12/4/17: Incoming Inflation Uptick: Gear Up

My contribution for Manning Financial on the topic of gearing investment portfolios against incoming uptick in inflation is now available here: https://issuu.com/publicationire/docs/mf__spring_2017?e=16572344/47063502.

27/1/17: U.S. GDP Growth is Down, Not Quite Out...

So President Trump wants U.S. economy growing at 4 percent per annum. And he wants a trade tussle with Mexico and China, and possibly much of the rest of the world, or may be a trade war, not a tussle. And he wants tariffs on imports from Mexico to pay for the Wall. And all of this is as likely to support his 4 percent growth target, as a crutch is to support a two-legged sheep.

Take the latest U.S. GDP figures. The latest preliminary estimates for the 4Q 2016 U.S. GDP growth came out today. It is pretty ugly. The markets expected 4Q GDP print to come in up 2.2 percent, with some forecasters being on a much more optimistic side of this figure. Instead, q/q growth (preliminary estimate) came in at 1.9 percent. This puts full year 2016 growth estimate at 1.6 percent which, if confirmed in subsequent revisions, will be the one of the two lowest rates of growth over 2010-2016 period. In 2015, FY growth was 2.6 percent.

The key reason for the drop in growth that everyone is talking about is net exports. In 4Q 2016, net exports subtracted 1.7 percentage points from the U.S. GDP, which is the largest negative impact for net trade figures since 2Q 2010. This was ugly. But less-talked about was a rather not-pretty 1 percentage point positive contribution to GDP from inventories which was the largest positive contribution since 1Q 2015. And more: inventories overall contribution to 2016 FY growth was higher than in both 2014 and 2015.

Quarterly GDP Growth and Contributions to Growth

Source: ZeroHedge

Good news: business investment rose, adding 0.67 percentage points to overall growth, and private sector equipment purchases rose 3.1 percent. Good-ish news: (after-tax) disposable personal income rose 1.5 percent in real terms on an annualised basis, but this marked the lowest growth rate in income over 3 years. Slower rate of growth in personal income over 4Q 2016 was down to “deceleration in wages and salaries”. Structurally, this suggests we might see some capex growth in 2017, while wages and salaries growth slowdown is likely to give way to more labour costs inflation, consistent with headline unemployment figures. If so, 1.6 percent annual growth can shift to 2-2.2 percent range.

Adding a summary to the above, BEA report notes:  “The increase in real GDP in 2016 reflected positive contributions from PCE [private consumption], residential fixed investment, state and local government spending, exports, and federal government spending that were partly offset by negative contributions from private inventory investment and nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.” In other words: borrowed money-based personal spending, plus borrowed money-based government spending, borrowed money-based property ‘investments’ were up. Capacity investments were down.

So, about that 4% target figure, Mr. President... time to hire some Chinese 'state statisticians' to get the figures right?..


In a final caveat: this is the first print of GDP growth and it is subject to future revisions.

15/12/16: US Economic Policies in the Era of President Trump

My article on likely President-elect Donald Trump's economic policies for Manning Financial: https://issuu.com/publicationire/docs/mf_winter_2016__1_?e=16572344/41835605

9/12/16: Trumpismo and the U.S. Economy

My Village column on the outcome of the U.S. Presidential election and the economic implications of Trumpismo : http://villagemagazine.ie/index.php/2016/12/trumpslump/

13/9/16: U.S. business investment slump: oil spoil?

Credit Suisse The Financialist recently asked a very important question: How low can U.S. business investment go? The question is really about the core drivers of the U.S. recovery post-GFC.

As The Financialist notes: “Over the last 50 years, there has usually been just one reason that businesses have slashed investment levels for prolonged periods of time—because the economy was down in the dumps.”

There is a handy chart to show this much.

“Not this time”, chimes The Financialist. In fact, “Private, nonresidential fixed investment fell 1.3 percent in real terms over the previous year in the second quarter of 2016, the third consecutive quarterly decline.” This the second time over the last 50 years that this has happened without there being an ongoing recession in the U.S.

Per Credit Suisse, the entire problem is down to oil-linked investment. And in part they are right. Latest figures reported by Bloomberg suggest that oil majors are set to slash USD1 trillion from global investment and spending on exploration and development. This is spread over 6 years: 2015-2020. So, on average, we are looking at roughly USD160 bn in capex and associated expenditure cuts globally, per annum. Roughly 2/3rds of this is down to cuts by the U.S. companies, and roughly 2/3rds of the balance is capex (as opposed to spending). Which brings potential cuts to investment by U.S. firms to around USD70 billion per annum at the upper envelope of estimates.

Incidentally, similar number of impact from oil price slump can be glimpsed from the fact that over 2010-2015, oil companies have issued USD1.2 trillion in debt, most of which is used for funding multi annual investment allocations.

Wait, that is hardly a massively significant number.

Worse, consider shaded areas marking recessions. Notice the ratio of trough to peak recoveries in investment in previous recessions. The average for pre-2007 episode is a 1:3 ratio (per one unit recovery, 3 units growth post-recovery). In the current episode it was (at the peak of the recovery) 1:0.6. Worse yet, notice that in all previous recoveries, save for dot.com bubble crisis and most recent Global Financial Crisis, recoveries ended up over-shooting pre-recession level of y/y growth in capex.

Another thing to worry about for 'oil's the devil' school of thought on corporate investment slowdown: slump in oil-related investment should be creating opportunities for investment elsewhere. One example: Norway, where property investments are offsetting fully decline in oil and gas related investment. When oil price drops, consumers and companies enjoy reallocation of resources and purchasing power generated from energy cost savings to other areas of demand and investment. Yet, few analysts can explain why contraction in oil price (and associated drop in oil-related investment) is not fuelling investment boom anywhere else in the economy.

To me, the reason is simple. Investing companies need three key factors to undertake capex:
1) Surplus demand compared to supply;
2) Technological capacity for investment; and
3) Policy and financial environment that is conducive to repatriation of returns from investment.

And guess what, they have none of these in the U.S.

Surplus demand creates pressure factor for investment, as firms face rapidly increasing demand with stable or slowly rising capacity to supply this demand. That is what happens in a normal recovery from a crisis. Unfortunately, we are not in a normal recovery. Consumer and corporate demand are being held down by slow growth in incomes, significant legacy debt burdens on household and corporate balance sheets, and demographics. Amplified sense of post-crisis vulnerability is also contributing to elevated levels of precautionary savings. So there is surplus supply capacity out there and not surplus demand. Which means that firms need less investment and more improvement in existent capital management / utilisation.

Technologically, we are not delivering a hell of a lot of new capacity for investment. Promising future technologies: AI-enabled robotics, 3-D printing, etc are still emerging and are yet to become a full mainstream. These are high risk technologies that are not exactly suited for taking over large scale capex budgets, yet.

Finally, fiscal, monetary and regulatory policies uncertainty is a huge headache across a range of sectors today. And we can add political uncertainty to that too. Take monetary uncertainty alone. We do not know 3-year to 5-year path for U.S. interest rates (policy rates, let alone market rates). Which means we have no decent visibility on the cost of capital forward. And we have a huge legacy debt load sitting across U.S. corporate balance sheets. So current debt levels have unknown forward costs, and future investment levels have unknown forward costs.

Just a few days ago I posted on the latest data involving U.S. corporate earnings (http://trueeconomics.blogspot.com/2016/09/7916-dont-tell-cheerleaders-us.html) - the headline says it all: the U.S. corporate environment is getting sicker and sicker by quarter.

Why would anyone invest in this environment? Even if oil is and energy are vastly cheaper than they were before and interest rates vastly lower...

7/9/16: Don't Tell the Cheerleaders: U.S. Corporates Are Getting Sicker

Some at the U.S. Fed think the U.S. economy is in a rude health (http://www.cnbc.com/2016/09/06/federal-reserve-interest-rate-outllok-williams-wants-hike-as-us-economy-in-good-shape.html), and others in the financial world think the U.S. corporates are doing just fine (http://www.wsj.com/articles/u-s-corporate-profits-rise-as-gdp-ticks-down-to-1-1-1472214856). But the reality is different.

In fact, U.S. companies are bleeding cash like there is no tomorrow (http://www.bloomberg.com/news/articles/2016-09-06/buyback-addiction-getting-costly-for-s-p-500-ceos-burning-cash) and they are doing so not to support capex or investment, but to support share prices.

Source: Bloomberg

And earnings are down:

Meanwhile, earnings per share are falling (and not only in the U.S.), as noted here: http://trueeconomics.blogspot.com/2016/09/4916-earnings-per-share.html

And here is 12 ko Forward P/E ratio for the U.S. on 12mo MA basis:

iSource: FactSet https://www.factset.com/websitefiles/PDFs/earningsinsight/earningsinsight_9.2.16

And it gets worse on a trailing basis

So, quite obviously, things are really going swimmingly in the U.S. economy... as long as you don't  look at the production / supply side of it and focus on 'real' indicators like jobs creation (unadjusted for productivity and quality) or student loans (unadjusted for risk of default) or home sales (pending or new, of course, but not existing). Which should be helped marvelously by a Fed hike, because in a credit-based economy, sucking out fuel vapours from an empty tank is undoubtedly a great prescription for sustaining forward growth.

17/6/16: Credit markets on the ropes?

In their research note, titled aptly “Credit Metrics Bode 1ll”, Moody’s Analytics produced a rather strong warning to the corporate credit markets, a warning that investors should not ignore.

Per Moody’s: “The current business cycle upturn is in its latter stage, aggregate measures of corporate credit quality suggest. The outlook for the credit cycle is likely to deteriorate, barring improved showings by cash flows and profits, where enhanced prospects for the latter two metrics depend largely on a sufficient rejuvenation of business sales.”

In other words, unless corporate performance trends break to the upside, credit markets will push into a recessionary territory.

“Recessions materialized within 12 months of the year-long ratio of internal funds to corporate debt descending to 19.1% i n Ql -2008, Ql-2000, and Q4-1989. As derived from the Federal Reserve's Financial Accounts of the United States, or the Flow of Funds, the moving year long ratio of internal funds to corporate debt for US non-financial corporations has eased from Q2-2011's current cycle high of 25.4% to the 19.1% of Ql-2016.”

Moody’s illustrate:

Now, observe the ratio over the current cycle: the peak around the end of 2011-start of 2012 has now been fully and firmly exhausted. Current ratios sit dangerously at 4Q 2007 and close to 1-3 quarters distance from each previous recession troughs.

The safety cushion available to the U.S. corporates when it comes to avoiding a profit recession is thin. Per Moody’s: “The prospective slide by the ratio of internal funds to corporate debt underscores how very critical rejuvenations of profits and cash flows are to the outlooks for business activity and credit quality. Getting profits up to a speed that will keep the US safely distanced from a recession has been rendered more difficult by the current pace of employment costs."

Here’s the problem. Employment costs can be cut back to improve profitability in a normal cycle. The bigger the cut back, the more cushion it provides. But in the current cycle, employment costs are subdued (do notice that this environment - of slower wages and costs inflation - is the same as in 2004-2007 period). Which means two things:

1. U.S. corporates have little room to cut employment costs except by a massive wave of layoffs (which can trigger a recession on its own); and
2. U.S. corporates have already front-loaded most of the risk onto employment costs during the Great Recession. Which means any new adjustment is going to be even more painful as it will come against already severe cuts inherited from the Great Recession and only partially corrected for during the relatively weak costs recovery period since then. 

Moody’s are pretty somber on the prospect: "As inferred from the historical record, restoring profits through reduced labor costs is all but impossible without the pain of a recessionary surge in layoffs. Thus, barring a recession, employment costs should continue to expand by at least 5% annually."

That’s the proverbial the rock and the hard place, between which the credit markets are wedged, as evidenced by the recent dynamics for both Corporate Gross Value Added (the GDP contribution from the corporate sector) and the nominal GDP:

Again, the two lines show steady downward trend in corporate performance (Corporate GVA) and slight downward trend in nominal GDP. In terms of previous recessions, sharp acceleration in both trends since the end of 4Q 2014 is now long enough and strong enough to put the U.S. onto recessionary alert.

Per Moody’s: "As of early June, the Blue Chip consensus projected a 3.2% annual rise by 2016's nominal GDP that, …signals a less than 3% increase by corporate gross value added. [This]... implies a drop by 2016's profits from current production that is considerably deeper than the - 2.5% dip predicted by early June's consensus. Moreover, as inferred from the consensus forecast of a 4.4% increase by 2017's nominal GDP, net revenue growth may not be rapid enough to stabilize profits until the second-half of 2017, which may prove to be too late for the purpose of avoid ing a cyclical downturn."

In other words, there is a storm brewing in the U.S. economy and the credit markets are exhibiting stress consistent with normal pre-recessionary risks. Which is, of course, somewhat ironic, given that debt issuance is still booming, both in the USD and Euro (a new market of choice for a number of U.S. companies issuance in response to the ECB corporate debt purchasing programme):

Just as the corporate credit quality is deteriorating rapidly:

You really can’t make this up: the debt cornucopia is rolling on just as the debt market is flashing red.

12/6/16: U.S. Student Loans: A Ticking Time Bomb

If you like hokey stick charts, you’ll love these two covering U.S. student loans debt evolution over time:

The numbers are simply mad: total debt rose from around USD 100 billion ca 2006 to almost USD 1 trillion by the end of 2015. On a per capita of student population basis, same period rise was from around USD 16,000 per student to over USD100,000 per student. More recent data, through May 2016 shows that average student debt is now at USD133,000 and the total quantum of student loans outstanding is at over USD 1.2 trillion.

Data from Bloomberg, through 2014, shows that Federal Government-originated student loans have increased 10-fold since 1990:

 Source: Bloomberg, data from Collegeboard.org 

This is not just worrying - it is outright unsustainable. Students loans are predominantly fixed interest rate loans. However, even in the current benign environment, interest rates on this debt are high:

Source: https://studentaid.ed.gov/sa/about/announcements/interest-rate

So the key risk to the student loans debt is not from interest rates increases, but from the fact that it is a secondary debt: as interest rates rise, households priorities on paying down short term credit (credit cards) will take more precedence over longer-term fixed rate debt. Student loans are likely to suffer from higher risk of non-payment.

Currently, 43% of student loans are in default, representing an improvement over 2014 default rate of 46%. The Wall Street Journal recently attributed this decline to programs that allow some borrowers to lower their student loan payments by connecting them to a percentage of the borrower's income (also known as income-driven repayment). The number of borrowers taking advantage of the schemes nearly doubled since 2015 to 4.6 million.

U.S. student loans are, in very simple term, a ticking time bomb. The indebted generation is in the younger demographic with limited income prospects and the job markets that are longer-term characterised by greater income volatility and lower income trends. This means that repayment of these loans exerts greater pressure on household savings and investments exactly at the period of the household life-cycle when American workers benefit the greatest from the compounding effects of savings and investments on life-time income. In other words, the opportunity cost of this debt is the greatest.

11/5/16: U.S. Economy: Three Charts Debt, One Chart Growth

In his recent presentation, aptly titled "The Endgame",  Stan Druckenmiller put some very interesting charts summarising the state of the global economy.

One chart jumps out: the U.S. credit outstanding as % of GDP

In basic terms, U.S. debt deleveraging post-GFC currently puts U.S. economy's leverage ratio to GDP at the levels comparable with 2006-2007. Which simply means there is not a hell of a lot room for growing the debt pile. And, absent credit creation by households and corporates, this means there is not a hell of a lot of room for economic growth, excluding organic (trend) growth.

As Druckernmiller notes in another slide, the leveraging of the U.S. economy is being sustained by monetary policy that created unprecedented in modern history supports for debt:

And as evidence elsewhere suggests, the U.S. credit creation cycle is now running on credit cards:

Source: Bloomberg

And the problem with this is that current growth rates are approximately close to the average rate of the bubble years 1995-2007. Which suggests that in addition to being close to exhaustion, household credit cycle is also less effective in supporting actual growth.

Which is why (despite a cheerful headline given to it by Bloomberg), the next chart actually clearly shows that the U.S. growth momentum is structurally very similar to pre-recession dynamics of the 1990 and 2000:

Source: Bloomberg

Back to Druckenmiller's presentation title... the end game...

9/2/16: Sales and Capex Weaknesses are Bad News for U.S. Jobs Growth

In a note from February 4, Moody Analytics have this two key messages about the U.S. economy, none pleasant:

• Business sales are ‘mediocre’ outside energy sector, so that jobs growth singled by business sales outside energy sector should be slowing; and
• Capex slowdown is about to smack jobs growth even further to the downside.

Take their numbers with a gulp of some oxygen.

Point 1: Business sales

The old-fashioned statistics don’t quite fudge stuff as well as the more modern hoopla about users, unique visits and signups deployed in the ICT sector. So here we go:

“Don’t fall into the trap of believing all is well outside of oil & gas. According to Bloomberg News, the 52% of the S&P 500 that has reported for 2015’s final quarter incurred over-year setbacks of -4.9% for sales and -5.7% for operating income. To a considerable degree, the declines were skewed lower by annual plunges of -34.2% for the sales and -64.2% for the operating profits of the latest sample’s 18 energy companies. For the 53% of the S&P 500’s non-energy companies that have reported for Q4-2015, sales barely rose by 0.6% annually, while the 2.6% increase by operating income fell considerably short of long-term profits growth of 6.5%.”

You’ve heard it right: in a recovery the U.S. is having, sales are up 0.6% y/y. Know of any real business that lives off something other than sales? I don’t.

Based on the Commerce Department broad estimate of business sales “that sums the sales of manufacturers, retailers and wholesalers. …even after excluding sales of identifiable energy products, what I refer to as core business sales posted annual increases of merely +2.1% for 2015 and +1.0% for Q4-2015”.

“…payrolls have been surprisingly resilient to the slowest growth by business sales excluding energy products since Q4-2009.” But, based on 3-mo average payrolls correlation with 12-mo average business sales data (estimated by Moody’s at 0.87), 2015 figures for sales suggest “…the average increase of private sector payrolls may descend from 2015’s 213,000 new jobs per month to 42,000 new jobs per month. Unless core business sales accelerate, 2016’s macro risks are most definitely to the downside.”

A handy chart:

Point 2: Capex headwind for jobs growth

“Business outlays on staff and capital spending are highly correlated. Over the past 33 years, the yearly percent change of payrolls revealed a strong correlation of 0.84 with the yearly percent change of real business investment spending.”

So, based on 2015 yearly increase in capital spending private sector payrolls “should have approximated 0.8% instead of the actual 1.9%. In other words, Q4-2015’s 1.6% yearly increase by real business investment spending favored a 91,000 average monthly increase by 2015’s payrolls, which was considerably less than the actual average monthly increase of 221,000 jobs.”

All of which puts into perspective what I wrote recently about the U.S. non farm payroll numbers here: http://trueeconomics.blogspot.com/2016/02/5216-three-facts-from-us-labor-markets.html

You really have to wonder, just how long can the U.S. economy continue raising the bar on additional bar staff hiring before choking on shortages of sales and capital investment?

13/7/15: About That Europe's Recovery Party

Last week, IMF published its WEO update for July. Little to go by in the general 'news' terms, but a telling sign of just how well repaired the world economy is becoming.

First, off the top, IMF dropped its forecast for global growth for 2015 from 3.5% in April 2015 to 3.3% in July. 2016 outlook remains unchanged at 3.8%. Given IMF estimates 2013-2014 growth at 3.4% each year, this means that 2015 is now expected to be sub-average for the three years period - hardly a sign of an improvement.

When considered by broader regions, Advanced Economies drove deterioration in the outlook. 2015 growth in advanced economies is now projected to be around 2.1%, down on 2.4% projection back in April. 2016 outlook is unchanged at 2.4%. Meanwhile, Emerging Markets and Developing Economies growth forecast has deteriorated from 4.3% in 2015 projected back in April, to 4.2% in July update. 2016 outlook remains the same at 4.7% projected growth rate.

IMF lauded the return to growth in the Euro area, which is supposedly booming - forecast to expand at 1.5% in 2015 (July outlook), same as in April outlook. And the Fund produced a doozer of an uplift to 2016 forecast growth - from 1.6% expected back in April to 1.7% expected in July update. Meanwhile, the U.S. economy got severely downgraded to 2.5% forecast expansion for 2015 (against 3.1% forecast back in April) and to 3.0% expansion forecast for 2016 (against 3.1% forecast back in April).

You can't make this up: the return to growth in Europe is still full-blown 40 percent lower growth than in wobbling U.S. Just in case you wondered: over 2013-2015, according to the latest forecast from the Fund,

• U.S. economy will expand, cumulatively, by 5.39%
• Euro area economy will grow by 1.91%
• Japan will grow by 2.31%
• UK will expand by 7.16%, and
• Other Advanced Economies group will grow by 7.90%.

Yes, that's right - Euro area will under-perform Japan, the heroes of 'blanket QE bombing' of the economy. 

29/5/15: That U.S. Engine of Growth Is Going 'Old Fiat' Way

Folks, what on earth is going on in the U.S. economy? Almost 2 months ago I warned that the U.S. is heading for a growth hick-up (http://trueeconomics.blogspot.ie/2015/04/4415-another-sign-of-us-growth-slowdown.html). Now, the data is pouring in.

1Q 2015 GDP growth came in at a revised -0.7%. And that's ugly. So ugly, White House had to issue a statement, basically saying 'damn foreigners stopped buying our stuff and weather was cold' for an excuse: https://m.whitehouse.gov/blog/2015/05/29/second-estimate-gdp-first-quarter-2015. Rest is fine, apparently, though U.S. consumers seem to be indifferent to Obamanomics charms and U.S. investors (in real stuff, not financial markets) are indifferent to the charms of ZIRP.

For the gas, the WH added that "The President is committed to further strengthening these positive trends by opening our exports to new markets with new high-standards free trade agreements that create opportunities for the middle class, expanding investments in infrastructure, and ensuring the sequester does not return in the next fiscal year as outlined in thePresident’s FY2016 Budget." Now, be fearful…

Source: @M_McDonough 

Truth is, this is the third at- or sub-zero quarterly reading in GDP growth over the current 'expansion cycle' - which is bad. Bad enough not to have happened since the 1950s and bad enough to push down 4 out of 6 key national accounts lines:

Source: @zerohedge

Good news, 1Q 2014 was even worse than 1Q 2015. Bad news is, 1Q 2015 weakness was followed by April-May mixed bag data.

Un-phased by the White House exhortations, the Institute for Supply Management-Chicago Inc.’s business barometer fell to 46.2 in May from 52.3 in April. Readings lower than 50 indicate contraction. Per Bloomberg: "The median forecast of 45 economists surveyed by Bloomberg called for the measure to rise to 53, with estimates ranging from 51 to 55. The report showed factory employment contracted this month."

Yep, that is a swing of massive 6.8 points on expectations.

Source: @ReutersJamie


Worse news, for the overheating markets that is, "Profits from current production (corporate profits with inventory valuation adjustment (IVA) and capital consumption adjustment (CCAdj)) decreased $125.5 billion in the first quarter, compared with a decrease of $30.4 billion in the fourth. …Profits of domestic non-financial corporations decreased $100.4 billion, in contrast to an increase of $18.1 billion. The rest-of-the-world component of profits decreased $22.4 billion, compared with a decrease of $36.1 billion."

Source: @ReutersJamie

Gazing into the future, the doom is getting doomed.

Source: @GallupNews

The above is via http://www.gallup.com/poll/183407/no-improvement-economic-confidence-index.aspx. The economic confidence index fell two points from the previous weekly score, Economic outlook component at -11, and Current conditions score of -6 higher than outlook. The index has been in negative territory for all but one of the past 14 weekly readings.

Source: @GallupNews 

Yes, the engine of global growth is spewing oil and smoke like the old 'Fix it up, Tony' Fiat... and the White House is just not having any new ideas on sorting it out.

Bad weather… Bad Double-Bad foreigners… Bad Triple-Bad Consumers/Savers…

4/4/15: Another Sign of US Growth Slowdown Risks: ISM

A very interesting chart via Bloomberg's @M_McDonough showing the growing weakness in US Manufacturing:

Local max at November-December 2014 is now being eroded, although ISM is still reading reasonably above 50.

This is just another confirmation of some (early) signs of the US economy shifting toward 'mature expansion' stage of the cycle. Given that all of this is still based on two exogenous factors: the hang-over of lower capex costs and low energy costs, the signal is not good - slowing economy into the Fed rising reversal that might coincide with firming of oil prices in H2 2015 will be a tricky risk to manage.

Note some other data points relating to the slowdown in growth signals: http://trueeconomics.blogspot.ie/2015/04/2415-oh-someone-spotted-us-growth.html.

2/4/15: Oh... someone spotted US growth slowdown risk...

Given that even the Irish Stuffbrokers are starting to wake up to the ongoing slowdown in the US economic growth (yet to smell the traces of the global slowdown next), here is a chart worth contemplating:

Explaining the above, the authors, Markit say: the "Business Outlook Survey, which looks at expectations for the year ahead across 650 US private sector companies, highlighted that business sentiment remained positive in February, but the degree of optimism moderated to a post-crisis low."

More specifically: "At +24 percent, down from +31 percent in October 2014, the net balance of firms expecting a rise in business activity over the year ahead was the lowest since the survey began in late-2009. Weaker business sentiment was recorded in both manufacturing (+32 percent in February, down from +42 percent last October) and services (+22 percent in February, down from +29 percent)."

And here is the comparative to other major advanced economies:

Oh, and the US weakness is compounded (and compounds) broader expected global weakness: http://trueeconomics.blogspot.ie/2015/04/2415-bric-business-outlook-12-months.html and current ongoing slowdown: http://trueeconomics.blogspot.ie/2015/04/2415-bric-manufacturing-pmi-march-marks.html. Even though the Global PMI for Manufacturing sector came out with basically no change in March (51.8) compared to February (51.9), overall growth has been trending well below immediate post-crisis recovery years and pre-crisis period:

Just at the time when Irish official forecasters are revving up their numbers for 2015-2016, because being myopic is what we do best...

31/3/15: Six out of Seven Signs the US Economy is Weaker in Q1

That economic recovery in the U.S. - the engine for growth in far away places, like Ireland, the hope of the IMF, the beacon of the dream that debt stimulus is a fine way to repair structurally weakened (let alone devastated - as in the Euro area) economies is... err... coughing diesel:

Source: @M_McDonough

In basic terms, five out of six tracked Economic Surprise sub-indices are in the red now, with four of them in the red for some time. And the overall Bloomberg Economic Surprise index is in the red, and has been in the red for most of the Q1. And the overall index is falling in steep ticks... which is not good... not good at all.

6/3/15: US NPF: Another Feel-Good Print with Bitter Aftertaste

My take on the US Non-Farm Payroll numbers in few tweets with some RTs:

Good news:

Why German cars? Because:

And bad: the unemployment rate falling to 5.5% means Fed hike moves closer and this, perversely, means Government debt cost for the US is going to rise (I know, I know, it is perverse, but...):

 But the 'bad' gets worse:

The above mans that US now has historically high level of people who are not in the labour force - some 98.9 million all ... meanwhile...

 ...aaaand.... jobs increases are not in higher value-added sectors:

 

 So to sum this all up:

 Done.