my story and I’m sticking to it! Households are net savers and rate cuts eliminate income. Also, rates for savings have fallen a lot more than rates for borrowing this time around.

2009-01-26 Capacity Utilization, ISM Manufacturing

It’s been a long, slow dive, recently accelerating, since q2 06 when we pointed out the federal deficit was too small to sustain output and employment growth, due to the financial burdens ratios getting too high:

2009-01-26 Capacity Utilization, ISM Manufacturing

Looks like batteries have finally been recharged some over the last few years, even with personal income sagging.

2009-01-26 Capacity Utilization, ISM Manufacturing

All these look like household ‘balance sheets’ are improving.
And with rising federal budget deficits providing additional net financial assets this should continue.

Yes, the housing graphs, not shown look terrible, there are some signs it could all turn quickly:

2009-01-26 Capacity Utilization, ISM Manufacturing

2009-01-26 Capacity Utilization, ISM Manufacturing

Actual new home inventories are very low and probably picked over, as affordability continues to pick up.

2009-01-26 Capacity Utilization, ISM Manufacturing

Also, home ownership is low, and rental vacancies under control.

All indicating the coming fiscal adjustment could act more quickly than expected.

2009-01-26 Capacity Utilization, ISM Manufacturing

No let up here, however.

Unfortunately some of the latest Congressional incentives reward delinquency, anecdotally causing some otherwise good paying borrowers to not make payments to qualify for assistance.

2009-01-26 Capacity Utilization, ISM Manufacturing

It’s government to the rescue, as the automatic stabilizers do their thing to increase federal deficit spending and add income and savings of financial assets to the non govt. sectors.

2009-01-26 Capacity Utilization, ISM Manufacturing

Might be the output gap cutting down the rise in prices, and might be the GMIL (great Masters inventory liquidation). It’s too soon to tell- probably some of both.

2009-01-26 Capacity Utilization, ISM Manufacturing

Opec cuts seem to have stemmed the tide, and pave the way for the Saudis resuming their role of price setter. Demand has dropped very little. This is not the 80’s when demand dropped by over 15 million barrels per day after natural gas was deregulated in 1978 and it and coal replaced crude oil for most power generation.

2009-01-26 Capacity Utilization, ISM Manufacturing

Talk is cheap- supporting their exporters is a priority!

2009-01-26 Capacity Utilization, ISM Manufacturing

Cautions about the coming Obamaboom.

2009-01-26 Capacity Utilization, ISM Manufacturing

Hints of credit spreads stabilizing.

2009-01-26 Capacity Utilization, ISM Manufacturing

The eurozone is fading quickly, and it could all go bad here again if (when?) their financial structure melts down.


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Posted in Articles, Valance | 16 Comments »