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Sunday, April 30, 2023

2023-04-30

*** denotes well-worth reading in full at source (even if excerpted extensively here)


Economic and Market Fare:


… Going back to the late 1960s, the average recession start date occurred when the Leading Index registered a growth rate of -4.8%. The Conference Board sets a recession threshold at -4.2%, which is the median of the past recession start dates.

In either case, today’s growth rate of -8.1% is far worse than the average recession start.


Recession? Anyone? Anyone? Anyone?





The news today was supposedly disappointing—GDP growth in the first quarter was weaker than expected, while inflation was a bit higher than expected—but I disagree. I see the economy continuing to grow at about a 2% rate and I see inflation falling. Here are two charts which I think give you a better picture of what's happening on the growth and inflation front. .....


Carrier sentiment in Q2 now negative; brokers and shippers still positive




Roberts: Inflation: causes and solutions

..... I and others have spent much ink in showing that both these theories do not explain inflation in prices, either now or in the past.  And it’s not just leftists. For example, economists at the Bank for International Settlements (BIS), hardly a leftist body, found that: “by some measures, the current environment does not look conducive to such a spiral. After all, the correlation between wage growth and inflation has declined over recent decades and is currently near historical lows.” 

........ But central bankers and mainstream economists ignore the evidence and continue to promote monetarist or wage-push inflation theories.  Why is this?  Gavyn Davies, former chief economist at Goldman Sachs, once explained why the theory that inflation is caused by wage rises persists even though it has been discredited theoretically and empirically. Davies: “without the Phillips Curve, the whole complicated paraphernalia that underpins central bank policy suddenly looks very shaky. For this reason, the Phillips Curve will not be abandoned lightly by policy makers”. 

........ As Vernengo and Ramon conclude: “The persistence of contractionary demand, mostly monetary, policy as the main tool to contain inflation seems to respond more to the prevailing prejudices and the ideological biases of the profession, than to the analysis of the real causes of inflation.” On the other hand,“It is not helpful that the main challenge to this consensus has been to blame corporations for increasing their profit margins, since this view also provides an incorrect explanation for the recent acceleration of inflation.





Banking Fare:


... The possibility of a repetition of 1929 or 2008 indeed looks slim, and the stakes for First Republic are not as high as they were in many of the tense meetings in the fall of 15 years ago. But the possibility that the difficulties for the banks continue to put a lead weight on the economy is very real. With rates and the yield curve where they are at present, there’s a real chance of a serious economic slowdown. And that in turn is why so many are prepared to bet that the Fed won’t keep rates where they are for much longer, and that encourages them to keep paying for stocks.


Quotes of the Week:

Donovan: The US will deliver an ill-educated guess at how fast its economy grew in the first quarter, with the first estimate of GDP. This number will be revised for years to come, and may well end up having little resemblance to today’s release. None of this will stop the breathless sensationalism of media reporting, nor politicians spinning the data right round (like a record).


Delwiche:  Investors, especially those in the US, have grown accustomed to stocks moving up and to the right over time. Zoom out long enough and the data confirms those expectations. But history also reveals extend periods of little or no progress. Adapting our expectations and adjusting our behavior to account for that reality can reduce volatility and make the overall journey less stressful.




Charts:
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Tweet Vid:


Vid Fare:





*** The Real Global Macro. Nate Hagens




(not just) for the ESG crowd:




Sci Fare:

Coyne: BBC discussion on the discovery of the double helix of DNA, featuring Matthew Cobb, Nathaniel Comfort and Angela Creager

If you have half an hour to spare, you may want to listen to the BBC Radio 4’s version of the new article by Matthew Cobb and Nathaniel Comfort on DNA structure (with special emphasis on Rosalind Franklin’s work). ....



Other Fare:

Taibbi: America, the Single-Opinion Cult
Narrowing permitted ideas on both left and right, one unsuitable voice at a time

Not long ago I was writing in defense of Alexandria Ocasio-Cortez. When she first entered Congress as an inner-city kid who’d knocked off longtime insider Joe Crowley with a Sandersian policy profile, her own party’s establishment ridiculed her as a lefty Trump. Nancy Pelosi scoffed that her win just meant voters “made a choice in one district,” so “let’s not get carried away.” Ben Ritz, director of the Progressive Policy Institute, an offshoot of the old Democratic Leadership Council, groused, “Oh, please, she just promised everyone a bunch of free stuff.”

This was before AOC decided to be the next Pelosi, instead of the next Sanders. The above sit-down on MSNBC shows the transformation. Having shed the mantle of an outsider who shook the old guard with online savvy, she appeared in soft light for a softball “interview,” by a literal Biden official (Inside With Jen Psaki is as close as you can get to a formal dissolution of the line between White House and media). In it, she seemed to argue for the outlaw of Fox News. “We have very real issues with what is permissible on air,” she said .....



The first clause is almost certainly self-evident. We are awash in a sea of words. Words on our screens. Words in our earbuds. Words on the walls. Words everywhere we turn. The internet has given all of us a ready means to speak our mind and say our piece (whether anyone was listening has always been another matter). The result is a practically infinite stream of words. AI tools now promise to effortlessly generate even more words, and by orders of magnitude. ........



Pics of the Week:



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