Q219 GDP: Puree Mode?
Following up on Debunked Degrasse Tyson and Hawking Memes? Once again it's "Flush it Thursday" or "Thursday in the Loo".. and this week we are taking a major shift. So please sh*t back and relax with week's offering... Q219 GDP: Puree Mode?
What did Brahma say? Answer later, moving West...
Yesterday's FOMC announcement FFR cut -25bps to 2.25%; IOER cut -25bps to 2.10%, ON RRP cut -25bps to 2%; Primary credit rate cut -25bps to 2.75%.
The FOMC portfolio run off was terminated one month early. Prior Treasury roll over limit exceeding 15B eliminated, ALL T and ABS goes to rollover, ALL T's goes back into T's; ABS up to 20B now rolls over into T's; ABS in excess of 20B still rolls over into ABS.
Net change to ABS: in excess of 20B potential additional monthly purchases.
Net change to T's: roll off of -15B eliminated, potential +$35B in monthly purchases.
Some choice Powell comments: The 25 bps cut is risk management, insurance, leverage is low, not part of a monetary easing cycle, just a mid cycle adjustment to policy. Mr. Market did not approve with NQ diving +220pts, then recovering +80pts into close.
Repeating our theme from The Lazarus Fed: Immaculate Misconception? There are a lot of misconceptions out there.
Q4 2018 GDP was revised down from 2.6% to 1.1% while Q2 2019 GDP came in at +2.1%. Misconception: all is well?
The economic base is emasculated, this time its not just tech (dot.com) or housing and MBS (GFC), all asset classes are in overvalued bubbles, setting a stage much worse than 07-09.
Above, excepting 1984-85 (peak of our civilization), when IVA and CC adjusted corporate profits go into negative YOY growth, a recession ensues.
Begging the question, what are 2013, 2015 and present? A recovery with robust economy and record low unemployment? More misconception and there goes the debunked Philips curve and NAIRU out the window once and for all.
Since 2011, corporate profit YOY delta is in decline, hint: there was no recovery? Yet, the stock market is at all time PE and valuation highs? The Grand Illusion of misconception. There's nothing new in that socio economic disconnect, and any Fed interest rate cuts are an ex post warning, not insurance.
Federal spending is always good? Any acceleration in Federal spending growth (+0.85% contribution) is due to the fact that spending growth in 2011- 14 was negative, and 2015-16 was zero. Why didn't the ubiquitous "they" spend the money when we needed it?
This pernicious condition was due to political "austerity" measures taken by a GOP controlled congress during the last six years of POTUS 45's tenure, which ultimately influenced the outcome of the 2014 and 2016 elections.
This explains the graph related question above, what are 2013, 2015 and present? The pureed remnants or zombie economy left over from the GFC. There was no recovery, we have been in a long term recession. Perhaps we are headed into something far worse, a singularity known as the bankers black hole of ZIRP and NIRP.
How did we get here? Borrowing from Pie... Collectively, our self serving, unrepentant, elected officials have wasted decades in "gridlock by design", trying to keep their useless, irrelevant, political parties together, while sleep walking the country into an Osterizer blender set to puree.
Answer to question at the top: Vishnu wit you? Given that moment of Zen, and the heightened level of misconception or "condition of our condition", FUBAR or business as usual might be apropos, we think.
What did Brahma say? Answer later, moving West...
Yesterday's FOMC announcement FFR cut -25bps to 2.25%; IOER cut -25bps to 2.10%, ON RRP cut -25bps to 2%; Primary credit rate cut -25bps to 2.75%.
The FOMC portfolio run off was terminated one month early. Prior Treasury roll over limit exceeding 15B eliminated, ALL T and ABS goes to rollover, ALL T's goes back into T's; ABS up to 20B now rolls over into T's; ABS in excess of 20B still rolls over into ABS.
Net change to ABS: in excess of 20B potential additional monthly purchases.
Net change to T's: roll off of -15B eliminated, potential +$35B in monthly purchases.
Some choice Powell comments: The 25 bps cut is risk management, insurance, leverage is low, not part of a monetary easing cycle, just a mid cycle adjustment to policy. Mr. Market did not approve with NQ diving +220pts, then recovering +80pts into close.
Repeating our theme from The Lazarus Fed: Immaculate Misconception? There are a lot of misconceptions out there.
Q4 2018 GDP was revised down from 2.6% to 1.1% while Q2 2019 GDP came in at +2.1%. Misconception: all is well?
The economic base is emasculated, this time its not just tech (dot.com) or housing and MBS (GFC), all asset classes are in overvalued bubbles, setting a stage much worse than 07-09.
Above, excepting 1984-85 (peak of our civilization), when IVA and CC adjusted corporate profits go into negative YOY growth, a recession ensues.
Begging the question, what are 2013, 2015 and present? A recovery with robust economy and record low unemployment? More misconception and there goes the debunked Philips curve and NAIRU out the window once and for all.
Since 2011, corporate profit YOY delta is in decline, hint: there was no recovery? Yet, the stock market is at all time PE and valuation highs? The Grand Illusion of misconception. There's nothing new in that socio economic disconnect, and any Fed interest rate cuts are an ex post warning, not insurance.
"The deceleration in real GDP in Q2 2019 reflected downturns (negative contributions) from private inventory investment, exports, nonresidential fixed investment and residential fixed investment."Inventories -(0.86); Net exports -(0.65) and gross private domestic investment a negative -(1.00)% contribution. Downturn in the parts of the economy that lead to or signify economic recovery?
"These downturns were partly offset by accelerations (positive contributions) in PCE and federal government spending. "As for PCE: new vehicles +0.37 and recreational goods and vehicles +0.30 made positive contributions totaling 0.67%, our guess is on the growing mountain of consumer credit or reflated housing ATM?? Meanwhile, savings draw down, personal savings -$50B rate to disposable income declined from 8.5 to 8.1%.
Federal spending is always good? Any acceleration in Federal spending growth (+0.85% contribution) is due to the fact that spending growth in 2011- 14 was negative, and 2015-16 was zero. Why didn't the ubiquitous "they" spend the money when we needed it?
This pernicious condition was due to political "austerity" measures taken by a GOP controlled congress during the last six years of POTUS 45's tenure, which ultimately influenced the outcome of the 2014 and 2016 elections.
This explains the graph related question above, what are 2013, 2015 and present? The pureed remnants or zombie economy left over from the GFC. There was no recovery, we have been in a long term recession. Perhaps we are headed into something far worse, a singularity known as the bankers black hole of ZIRP and NIRP.
How did we get here? Borrowing from Pie... Collectively, our self serving, unrepentant, elected officials have wasted decades in "gridlock by design", trying to keep their useless, irrelevant, political parties together, while sleep walking the country into an Osterizer blender set to puree.
Answer to question at the top: Vishnu wit you? Given that moment of Zen, and the heightened level of misconception or "condition of our condition", FUBAR or business as usual might be apropos, we think.
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