What “Off The Grid” Indicators Reveal About The True State Of The US Economy

It’s that time of quarter again; today we review our ‘Off the Grid’ economic indicators. And they all look pretty good in terms of launching the American economy into 2018. Pickup truck sales and used car prices remain robust, and there’s some actual inflation in our Bacon Cheeseburger Index. One warning: ‘Bitcoin’ is among the top Google search autofills for the phrase ‘I want to buy…
We started our ‘Off the Grid’ economic indicators in the aftermath of the Financial Crisis as a way to dig deeper into the longer-lasting effects of that event on the American consumer. It seemed to us that standard economic measures like unemployment or CPI inflation missed a lot about the state of the country. So we started gathering up a list of intuitive metrics that could fill those gaps.
A few examples from these datasets over the years:

This post was published at Zero Hedge on Fri, 12/29/2017 –.

Bi-Weekly Economic Review: Animal Spirits Haunt The Market

This is a syndicated repost courtesy of Alhambra Investments. To view original, click here. Reposted with permission.
The economic data over the last two weeks continued the better than expected trend. Some of the data was quite good and makes one wonder if maybe, just maybe, we are finally ready to break out of the economic doldrums. Is it possible that all that new normal, secular stagnation stuff was just a lack of animal spirits? Is it possible that the mere anticipation of tax cuts was sufficient to break us out of the 2% growth paradigm? Or are there other factors that have us on the precipice of a third consecutive quarter of 3%+ growth?
It is easy to find the positives in the economic data these days. Retail sales surged last month and are now up nearly 6% year over year. Wholesale sales are up over 8% and inventories are improving relative to sales. Imports and exports are up 7% and 5.6% respectively. Factory orders are rising at about a 4% clip. Productivity was up 3% last quarter. The Fed’s worries about inflation also seem reasonable considering CPI and PPI well above the Fed’s target rate of inflation. Import and export prices are both up over 3% year over year. With the unemployment rate down to 4.1% you can understand why the Philips Curve disciples are getting antsy.

This post was published at Wall Street Examiner on December 19, 2017.

Key Events In The Last Week Before Christmas

It might be the last full week before Christmas – with both newsflow and trading volumes set to slide substantially – but there’s still a few interesting events and data releases to look forward to next week. Among the relatively sparse data releases schedule, we get US GDP, core PCE, housing and durable goods orders in the US, as well as CPI and GDP across Euro area and UK PMI. After last week’s central bank deluge, there are a handful of leftover DM central bank meetings include the BOJ and Riksbank, with rates expected to remain on hold for both. In Emerging markets, there will be monetary policy meetings in Czech Republic, Hungary, Thailand, Taiwan and Hong Kong.
Perhaps the most significant will be in China when on Monday the three-day Central Economic Work Conference kicks off. This event will see Party leaders discuss economic policies for the next year and the market will probably be most interested in the GDP growth target. Deutsche Bank economists have noted that it will be interesting to see if the government will change the tone on its growth target by lowering it explicitly from 6.5% to 6% or fine-tuning the wording to reflect more tolerance for slower growth.
Away from this, tax reform in the US will once again be a topic for markets to keep an eye on with final votes on the Republican legislation in the Senate (possibly Monday or Tuesday) and House (possibly Tuesday or Wednesday) tentatively scheduled. Also worth flagging in the US is Friday’s release of the November personal income and spending reports and the Fed’s preferred inflation measure – the core PCE print. Current market expectations are for a modest +0.1% mom rise in the core PCE which translates into a one-tenth uptick in the YoY rate to +1.5%.

This post was published at Zero Hedge on Dec 18, 2017.

Inflation: An X-Ray View of the Components

e is a table showing the annualized change in Headline and Core CPI, not seasonally adjusted, for each of the past six months. Also included are the eight components of Headline CPI and a separate entry for Energy, which is a collection of sub-indexes in Housing and Transportation.
We can make some inferences about how inflation is impacting our personal expenses depending on our relative exposure to the individual components. Some of us have higher transportation costs, others medical costs, etc.
Listen to Inflation Spike at Current Valuations Could Be Ugly, Says Nevins
A conspicuous feature in the year-over-year table is the volatility in energy, significantly a result of gasoline prices, which is also reflected in Transportation.

This post was published at FinancialSense on 12/14/2017.

Stocks Rebound From “Bama Shock”, All Eyes On Yellen’s Last Rate Hike

After an early slide last night following the stunning news that Doug Jones had defeated Republican Roy Moore in the Alabama special election, becoming the first Democratic senator from Alabama in a quarter century and reducing the GOP’s Senate majority to the absolute minimum 51-49, US equity futures have quickly rebounded and are once again in the green with the S&P index set for another record high, as European stocks ease slightly, and Asian stocks gain ahead of today’s Fed rate hike and US CPI print.
‘The big issue now is whether Republicans will push through their tax bill before Christmas,’ said Sue Trinh, head of Asia foreign-exchange strategy at RBC Capital Markets in Hong Kong. ‘And more broadly, U. S. dollar bulls will be more worried that this marks a Democratic revival into 2018 mid-term Congressional elections.’
The negative sentiment faded quick, however, because according to Bloomberg, despite the loss of a Senate seat, it probably won’t affect the expected vote on business-friendly tax cuts, however, as the winner won’t be certified until late December.

This post was published at Zero Hedge on Dec 13, 2017.

Fed Gets More Ammo for Rate Hikes

Producer Price Index rises most in six years.
The Producer Price Index for final demand – which tracks prices received for goods, services, and construction from the perspective of the seller, as opposed to a measure like CPI which tracks prices paid from the perspective of the buyer – jumped 0.44% seasonally adjusted in November from October, after having risen 0.44% in October and also 0.44% in September, the Bureau of Labor Statistics reported today. After those three sharp monthly increases in a row, the index has now risen 3.1% year-over-year (not seasonally adjusted), the fastest increase since January 2012.

In the chart above, note the impact of the collapse of energy prices in 2015 and early 2016, which was just a temporary blip on the longer-term inflation scale.

This post was published at Wolf Street on Dec 12, 2017.

Mark Carney Forced To Explain Surge In UK Inflation To Highest In Almost 6 Years

The market expected Mark Carney to avoid it but it was just not meant to be.
The BoE Governor will suffer the ignominy of a bizarre tradition of having to write a letter to the Chancellor of the Exchequer explaining why UK inflation is more than 1.0% above the target of 2.0%. The market had expected the UK CPI to rise by a modest 0.2% month-on-month, taking the year-on-year rate up to 3.0%. Instead the month-on-month rate hit 0.3% pushing the annual rate to 3.1%, its highest rate since March 2012.
As Bloomberg writes, “U. K. inflation unexpectedly accelerated to the fastest in more than 5 1/2 years in November, forcing Bank of England Governor Mark Carney to explain why price growth is so far above target. Consumer prices rose 3.1 percent from a year earlier, driven by the cost of air fares and computer games, the Office for National Statistics said on Tuesday. That’s up from 3 percent in October and the highest since March 2012.”

This post was published at Zero Hedge on Dec 12, 2017.

Finally, An Honest Inflation Index – Guess What It Shows

Central bankers keep lamenting the fact that record low interest rates and record high currency creation haven’t generated enough inflation (because remember, for these guys inflation is a good thing rather than a dangerous disease).
To which the sound money community keeps responding, ‘You’re looking in the wrong place! Include the prices of stocks, bonds and real estate in your models and you’ll see that inflation is high and rising.’
Well it appears that someone at the Fed has finally decided to see what would happen if the CPI included those assets, and surprise! the result is inflation of 3%, or half again as high as the Fed’s target rate.
New York Fed Inflation Gauge is Bad News for Bulls (Bloomberg) – More than 20 years ago, former Fed Chairman Alan Greenspan asked an important question ‘what prices are important for the conduct of monetary policy?’ The query was directly related to asset prices and whether their stability was essential for economic stability and good performance. No one has ever offered a coherent answer even though the recessions of 2001 and 2008-2009 were primarily due to a sharp correction in asset prices.

This post was published at DollarCollapse on DECEMBER 6, 2017.

Weekend Reading: You Have Been Warned

Investors aren’t paying attention.
There is an important picture that is currently developing which, if it continues, will impact earnings and ultimately the stock market. Let’s take a look at some interesting economic numbers out this past week.
On Tuesday, we saw the release of the Producer Price Index (PPI) which ROSE 0.4% for the month following a similar rise of 0.4% last month. This surge in prices was NOT surprising given the recent devastation from 3-hurricanes and massive wildfires in California which led to a temporary surge in demand for products and services.
Then on Wednesday, the Consumer Price Index (CPI) was released which showed only a small 0.1% increase falling sharply from the 0.5% increase last month.

This post was published at Zero Hedge on Nov 17, 2017.

Can’t Hide From The CPI

This is a syndicated repost courtesy of Alhambra Investments. To view original, click here. Reposted with permission.
On the vital matter of missing symmetry, consumer price indices across the world keep suggesting there remains none. Recoveries were called ‘V’ shaped for a reason. Any economy knocked down would be as intense in getting back up, normal cyclical forces creating momentum for that to (only) happen.
In the context of the past three years, symmetry is still nowhere to be found. It’s confounding even central bankers who up until all this have been especially immune to contrary evidence. The unemployment rate tells them what they want, so everything else be damned.
The US CPI in October 2017 rose 2.04% above the index for October 2016. That’s a slight deceleration from 2.23% inflation in September, despite another energy price boost.

This post was published at Wall Street Examiner on November 15, 2017.

New York Fed’s ‘Underlying Inflation’ Hits 11-Year High

Something is moving beneath the surface. Today is inflation day. After the Bureau of Labor Statistics released its Consumer Price Index for October this morning, several other inflation gauges were released, all based on rejiggering in some way the minute disaggregated details of the BLS data pile. This includes the Atlanta Fed’s ‘Sticky-Price CPI,’ which ticked up 2.2%, and the New York Fed’s ‘Underlying Inflation Gauge,’ which hit the highest level since August 2006.
Inflation – when defined as increase in consumer prices – is very much in the eye of the beholder, or rather of the spender. Every household has its own inflation rate, depending on whether they have kids in college, have high medical expenses, or rent an apartment in a city where rents are high and soaring at double-digit rates.
And now that the New York Fed’s Underlying Inflation Gauge has hit an 11-year high, in a sign of things to come, we better take a look at it.
The UIG comes, like most inflation measures, in two forms: The ‘prices-only’ UIG, which is based on 223 disaggregated price series in the CPI and is comparable to a ‘core’ inflation measure; and the ‘full data set’ UIG, which incorporates all the data of the ‘prices-only’ UIG plus 123 macroeconomic and financial variables.

This post was published at Wolf Street on Nov 15, 2017.

NOV 15/A ANOTHER RAID ON GOLD AND SILVER: GOLD DOWN $5.15 AND SILVER DOWN 10 CENTS/MARKETS IN ASIA CRUMBLE WHICH SET THE MOOD FOR EUROPE AND THE DOW/THE ALL IMPORTANT CPI SHOWS CONSIDERABLE ADVAN…

GOLD: $1277.7 DOWN $5.15
Silver: $16.98 DOWN 10 cents
Closing access prices:
Gold $1278.30
silver: $17.01`
SHANGHAI GOLD FIX: FIRST FIX 10 15 PM EST (2:15 SHANGHAI LOCAL TIME)
SECOND FIX: 2:15 AM EST (6:15 SHANGHAI LOCAL TIME)
SHANGHAI FIRST GOLD FIX: $1289.94 DOLLARS PER OZ
NY PRICE OF GOLD AT EXACT SAME TIME: $1281.20
PREMIUM FIRST FIX: $9.39
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
SECOND SHANGHAI GOLD FIX: $1292.56
NY GOLD PRICE AT THE EXACT SAME TIME: $1282.40
Premium of Shanghai 2nd fix/NY:$10.16
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
LONDON FIRST GOLD FIX: 5:30 am est $1285.70
NY PRICING AT THE EXACT SAME TIME: $1285.70
LONDON SECOND GOLD FIX 10 AM: $1282.20
NY PRICING AT THE EXACT SAME TIME. 1282.60
For comex gold:
NOVEMBER/
NOTICES FILINGS TODAY FOR OCT CONTRACT MONTH:0 NOTICE(S) FOR nil OZ.
TOTAL NOTICES SO FAR: 991 FOR 99,100 OZ (3.082TONNES)
For silver:
NOVEMBER
2 NOTICE(S) FILED TODAY FOR
10,000 OZ/
Total number of notices filed so far this month: 874 for 4,370,000 oz
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Bitcoin: BID $7121 OFFER /$7145 up $532.00 (MORNING)
BITCOIN : BID $7257 OFFER: $7282 // UP $668.00(CLOSING)

This post was published at Harvey Organ Blog on November 15, 2017.

Why Core Inflation is Rising & What it Means for Fed Rate Hikes

Yellen was right to brush off ‘transitory’ factors of ‘low’ inflation.
Consumer prices, as measured by CPI for October, rose 2.0% year-over-year. A month ago, CPI increased 2.2%. The Fed’s inflation target is 2%, but it doesn’t use CPI, or even ‘Core CPI’ – which excludes the volatile food and energy items. It uses ‘Core PCE,’ which usually runs lower than CPI, and if there were an accepted measure that shows even less inflation, it would use that. But it does look at CPI, and there was nothing in today’s data to stop the Fed from raising its target rate in December.
The Core CPI rose 1.8%, up a tad from September’s 1.7% increase. Core CPI has been above 2% for all of 2016 and through March 2017. In the history of the data going back to the 1960s, Core CPI had never experienced ‘deflation.’ But when Core CPI rates retreated in the spring through August, along with other inflation measures, a sort of panic broke out in the media:

This post was published at Wolf Street on Nov 15, 2017.

“We Have Reached A Turning Point”: Trader Explains Why Today’s CPI Could Send Equities Reeling

From the latest Macro View by Bloomberg commentator and former Lehman trader, Mark Cudmore
Equities Must Fear CPI Now the Fed Put Era Is Over
A surprise in either direction from today’s U. S. consumer price index print is likely to hurt global stocks.
For many years, in the wake of QE, we became used to markets where ‘good data is good for equities and bad data is good for equities.’ The logic was that bad data implied a greater likelihood more liquidity would be pumped into the system, whereas good data inspired confidence that the economic recovery was on track.
Today might mark a turning point where we more frequently trade the opposite dynamic. The Fed has fought so hard to convince investors that the economy can cope with hikes and balance-sheet reduction that it may have boxed itself into a corner. It can’t retreat from its policy path without seriously undermining its credibility.

This post was published at Zero Hedge on Nov 15, 2017.

Key Events In The Coming Week: Taxes, Inflation, Yellen, Draghi, Kuroda And Brexit

This week’s economic calendar features several key data releases and Fedspeak. The main data release in US include: CPI inflation, retail sales, industrial production, housing data and monthly budget statement. We also get the latest GDP and CPI reading across the Euro Area; the employment report in the UK and AU, Japan GDP, China IP, retail sales and FAI. In Emerging markets, there are monetary policy meetings in Indonesia, Chile, Egypt and Hong Kong.
Market participants will also want to pay close attention to tax reform progress in Washington. The House Ways and Means Committee had voted along party lines (24-16) to deliver its bill to the full House. The Senate Finance Committee’s proposal was also revealed last week and is slated for markup this week. Both versions are essentially opening gambits by the two chambers and the hard work begins when the two bills are ‘reconciled’. As a reminder, the Senate version is likely to be closer to the final version. In our view, there is a decent chance that some version of tax reform can be achieved, but this is likely to be a Q1 event and there are numerous potential stumbling blocks along the way.
With respect to the data, October inflation and retail sales reports are the main focus. Tuesday, DB expects headline PPI (+0.1% forecast vs. +0.4% previously) to moderate following a spike in gasoline prices last month due to hurricane-related supply disruptions. However, core PPI inflation (+0.2% vs. +0.1%) should firm. Analyst will focus on the healthcare services component of the PPI, as this is an input into the corresponding series in the core PCE deflator – the Fed’s preferred inflation metric. Recall that healthcare has the largest weighting in the core PCE.

This post was published at Zero Hedge on Nov 13, 2017.

An attempt to quantify the immeasurable

To paraphrase Einstein, not everything worth measuring is measurable and not everything measurable is worth measuring. The purchasing power of money falls into the former category. It is worth measuring, in that it would be useful to have a single number that consistently reflected the economy-wide purchasing power of money. However, such a number doesn’t exist.
Such a number doesn’t exist because a sensible result cannot be arrived at by summing or averaging the prices of disparate items. For example, it makes no sense to average the prices of a car, a haircut, electricity, a house, an apple, a dental checkup, a gallon of gasoline and an airline ticket. And yet, that is effectively what the government does – in a complicated way designed to make the end result lower than it otherwise would be – when it determines the CPI.
The government concocts economic statistics for propaganda purposes, but even the most honest and rigorous attempt to use price data to determine a single number that consistently paints an accurate picture of money purchasing power will fail. It must fail because it is an attempt to do the impossible.
The goal of determining real (inflation-adjusted) performance is not completely hopeless, though, because we know what causes long-term changes in money purchasing power and we can roughly estimate the long-term effects of these causes. In particular, we know that over the long term the purchasing power of money falls due to increased money supply and rises due to increased population and productivity.

This post was published at GoldSeek on Wednesday, 1 November 2017.

US Futures Rebound After Disappointing Chinese, European Data

Yesterday’s sharp Chinese selloff is now a distant memory after the BTFDers emerged, and this morning U. S. equity futures are once again levitating as the FOMC begins its two-day policy meeting, following an uneventful BOJ announcement on Tuesday morning which left all QE parameters unchanged. Asian stocks traded mixed steady while European shares climb.
The key event overnight was the BOJ meeting, in which the central bank maintained QQE with Yield Curve Control and kept NIRP unchanged at -0.1% as expected. The decision to keep QQE with YCC was made by 8-1 vote, with Kataoka the sole dissenter again who suggested the BoJ needs to buy JGBs so that 15yr yield stays below 0.2%, while Kataoka also commented that the BoJ should ease if domestic factors lead to delays in reaching the inflation target. In terms of changes to its outlook forecasts, the BoJ raised FY 17/18 Real GDP growth forecast to 1.9% from 1.8%, while it cut Core CPI forecasts to 0.8% from 1.1% for FY 17/18 and to 1.4% from 1.5% for FY 18/19
Asian shares rose in afternoon trading, with the MSCI Asia Pacific Index gaining 0.1 percent to 168.29 and ignoring the overnight miss across the board in Chinese PMIs…

This post was published at Zero Hedge on Oct 31, 2017.