Each week, Stratton Street produces a weekly update (full text here) which refers to data which is made available here in chart form.

CHARTS REFERRED TO IN THE WEEKLY OF 6TH June 2016

US Industrial Production (yoy)

US Industrial Production has been negative on an annual basis on 20 occasions since the 1920's and in 17 of those the US was already in recession!

US Participation Rate

The decline in the participation rate is likely due to an ageing population as older people choose not to work.

CHARTS REFERRED TO IN THE WEEKLY OF 11TH APRIL 2016

Latest from GDPNow

Source: Atlanta Fed

Whilst it is dangerous to extrapolate, the recent decline in the US GDP forecast support the global slowdown argument.

CHARTS REFERRED TO IN THE WEEKLY OF 29th MARCH 2016

Credit Market are very inefficient

The deviation of many credits from fair value remains extreme in many cases.

CHARTS REFERRED TO IN THE WEEKLY OF 21st march 2016

Net Foreign Asset Scores 2016 - Creditors (click image for greater detail)

SOURCE: STRATTON STREET CAPITAL LLP, PHILIP R LANE AND GIAN MARIA MILESI-FERRITTI (2007) "THE EXTERNAL WEALTH OF NATIONS MARK II: REVISED AND EXTENDED ESTIMATES OF FOREIGN ASSETS AND LIABILITIES, 1970 - 2004", JOURNAL OF INTERNATIONAL ECONOMICS 73, NOVEMBER,223-250.

Net Foreign Assets 2016 - Debtors (click image for greater detail)

SOURCE: stratton street capital llp, PHILIP R LANE and Gian Maria Milesi-ferritti (2007) "the external wealth of nations mark ii: revised and extended estimates of foreign assets and liabilities, 1970 - 2004", journal of international economics 73, november,223-250.

CHARTS REFERRED TO IN THE WEEKLY OF 29TH FEBRUARY 2016

Global Growth

We are closely watch global purchasing manager survey's for signs of further weakness, or ortherwise.

Chinese Imports

The Chinese set out their plan to shift from an export led economy to a more domestic oriented one as long ago as 2010. The link to changes in global growth seem inescapable.

Source: Bloomberg

CHARTS REFERRED TO IN THE WEEKLY OF 15TH FEBRUARY 2016

Largest Current Account Surpluses

The largest current account surpluses in the world include countries that have attempted to weaken their exchange rates. Current account surpluses for Germany at 8% of GDP and Holland, 9.2% of GDP are excessive, yet noone seems to either notice or care!

CHARTS REFERRED TO IN THE WEEKLY OF 8th FEBRUARY 2016

US High Yield

Spreads back above 800 basis points once again.

CHARTS REFERRED TO IN THE WEEKLY OF 1ST FEBRUARY 2016

Velocity in US

Since the introduction of QE in 2008, velocity of money has collapsed, suggesting that individuals are saving, not spending.

charts referred to in the weekly of 25th january 2016

Poland's net foreign liabilities

Poland's net foreign liabilities were approaching 100% of GDP in 2009.

NFA & Currencies

There is substantial academic evidence that countries with net foreign liabilities have weak currencies relative to those with net foreign assets.

Poland & Australia

Both countries have poor NFA positions.

CHarts referred to in the weekly of 18th january 2016

ATLANTA FED GDP NOW

The latest reading for Q4 2015 has fallen to just 0.6.

EMPIRE MANUFACTURING IDEX

The latest reading of -19.4 in a declining growth period has not been recorded since the last recession which started in December 2007. Source: Federal Reserve Bank of New York.

Charts referred to in the weekly of 11th january 2016

Global Growth Model Shows Weakness

Although we are not yet ready to predict either a US or global recession, the scope for higher US rates appears to be quite limited.

The short end lost money

The best place to be on an duration weighted basis was at the long end. Investors made losses at the short end.

Short dated bonds lost money

Short dated bonds lost investors money with the long end making neither gains or losses.

The period most relevant to today

In the 04-06 tightening cycle, investors lost money for the third time (out of 3!) by investing in the short end. Investors in the long end made money. We expect yield curves to flatten in this cycle too.

St Louis Fed

The latest US ISM reading of 48.2 is BELOW the level where the US last entered recession. Only robust services are preventing us from predicting a US recession at this stage.

This week's Daily Updates

Featured

Oct 19, 2018

Stratton Street

The Daily Update - Renminbi Weakness or US Dollar Strength?

Oct 19, 2018

Stratton Street

This week the US Department of the Treasury issued its semi-annual report to Congress on Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States. Under The Omnibus Trade and Competitiveness Act of 1988 the Treasury Secretary must ‘consider whether countries manipulate the rate of exchange between their currency and the United States dollar for purposes of preventing effective balance of payments adjustment or gaining unfair competitive advantage in international trade.’

Oct 19, 2018

Stratton Street

Oct 18, 2018

Stratton Street

The Daily Update - The Tinder is Still There

Oct 18, 2018

Stratton Street

Last year, on the 19th October, we wrote a daily entitled 30 years ago today, stating that 30 years earlier we had Black Monday. Whilst re-reading that daily I found the last paragraph particularly interesting. We wrote /-

So, are we going to see a repeat anytime soon? (of Black Monday) US equities have been on a multi-year bull run, money has been cheap, there are asset bubbles globally, North Korea, Brexit, Italian Banks, Greek debt, the rise in populism, consumer debt, the leader of the free world…

Oct 18, 2018

Stratton Street

Oct 17, 2018

Stratton Street

The Daily Update - Balance Sheets, Net Foreign Assets and The Bigger Picture

Oct 17, 2018

Stratton Street

By now you’re likely to have already seen the bashing of Britain’s balance sheet by press – citing the latest IMF Fiscal Monitor Paper. Indeed a minus two trillion pound net worth (3tn in assets minus 5tn of liabilities) is a great headline and a terrifying prospect for those likely to bear this future tax burden. It’s also an embarrassment for many governments (including the UK’s) that have weakened their country’s long-term financial health significantly since the Global Financial Crisis: privatising illiquid assets to create the illusion of lowering public debt and assuming corporate liabilities (UK by 189% of GDP from 2007-08).

Oct 17, 2018

Stratton Street

Oct 16, 2018

Stratton Street

The Daily Update - Italy and budgets, Presidents and cream

Oct 16, 2018

Stratton Street

Italy's 2019 budget approved by the cabinet on Monday includes a basic income for the poor, lowers the retirement age and offers a partial amnesty to settle tax disputes. (Here’s a question, is Italy the only country in the world to be lowering the retirement age?). Prime Minister Giuseppe Conte and his top ministers told reporters on Monday. Speaking after the cabinet signed off on the budget bill, Deputy Prime Minister Luigi Di Maio said the basic income to relieve poverty would kick off within the first quarter of the year.

Oct 16, 2018

Stratton Street

Oct 15, 2018

Stratton Street

The Daily Update - Powell's anchored inflation belief

Oct 15, 2018

Stratton Street

In a speech earlier this month, Federal Reserve Chairman Jerome Powell said he believed that inflation remained anchored and did not see any signs that it would spike despite the low unemployment rate, adding that he was not worried the Phillips curve ‘will soon exact revenge’. Talking at the National Association for Business Economics, Powell puts a strong emphasis on the anchored nature of inflation expectation in his thinking about the “dormancy” of the Phillips Curve.

Oct 15, 2018

Stratton Street