***** denotes well-worth reading in full at source (even if excerpted extensively here)
Economic and Market Fare:
Kayfabe: A Blue Moon Resurfacing
....... One of the great “mysteries” this cycle has been how negative leading indicators have been for the US economy, yet measures such as GDP have remained resilient, or even significantly positive, as reported for Q3 2023 to date.
ECRI has gone on to build off that earlier LEI-driven work, so the Conference Board’s version is closer to using dial up for internet vs broadband, but it is publicly available so it is the one most often referenced.
The gap which has opened up has driven many to doubt the efficacy of LEI’s, but through the lens of the broader Kayfabe framework, this cycle’s events are easily explained. As laid in Schrodinger’s Bank, the details of each cycle are unknowable in advance, so I am not going to pretend to have anticipated all details, and this Substack has not been about making “predictions.” Rather, this has been about offering an alternative variant perception with the hopes of helping people better understand the world around us as it unfolds. ......
... Remember - every cycle is different and hidden interdependencies are a feature and not a bug. Obviously, it would be great to figure all this stuff out in advance in order to profit from emerging trends, but that is a completely separate conversation. This post is about trying to explain what has been occurring and what it may mean going forward. ...
... The October secondary peak was 0.27% and the most recent report for December was -1.14 for a total move of about 1.40% (rounding).
With the important caveat of it being a single data point amidst the Fog of Cycles, it is certainly possible it will get revised away, was a data quality problem, etc.
But given the setup, through the lens of Kayfabe self organizing criticality, it could also be evidence of phase transition to the very unusual shock absorbers present this cycle finally capitulating.
.......
........... So I’ve said the balance of risks favor higher interest rates, wider credit spreads, lower corporate margins, and lower equity prices. It’s also useful to think about where the risks are in my risk assessments. If we get lower interest rates, instead of higher, then it’s very likely due to the economy being a lot weaker than it currently is, and the Fed ends up having to ease more than 150bps in 2024. That seems unlikely to me, but if it happens then notice that probably also means that credit spreads will widen and corporate margins, earnings, and stock prices decline. So, if you’re bullish on bonds and stocks, it seems to me you’re taking a dangerously narrow path. The balance of risks to me look bearish on both sides of that, but the bullish outcome for bonds implies (I think) a bearish outcome for stocks. It’s difficult for me to see an environment with appreciably higher stocks and bonds
Authers: Slower for Longer — Inflation Has Stopped Falling
....... “Record debt levels and high interest rates have set many countries on a path to crisis,” said Indermit Gill, the World Bank’s chief economist. “Every quarter that interest rates stay high results in more developing countries becoming distressed.”
China Fare:
The stall gives the Fed little reason to start early rate cuts, even though the market still expects them.
Atlanta Fed: Is the Last Mile More Arduous?
Summary:
US inflation surged starting in spring 2021, with Consumer Price Index (CPI) inflation reaching a 40-year high of 9 percent in mid-2022. Together with improving supply-chain conditions, policy tightening by the Fed decreased inflation to within 1 to 2 percentage points of its 2 percent target by late 2023 without a significant increase in unemployment. However, concerns have been raised that the last mile of disinflation to reduce inflation consistently to its 2 percent target will be more arduous than the previous miles. Close examination of such concerns indicates that they do not receive compelling support. Because the last mile is likely not significantly more arduous than the rest, it is unlikely that the Fed needs to exert extraordinary effort in terms of additional policy tightening as inflation nears its target. Such tightening unnecessarily increases the risk of a “hard landing.”
Key findings:
1. The notion that the last mile of disinflation is more arduous than the previous miles does not receive compelling support.
2. It is unlikely that the Fed needs to exert extraordinary effort in terms of additional policy tightening to bring inflation down the final 1 to 2 percentage points to consistently reach its 2 percent target; such tightening unnecessarily increases the risk of a “hard landing.”
The long-duration, tech-focused trade is looking increasingly fragile, while low-duration sectors such as energy, utilities, as well as small caps and value, are becoming cheaper. ...
Developing countries will have a hard time breaking the vicious cycle of debt and poverty, World Bank economists warn
....... “Record debt levels and high interest rates have set many countries on a path to crisis,” said Indermit Gill, the World Bank’s chief economist. “Every quarter that interest rates stay high results in more developing countries becoming distressed.”
China Fare:
from the archives:
(not just) for the ESG crowd:
A leading proponent of vertical farming discusses how urban areas should adapt to a perilous environmental future.
Geopolitical Fare:
Sardonicky: Blinken: Toward a More Humane Genocide
Secretary of State Antony Blinken doesn't so much want the genocide to end as he wants to put a more humanitarian gloss on the ongoing slaughter and starvation of Palestinians by the State of Israel. Why call for a ceasefire and an end to the occupation of Gaza or the freeze in US military aid - when all that the world really needs is love, sweet love. Not to mention great big globs of self-serving propaganda from American Empire. ...
...... So the US and the UK just bombed the poorest country in the middle east for trying to stop a genocide. Not only that, they bombed the very same country in which they just spent years backing Saudi Arabia’s genocidal atrocities which killed hundreds of thousands of people between 2015 and 2022
From the beginning of its war on Gaza, Israel has intentionally targeted journalists. As of 8 January, 109 journalists have been killed. Of those, “at least 96 . . . were deliberately and specifically targeted by surgical Israeli strikes against them, at home or in the line of duty. . .”
... The intentional targeting and killing of journalists is a flagrant, unequivocal violation of international law—a strategy employed only by the cruelest and most despotic of regimes to hide their crimes. It is only because of the work of journalists—those who have been killed and those who are still living—that the world knows what is truly happening to the people of Gaza. They have provided clear documentation of genocide, enabling South Africa to file a claim against Israel at the International Court of Justice on behalf of the citizens of Gaza.
Obviously, Israel would rather carry out its project of genocide and ethnic cleansing without it being documented. In what must be understood as an obscene form of retaliation, Israel has targeted the family members of journalists as well.
.............. That’s right kids: when Yemen sets up a blockade to try and stop an active genocide, that’s terrorism, but when the US empire imposes a blockade to secure its geostrategic interests in the middle east, why that’s just the rules-based international order in action.
It just says so much about how the US empire sees itself that it can impose blockades and starvation sanctions at will upon nations like Yemen, Venezuela, Cuba, Iran, Syria and North Korea for refusing to bow to its dictates, but when Yemen imposes a blockade for infinitely more worthy and noble reasons it gets branded an act of terrorism. The managers of the globe-spanning empire loosely centralized around Washington literally believe the world is theirs to rule as they will, and that anyone who opposes its rulings is an outlaw.
What this shows us is that the “rules-based international order” the US and its allies claim to uphold is not based on rules at all; it’s based on power, which is the ability to control and impose your will on other people. The “rules” apply only to the enemies of the empire because they are not rules at all: they are narratives used to justify efforts to bend the global population to its will.
We are ruled by murderous tyrants. By nuclear-armed thugs who would rather starve civilians to protect the continuation of an active genocide than allow peace to get a word in edgewise. Our world can never know health as long as these monsters remain in charge.
Other Fare:
Doctorow: Pluralistic: The REAL AI automation threat to workers
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