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Last week, a court in Hong Kong ordered that Evergrande, China’s massive property developer, must be liquidated. Real estate accounts for about one-quarter of China’s GDP, and Evergrande isn’t the only troubled part of the Chinese real estate sector. While I’d always like to see China constrained, not only is a collapsing China dangerous, but real estate collapse also reminds us of what’s happening domestically. Business Insider reported on Evergrande’s liquidation, which has long been expected and which will be carried out in an orderly fashion. The assets are valued at $245 billion (which I suspect is inflated), while the...

Several news stories caught attention in the last few days. One was that Moody, the bond rating agency, joined Standard and Poor’s and Fitch, in downgrading the bond rating of US government debt. It would seem the issuer of the reserve currency of the world, and the world’s largest economy no longer has a AAA credit rating with any of the major bond rating agencies. Then two stories appeared in the Wall Street Journal. One was “China’s Economy Descends Back Into Deflation”, and how various government attempts to “stimulate” have failed. The next day we are treated to “Japan: The...

Ever since China suddenly abandoned its zero-COVID police in the wake of protests, there have been pretty clear signs that the country’s economy was not recovering as Xi Jinping probably hoped it would. In March a very pro-China columnist for the South China Morning Post warned that Xi was making a mistake by leaning into communist nationalist too hard. Chinese business leaders were worried about it too.Interviews with more than a dozen Chinese entrepreneurs, venture investors and analysts found widespread concern about Beijing’s approach to private enterprise, just as the country is trying to recover from three years of Covid...

BEIJING, Aug 9 (Reuters) - China's consumer sector fell into deflation and factory-gate prices extended declines in July, as the world's second-largest economy struggled to revive demand and pressure mounted on Beijing to release more direct policy stimulus. Anxiety is rising that China is entering an era of much slower economic growth akin to the period of Japan's "lost decades", which saw consumer prices and wages stagnate for a generation, a stark contrast to the rapid inflation seen elsewhere. China's post-pandemic recovery has slowed after a brisk start in the first quarter as demand at home and abroad weakened and...

Thanks to The Federal Reserve, office property values have gone crazy despite rising vacancy rates. US office space vacancies (white line) have soared since 2008 as The Fed’s massive monetary expansion (blue and green line) has not helped. But Fed monetary expansion DID help drive office prices! At least until 2022, when office space values began to fall. Notice that office values are falling as The Fed withdraws monetary stimulus. During the regional bank failures in March, we directed our readership to focus on the next potential crisis: “CRE Nuke Goes Off With Small Banks Accounting For 70% Of Commercial...

There goes the economy! As The Federal Reserve is poised to continue it inflation-fighting crusade, the US economy is rapdily approaching DEFLATION. US Producer Price Index FINAL DEMAND fell to 0.1% YoY in June. Bidenomics, the combination of insane monetary stimulus and insane directed Federal spending towards going green at all costs, is running out of steam. M2 Money growth was last measured to be -4% YoY and the US Dollar is down -8.2% since September 2022. The good news? Silver is up over 2% today! And Bitcoin is up almost a percent today. Speaking of the Biden White House...

Money supply growth fell again in April, plummeting further into negative territory after turning negative in November 2022 for the first time in twenty-eight years. April's drop continues a steep downward trend from the unprecedented highs experienced during much of the past two years. Since April 2021, money supply growth has slowed quickly, and since November, we've been seeing the money supply repeatedly contract—year-over-year— for six months in a row. The last time the year-over-year (YOY) change in the money supply slipped into negative territory was in November 1994. At that time, negative growth continued for fifteen months, finally turning...

If the Chinese yuan were to become the global reserve currency, it would, in essence, give the CCP the ability to cripple entire nations.In July 1944, 44 delegates from Allied countries came together during World War II in Bretton Wood, New Hampshire. The goal? Devise an international currency system to manage foreign exchange that would disadvantage no country and effectively facilitate post-war rebuilding and commerce. The outcome: The U.S. greenback would be the world’s reserve currency.It has been almost 80 years since, and all nations have been better off with a United States dollar-dominated world. World gross domestic product (GDP)...

1929: The biggest economic crisis of the 20th century brought an abrupt end to the euphoria of the Roaring Twenties. Driven from their land, the farmers of the Great Plains were forced to abandon everything they had. They became migrants in their own country, and were treated as such by the vast Californian estates. They became the symbol of an America confronted by its own reality. Built on the work of the iconic photographers of the Great Depression - Dorothea Lange, Walker Evans, and Arthur Rothstein - this full archive documentary analyzes the consequences of the economic collapse in the...

After two difficult years for the global economy and in the midst of an energy crisis fueled by the Russian invasion of Ukraine, U.S. diesel inventories are currently "unacceptably low," National Economic Council Director Brian Deese said on Bloomberg TV last week. This supply crunch is raising concerns among analysts and energy experts of an incoming slowdown of the U.S. economy, which could be exacerbated by the national strike planned by railroad workers for mid-November. And in May and June, diesel and gas prices reached record highs, threatening to bring shipping and logistics to a grind and harming drivers' at...

Three weeks ago, we showed readers what happens when the infamous “Bullwhip effect” reversal takes place by presenting the unprecedented surge in the “Inventory to Sales” ratio for a broad range of US retailers covering the furniture, home furnishings and appliances, building materials and garden equipment, and a category known as “other general merchandise,” which includes Walmart and Target. Since then, this ratio has only gotten even more extended, and as shown below it is now at the highest level since the bursting of the dot com bubble! What does this mean for retailers and the price of goods? Three...

The only thing surprising about the freight market slowdown is the speed at which it’s unfolding. The supply chain “bullwhip effect” is both predictable and expected. The surge of inventories and declining freight costs/capacity imbalances will be deflationary. The trucking market has slowed. Demand for trucks usually surges during the Spring, but this year, demand for truckload freight has broken out of this typical seasonal pattern.Outbound Tender Volume Index (OTVI) is an index which measures the volume of truckload order requests in the contract truckload market. The OTVI chart shows year over year activity from 2018 to this year.The bullwhip...

Laughing Pets, a pet-sitting and dog-walking company in Atlanta, Georgia, turned down a holiday job worth around $2,500 because it couldn't find enough staff. "We get, on average, four new inquiries per day and we have to turn all of them away," its owner Karen Levy told Insider. She said that she used to hire 12 members of staff, which has fallen to just five. As well as turning away prospective customers, she'd had to suspend some visits to long-term clients, too. "I may never get those clients back," Levy said, adding that she was even grateful for cancellations because...

Billionaire bond investor Jeffrey Gundlach, the founder and CEO of $137 billion DoubleLine Capital, says his number one conviction over several years is that the U.S. dollar will decline as a consequence of current economic policies, resulting in the U.S. losing its sole reserve currency status. "My number one conviction looking forward a number of years — I'm not talking about the next few months at all, I'm talking about several years — is that the dollar is going to go down," Gundlach told Yahoo Finance in an exclusive interview. It's Gundlach's view that the "places to be in the...

Sometimes new data can shed light on an uncertain situation, especially in financial markets. Other times it simply adds to the confusion. Such was the case with the most recent U.S. employment report released June 4 for the month of May. The analyst world was glued to their news feeds, anxiously awaiting the latest report. The result was — bafflement. The report showed job gains of 559,000. That’s a strong number, but it was below expectations. The market was looking for 670,000 jobs or higher. While strong April gains were revised up slightly, the stronger March gains had earlier been...

We are entering a period where financial pundits agree will be inflationary, but some think it could turn deflationary. Here is an article from a similar economic period in 2008 evaluating strategies for both situations. As alwats, let the buyer beware: Monday, August 11, 2008 Investment Scenarios: Inflation vs Deflation I've said all along that you need to be thinking ahead and preparing your portfolio for various potential economic and market scenarios. And, I've roughly broken down these scenarios into two environments: inflationary & deflationary. So, after much reading, pondering, and hypothesizing, I've come up with my broad gameplan for...

With The Federal Reserve’s prodigious asset purchases and rate suppression (not to mention Biden’s record spending), inflation is a concern. But now there is another problem on the horizon … deflation. If we look at commercial and industrial lending at commercial banks divided by bank deposits, we see the ratio is the lowest since the 1970s. How about loan and leases at commercial banks divided by deposits? Also the lowest since the 1970s. Why is this possibly deflationary? Because commercial banks are the primary transmission mechanism for Fed policy, this bodes ill unless the economy roars back from government Covid...

Earlier this month, Wealthion (a new YouTube channel featuring interviews with today's top experts in money & the markets) hosted its first online conference, at which economist Dr Lacy Hunt made a strong case in his keynote presentation that deflation -- not inflation -- will win the day going forward. He predicts that much of the sudden sharp rise we are seeing in input prices will indeed be transitory. And he presented a parade of econometric data that show many historical precedents why this is likely to be the case. Of course, the current debt, demographic and technological trends are...

Much like “Humpty Dumpty,” despite the Fed’s best efforts, you can’t create permanent inflation from artificial growth. Currently, depending on whether you are “bullish” or “bearish,” there is much angst over the prospect of higher inflation. If you are bullish, higher inflation is a reflection of surging economic growth. If you are bearish, higher inflation leads to rising costs and higher rates. However, we need a better definition of what inflation is. “In order to understand the effects of inflation it is helpful to understand that inflation is not a general rise in prices as such, but an increase in...

Several positive developments over the last several months have dramatically improved the near-term outlook for the economy. Accelerating vaccine rollouts, increasing business activity, continued monetary policy, and substantial new doses of fiscal spending contribute to the potential for higher economic output. All these factors, however, are also increasing concerns about inflation, and rightly so.The good news is there is plenty of commentaries that provide valuable updates and insights for investors to monitor the situation. The less good news is there is no easy answer to the debate between inflation and deflation/disinflation. A significant challenge, then, is figuring out how to...