Credit Bubble Bulletin

Government Spending jumped to a 5.0% annualized growth rate (Q1 2.9%), led by a 7.9% annualized development in authorities expenditures (strongest reading since Q2 ’09). With federal deficit spending near 4.5% of GDP, fiscal stimulus has turned into a powerful power in the real overall economy. Dropping 5.2%, Exports were a drag on growth. Reversing Q1’s 6.2% growth rate, Gross Private Investment declined 5.5% annualized.

At 2.3%, Q2’s GDP Price Index recovered highly from Q1’s 1.1%. Q2 PCE (Personal Consumption Expenditures) rose to 2.3%, the most powerful reading since Q1 ’18. June Durable Goods Orders were up a stronger-than-expected 1.9% (estimates 0.7%), with the 1.9% rise in Non-Defense Capital Goods Orders way prior to the 0.2% consensus forecast.

Weekly Jobless Claims dropped to the lowest level in eight weeks. And let’s not forget the 224,000 gain in June Non-Farm Payrolls. And while the 50 reading for the Markit U.S. Global manufacturing is vulnerable, and the U.S. 16.89 billion. Combined, these three posted 18% y-o-y revenue development. My point: the nature of economic output has transformed momentously, and every year manufacturing accounts for a smaller little bit of the higher U.S. The Fed made a blunder by pre-committing to next week’s trim. Despite the apparent dangers associated with vulnerable global manufacturing, trade battle frictions and China fragilities, U.S.

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Investment-grade Credit default swap (CDS) prices fallen this week to the lowest level because the multi-year lows occur February 2018. Junk bond spreads narrowed this week to close to November lows. Corporate debt issuance is running at record pace. And, of course, stock prices have surged to all-time highs. July 25 – Wall Street Journal (Jessica Menton): “Investors are piling into safe-haven bonds at a record pace, an indicator that caution remains despite stocks and shares pushing toward information.

12.1 billion of inflows for the week ended July 17, the 28th consecutive week of inflows. 455 billion with an annualized basis in 2019, according to a Bank of America Merrill Lynch analysis of EPFR Global data. The Fed is about to lower rates in the throes of manic securities markets activity. They’ll surely cite global dangers and below-target inflation.

The issue is not some “disease of low inflation.” There’s plenty of inflation, it’s just neither even nor necessarily in every the strategies central bankers prefer. There has been strong inflation in securities prices, with the term “hyperinflation” fitting for a few global bond marketplaces (i.e. Italy, Greece, Portugal, Spain, Slovenia, etc.). Global stock prices are locked in a powerful late-cycle (speculative) inflation powerful. Global areas remain in a strong inflationary environment, along with asset prices more generally.

The price dynamic for high-end collectables is hyperinflationary. The world has changed greatly in 30 years – the nature of economic output, economic structure, finance, monetary policy and “globalization”, to name broad categories which have altered inflation dynamics profoundly. Individual country inflation dynamics are no longer dominated by domestic Credit growth, financial conditions and monetary policy.