Economist Peter Bookvar recently analyzed the the anecdotal evidence of capacity constraints piling up in recent industry surveys, including the following: “Business is strong in all regions. Materials are tight. Trucking continues to be a major challenge.” (Chemical Products) “Strong economic growth continues to put pressure/strain on capacity, lead time, availability and pricing across a […]
Things Are Lining Up Nicely For Gold And Silver
Beginning in early Spring, gold and silver faced two serious headwinds: Seasonality – that is, the annual decline in bullion demand from China and India once wedding season ends – and the internal structure of the futures markets, where the big players in gold had lined up in ways that historically point towards weak prices […]
US Political Center Is Being Devoured From Both Right And Left
President Trump will soon nominate his second Supreme Court justice. The first, Neil Gorsuch, has so perfectly replaced the late Antonin Scalia that it’s safe to assume retiring justice Anthony Kennedy’s successor will be in the same mold – which is to say formidable and unapologetically conservative. The result will be a solid conservative majority […]
Emerging Market Crisis Spreads To The Core, Central Banks Face Catch-22
One of the things giving “data-driven” central banks wiggle room on their pledge to tighten monetary policy is the fact that there are several definitions of inflation. In the US the thing most people think of as inflation is the consumer price index, or CPI, which is now running comfortably above the Fed’s target. But […]
Is China Part Of The “Emerging Market Crisis”?
Being huge, consequential and technologically advanced, China isn’t normally lumped into the “emerging” category with Brazil and Argentina. To most observers they’ve already left the kids table and are now seated with the developed-world adults. But that might be premature. A big part of China’s economic ascendance was purchased with borrowed money – including a […]
If Bitcoin’s Rise Was Bad For Gold, Will Its Fall Be Good?
After an artificial pause in 2017, US government debt has resumed its inexorable climb… …the dollar has fallen by around 5%… … and inflation – even the massaged-beyond-recognition Consumer Price Index (CPI) – has shifted to a higher gear, driven by rising oil. All of which should be great for gold, right? Well, not so […]
Will Disney’s Epic Buyout of Fox Mark The End Of The Everything Bubble?
As bubbles expand and hot money starts burning holes in corporate pockets, merger and acquisition deal terms begin to leave reality behind. Often one deal of such breathtaking size, scope and hubris is struck that — in retrospect – it heralds the end of the era. The junk bond bubble of the 1980s, for instance, […]
Housing Bubble Pathologies, Part 2: Fewer Babies And More Stressed-Out Renters
Home prices are still rising pretty much everywhere in the US, with California as usual leading the way. State-wide, the median CA home is now above $600,000, up 9% year over year. In San Francisco County, homebuyers are paying an average of 18% above the asking price, and price per square foot is now more […]
Failed States, Part 1: Hopeless European Millennials And The Populist Takeover
Europe is frequently held up as an example of how the rest of the world should behave on a variety of issues. But this comparison misses at least two things: First, “Europe” is actually a lot of different countries in a lot of different situations. Second, much of what seems to work over there only […]
Oil, The Petrodollar, And The Next Emerging Market Crisis
Oil prices are up over the past year, which is bad if you’re, say, a developing country that imports a lot of the stuff. But the US dollar (aka the petrodollar) is also up, which compounds the problem because oil is priced in dollars. So Brazil, for instance, finds itself buying an appreciating necessity that’s […]
Shocked! To Hear That Corporate Share Buybacks Line Execs’ Pockets
Here’s one for the Clueless Regulator Hall of Fame: Corporate executives are using stock buybacks to pad their own compensation, according to SEC official (CNBC) – Share buybacks have surged since the Republican-backed tax bill made it through Congress in December. Corporate executives are using tax cuts and share buybacks to boost their own compensation, […]
Inflation Is Back, Part 7: Just Check Out This Chart
Monthly economic readings tend to be full of noise and are therefore unreliable. So it’s best to save the excited assertions for established trends. The US Consumer Price Index appears to have reached that point: As most readers probably know, the CPI is widely believed to understate the true rate of inflation because of statistical […]
When Will Gold’s “Summer Doldrums” End? History Says Pretty Soon
This has been a uniquely boring stretch for gold and silver – especially considering all the things going on in the world that ought to light a fire under precious metals. In just the past few weeks, the US started a global trade war, Italy elected a populist government, emerging markets descended into yet another […]
“Junk In The Trunk” – Investors Get “Comfortable” With Subprime Auto Loan Bonds
The longer an expansion lasts, the crappier its paper becomes. That may seem like a baseless assertion, but it’s actually just simple math. Early in recoveries, borrowers and lenders are both shell-shocked by the last recession, so only high-quality deals get done. But as time passes, all the good borrowers get their loans and if […]
Inflation Is Back, Part 6: More People Now Expect Higher Prices
Turning points in a financial system usually occur in discrete phases. At first, new information that contradicts existing preconceptions is dismissed as unimportant. But as more such data accumulates, a growing number of people come to expect the new trend to continue. In economist-speak, “expectations” change, and these become self-fulfilling prophecies, as people start behaving […]
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