Analysis Topic: Economic Trends Analysis
The analysis published under this topic are as follows.
Monday, July 06, 2020
The Corona Economic Depression Is Here / Economics / Coronavirus Depression
By: Patrick_Watson
The US economy entered recession at the end of February, according to the economists who officially define such things. But will it get even worse?
In some ways, this is already beyond the 1930s Great Depression. Mass unemployment happened much faster this time and it looks like millions will be jobless for a long time.
We can identify recessions statistically, but “Depression” is fuzzier.
Geopolitics expert George Friedman noted recently that recessions are a cyclical financial process. They’re painful, but the economy recovers. A depression is more than an especially severe recession. It changes the existential reality of daily life. The financial, business, and job consequences are only the beginning.
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Thursday, July 02, 2020
After 2nd Quarter Economic Carnage, the Quest for Philippine Recovery / Economics / Coronavirus Depression
By: Dan_Steinbock
Recently, the IMF downgraded most growth projections, due to weaker private consumption and elevated uncertainty in investment. Those are the twin engines of the Philippine economy. So, what’s ahead for economic recovery?
As I wrote in a report 2 months ago (click here), the global economic outlook of the International Monetary Fund (April 2020) was too optimistic. Last week, the IMF downgraded most of its projections. Now global growth is projected at -4.9% in 2020, almost 2 percentage points below the previous forecast.
Consumption growth has been downgraded for most economies, due to the larger-than-anticipated disruption to domestic activity. Worse, investment is expected to remain subdued as firms defer capital expenditures amid elevated uncertainty.
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Thursday, June 25, 2020
Hainan’s ASEAN Future and Dark Clouds Over Hong Kong / Economics / Asian Economies
By: Dan_Steinbock
The Hainan Free Trade Port plan is aligned with China’s new Silk Road initiatives, the Greater Bay Area plan and deeper ties with Southeast Asia. Hong Kong’s real threats are closer and farther.
On June 1, the Chinese government published its Hainan masterplan. It seeks to transform the southernmost province, separated from Guangdong’s Peninsula by the Qiongzhou Strait, into a Free Trade Port (FTP). The plan will turn China’s largest and most populous island to its biggest special economic zone (SEZ).
The initiative stems from the early days of Chinese economic reforms. Following the first special economic zones in Guangdong and the opening of further 14 coastal megacities to overseas investment, the government disclosed its plan to transform Hainan into China’s largest SEZ in 1988.
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Friday, June 19, 2020
Worse than expected coronavirus contraction in ASEAN-4 Economies / Economics / Coronavirus Depression
By: Dan_Steinbock
In the coming months, success or failure to contain the global pandemic and overcome the coronavirus contraction has potential to make or break the promise of Southeast Asia in the early 21st century.
By the end of the 2nd quarter, the total number of confirmed cases may total close to 10 million, while deaths could surpass 225,000. What was an epidemic in China at the turn of January and February grew into a pandemic in the 1st quarter, due to the belated and inadequate mobilizations in the US and Europe.
In early year, the epicenter of the virus was in China and the rest of Asia. By March-April, it had moved to Europe and the United States. As I projected three months ago, global devastation would escalate by summer as the epicenter is shifting to emerging and particularly developing economies.
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Wednesday, June 10, 2020
Inflation ‘A mirror image of the early 1980s’ / Economics / Inflation
By: Michael_J_Kosares
“To propose a return of inflation is to be inflammatory,” writes Lightman Investment Management’s Rob Burnett in an opinion piece for the Financial Times. “Investors are committed to a deflationary thesis — and such is their fervor that many believe inflation cannot return in any circumstance. Yet if we look beyond today’s demand shock from the Covid-19 crisis, the forces driving the disinflation of the past 40 years appear to be in retreat. … [T]oday appears like a mirror image of the early 1980s. We have moved from inflation peak to deflation trough.”
Evidence is beginning to mount that the new paradigm Burnett describes – moving from disinflation to inflation – might not be too far off the mark. During the financial crisis that began in 2008, the Fed sterilized its money creation by routing money back to its coffers in the form of commercial bank excess reserves – a strategy that kept the inflation rate from running out of control. As you can see in the first chart, the current level of sterilization, at least in the short term, is greater than what occurred in the 2008-2014 period. At the same time, as you can see in the second chart, the rapid growth in the money supply this time around goes beyond anything that occurred during the prior crisis. Whether or not Burnett is correct and the growth in the money supply translates to price inflation down the road remains to be seen. (Please take note that the growth in the money supply began roughly a year ago – well before the onslaught of the coronavirus pandemic.)
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Tuesday, June 09, 2020
Argentina, the World’s Biggest Deadbeat Economy / Economics / Argentina
By: Steve_H_Hanke
Borrow, spend, default; lather, rinse, repeat.
On May 22, Argentina failed to meet interest payments on its sovereign debt. With that, the country tipped into default on its $65 billion mountain of foreign debt. If that’s not enough, Argentina’s provinces are addicted to debt and are buried in it, too. The province of Buenos Aires is already in default, and Cordoba, La Rioja, Salta, Rio Negro, and Chubut have also indicated that they plan to restructure their debt as well.
This is not the first time that Argentina has stiffed its creditors. No, it’s the ninth time. And it’s not Argentina’s largest default, either. Indeed, Argentina set the world’s default record when it defaulted on $95 billion in external debt in 2001. The bottom line is clear: Argentina is hands down the world’s biggest deadbeat.
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Thursday, June 04, 2020
East Asia Will Be a Post-Pandemic Success / Economics / Asian Economies
By: The_Gold_Report
In conversation with Maurice Jackson of Proven and Probable, Jayant Bhandari of Capitalism and Morality offers his take on what the post-COVID-19 world will look like.
Maurice Jackson: Joining us for a conversation is Jayant Bhandari, the founder of Capitalism & Morality, and a highly sought-out advisor to institutional investors.
Jayant, there are a lot of mixed, contentious emotions regarding COVID-19. Irrespective of one's position, it's incumbent for us all to prepare for how the world will function going forward. Let's discover which parts of the world, and how readers may thrive in a post coronavirus world.
Sir, you recently wrote a musing entitled "What the Post Coronavirus World Looks Like." In this piece, you outlined a number of distinctions that may create a great divide between East Asia, the West and Third World countries. From a 30,000-foot perspective, who do you see coming out as the winners, when and if the world returns to some aspect of normalcy, and why?
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Wednesday, June 03, 2020
Deflation: Why the "Japanification" of the U.S. Looms Large / Economics / Deflation
By: EWI
The U.S. faces the prospect of a Japan-like deflation.
Let's begin with a brief review of Japan.
Here's a chart and commentary from the 2020 edition of Robert Prechter's Conquer the Crash:
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Thursday, May 28, 2020
Ray Dalio Suggests USA Is Entering A Period Of Economic Decline And New World Order / Economics / Coronavirus Depression
By: Chris_Vermeulen
We find it interesting how researchers attempt to compare history, sometimes ancient history, to the applicable functions of today’s world and to attempt to translate the decline of empires in the past to what is happening in today’s world. Ray Dalio appears to be suggesting the rise of the Chinese economy and economic capabilities is going to threaten to unseat the US as a world super-power.
Within Ray Dalio’s article, he suggests the following which seems to sum up his cycle theory:
“In brief, after the creation of a new set of rules establishes the new world order, there is typically a peaceful and prosperous period. As people get used to this they increasingly bet on the prosperity continuing, and they increasingly borrow money to do that, which eventually leads to a bubble. As the prosperity increases the wealth gap grows. Eventually the debt bubble bursts, which leads to the printing of money and credit and increased internal conflict, which leads to some sort of wealth redistribution revolution that can be peaceful or violent. Typically at that time late in the cycle the leading empire that won the last economic and geopolitical war is less powerful relative to rival powers that prospered during the prosperous period, and with the bad economic conditions and the disagreements between powers there is typically some kind of war. Out of these debt, economic, domestic, and world-order breakdowns that take the forms of revolutions and wars come new winners and losers. Then the winners get together to create the new domestic and world orders.”
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Friday, May 22, 2020
China’s ‘Two Sessions’ herald Rebound of Economy / Economics / China Economy
By: Dan_Steinbock
As the coronavirus fallout is spreading in Western economies, China’s rebound has begun. Global recovery requires global cooperation, however.
Today, international interest in the annual Two Sessions of China’s top legislative and political advisory bodies - National People’s Congress, and Chinese People’s Political Consultative Conference – which starts on Thursday, is exceptionally high.
Due to the global pandemic, the Sessions take place under strong anti-epidemic measures, including social distancing, and will be significantly shorter and rely more on videoconferences. Such measures are in line with the science-based health policies, which the central government adopted in late January.
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Sunday, May 17, 2020
The Great Economy Reopening Gamble / Economics / Coronavirus Depression
By: Patrick_Watson
We knew the April US jobs data would be ugly. Speaking on ABC’s “This Week” program last Sunday, Minneapolis Federal Reserve Bank President Neel Kashkari predicted “the worst is yet to come.”
Kashkari is right; this won’t get better while so much of the economy is sidelined. The stay-at-home orders, while they help reduce coronavirus spread, have other side effects, too. Domestic violence increases, children miss educational opportunities, people with other health conditions go untreated. These are real problems.
The question is how to reopen without making the situation worse. Kashkari had some advice on that, too: “To solve the economy, we must solve the virus.”
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Wednesday, May 13, 2020
Inflation, Deflation, or Both? / Economics / Coronavirus Depression
By: MoneyMetals
The forces of deflation and inflation continue to tug at the economy simultaneously.
The pressures on both sides are huge.
On the deflation side, jobs, industrial demand, and the small business lifeblood of communities are contracting at an unprecedented pace. Meanwhile, trillions in credit card, auto, student loan, and mortgage debt that props up consumer spending and home values is at risk of imploding – and bringing markets down with it.
On the inflation side, the Federal Reserve is pumping more than $6 trillion into the financial system.
Meanwhile, all pretenses of needing to be fiscally responsible are being discarded in Washington as Congress pushes stimulus after stimulus with money it doesn’t technically have.
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Tuesday, May 12, 2020
US Fourth Turning Accelerating Towards Debt Climax / Economics / Coronavirus Depression
By: James_Quinn
“At some point, America’s short-term Crisis psychology will catch up to the long-term post-Unraveling fundamentals. This might result in a Great Devaluation, a severe drop in the market price of most financial and real assets. This devaluation could be a short but horrific panic, a free-falling price in a market with no buyers. Or it could be a series of downward ratchets linked to political events that sequentially knock the supports out from under the residual popular trust in the system. As assets devalue, trust will further disintegrate, which will cause assets to devalue further, and so on. Every slide in asset prices, employment, and production will give every generation cause to grow more alarmed.” – Strauss & Howe – The Fourth Turning
I’ve been writing articles about the Fourth Turning for over a decade and nothing has happened since its tumultuous onset in 2008, with the global financial collapse, created by the Federal Reserve and their Wall Street co-conspirator owners, that has not followed along the path described by Strauss and Howe in their 1997 book – The Fourth Turning.
Like molten lava bursting forth from a long dormant (80 years) volcano, the core elements of this Fourth Turning continue to flow along channels of distress, long ago built by bad decisions, corrupt politicians and the greed of bankers. The molten ingredients of this Crisis have been the central drivers since 2008 and this second major eruption is flowing along the same route. The core elements are debt, civic decay, and global disorder, just as Strauss & Howe anticipated over two decades ago.
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Monday, May 11, 2020
Finding Winners in the Wreckage of the Coronavirus Economic Downturn / Economics / Coronavirus Depression
By: Frank_Holmes
While the broader markets have seen sharp declines, Frank Holmes, CEO and chief investment officer of U.S. Global Investors, homes in on gold, gold stocks and bitcoin, and gives his prognosis for the airlines.
Streetwise Reports: Let's start with gold, which has seen an impressive rise in the last few months as the broader markets have declined on the back of the coronavirus pandemic. What do you think is ahead for the metal?
Frank Holmes: There is a short-term view and a long-term view. What's really hard for so many investors and asset allocators to recognize is that gold bullion since 2000 has far outperformed the S&P 500. In fact, of the last 20 years, in 16 of those years gold has been positive. So if we look at the numbers, it's double what the S&P 500 has done for the past 20 years.
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Sunday, May 10, 2020
US Rates Eye Negative Territory as Capital Prepares for Slow Death / Economics / Coronavirus Depression
By: MoneyMetals
Precious metals markets appear to be gearing up for another leg higher. On Thursday, the metals complex rose sharply across the board. Gold gained about 2.5% while silver packed on nearly 4%.
Both of the monetary metals showed signs of breaking out of the sideways trading ranges they’ve been stuck in over the past four weeks. Silver closed solidly above its 50-day moving average for the first time since late February.
Bulls will be looking for confirmation with strong weekly closes today and then follow-through early next week.
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Friday, May 08, 2020
The Giant Presumption behind Re-Opening America / Economics / Coronavirus Depression
By: Patrick_Watson
Newly “liberated” Americans are flocking to beaches, parks, and restaurants, eager to prove the novel coronavirus doesn’t scare them.
In fact, the virus doesn’t care how brave they are. It just wants to spread. I suspect it found many new hosts at those gatherings, and this will be apparent soon.
At the same time, many others are still staying home whenever possible, not yet convinced it is safe to go out.
But regardless of who’s right, Wall Street people are thrilled. The stock market shot higher in April. Many experts think the economy will soon be back to normal.
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Thursday, May 07, 2020
Covid-19: Major Risks as US Eyes Re-Open / Economics / Coronavirus Depression
By: Dr_David_J_Harris
SUMMARY
This article provides a quick review of the current state of the US lock-down in response to the COVID-19 pandemic. Major risks lie ahead in terms of re-starting the US economy without re-igniting the spread of the COVID-19 coronavirus.
- Current number of active cases is 50x the number when US lock-down started
- Peak number of US active cases still not yet reached, and likely weeks away
- Peak number of deaths for US in a day, observed relatively recently
- Model projections are predicting at least 100,000 US deaths by May 31
- Contact tracing in today’s complex society is a major problem to overcome
- The US is now in a recession that could last at least 12 to 18 months
Wednesday, May 06, 2020
A Tale of Two Economic Depressions / Economics / Coronavirus Depression
By: Richard_Mills
As the coronavirus continues to hammer state and provincial economies, politicians are being forced to consider whether lockdown “cures” are worse than the disease. Pressured by the Trump administration, and in some cases the public, several US states are planning a re-opening, or partial re-opening of their economies, sometime in May.
About half of Canadian provinces and territories are also in the midst of a re-start of some description; among those still locked down are British Columbia, Alberta, Nova Scotia, and Newfoundland/ Labrador.
The question weighing on the minds of both health officials and economists, is whether letting up on social distancing restrictions will cause the number of covid-19 cases to spike, thereby setting back virus containment efforts and the timeline of economic recovery. Yet regardless of what comes next, it doesn’t take a lot of analysis to see we are already in a heap of trouble.
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Wednesday, May 06, 2020
Why Americans Don't Have Any Savings / Economics / US Economy
By: Frank_Hollenbeck
In response to a likely worldwide recession, governments have turned on full blast the fiscal and monetary spigots. A $2 trillion spending plan has just been approved in the USA, central banks are on a buying spree, and the $1200 stimulus payment is just helicopter money. Since the government does not have a magical tree of plenty and can only redistribute from the left pocket to the right by taxing, borrowing, or printing money, how does this make any economic sense or make any country better off? Government and Keynesian economists will tell you it’s to protect us from the coming dangers of hoarding; specifically, that banks will stop lending and just let funds sit. Keynes brought hoarding to the forefront of economics in his The General Theory of Employment, Interest, and Money; a concept that the classical economist considered to be irrelevant.
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Monday, May 04, 2020
US Q1 GDP Data Masking The True Global Economic Future? / Economics / Coronavirus Depression
By: Chris_Vermeulen
As Q1 GDP data is released on Wednesday, April 29, which will reflect the first three months of 2020 in terms of total economic output, we believe the number will skew the current true global economic conditions to a large degree. The pandemic shutdowns started in the US on March 15th – nearly 2 weeks before the end of Q1:2020. Thus, we had a fairly normal Q1 in terms of economic activity, production, and consumer engagement. Everything changed after March 15th, 2020.
Skilled traders need to watch the current economic data and “week over week” data that is presented. Skilled traders also need to pay attention to the news items that are being pushed out to the public. Larger and larger corporations and sectors are moving towards bankruptcy or screaming for a bailout. Airlines, Hotels, Car Rental, and dozens of other sectors have all collapsed over the past 5+ weeks. We expect real estate activity and pricing to collapse as well. The results of the last 5+ weeks, after the March 15th shutdown started, have been anything but normal.
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