Mish's Global Economic Trend Analysis |
- 3rd Quarter GDP Now Forecast Ticks Down to 1.4%
- Why I'm Never Going to "Two-Bit" China
- Durable Goods Orders Decline 2%, Led by Transportation; QE Bounce Effect is Over; Recession on the Way?
- Japan Manufacturing PMI Borders on Contraction as New Export Orders Plunge
| 3rd Quarter GDP Now Forecast Ticks Down to 1.4% Posted: 24 Sep 2015 01:04 PM PDT The Atlanta Fed GDPNow Forecast model ticked slightly lower today following recent economic reports. The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2015 is 1.4 percent on September 24, down slightly from 1.5 percent on September 17. The decline occurred on Monday when the model's forecast for third-quarter real residential investment growth fell in response to the existing home sales release from the National Association of Realtors.  I thought today's Durable Goods report (see Orders Decline 2%, Led by Transportation; QE Bounce Effect is Over; Recession on the Way?) would have knocked a tick or two off the model forecast, but it was actually existing home sales that did it. Mike "Mish" Shedlock |
| Why I'm Never Going to "Two-Bit" China Posted: 24 Sep 2015 11:01 AM PDT I would never go to China, even if someone paid for the trip and all expenses. My reason can be explained in one headline: China Arrests US Citizen for 'Endangering National Security'. An American businesswoman has been formally arrested in China on suspicion of "endangering national security" just days before Chinese President Xi Jinping arrives in the US for his first official state visit.Missing Since March Gillis went missing on March 19. We are only hearing about it just now because her husband was afraid publicity might jeopardize her chances of being released. Since then, he has awakened to reality: He is at the mercy of merciless, corrupt Chinese leaders. As noted by the Financial Times, "In China the definition of state secrets is broad and vague and often encompasses things that would be considered public information in other countries. Authorities regularly detain foreign citizens they suspect of spying but ethnically Chinese foreign citizens are far more likely to be held and charged." Reader Questions When I write about China I frequently get comments along the lines "What do you know about China? Have you ever been there?" In the not-so distant past, such questions were accompanied by comments like "China is booming. Have you seen all the building cranes? They are everywhere. Every city is expanding ..." My reply was along the lines of "There were cranes all over Florida as well, right before US real estate collapsed." Now reports of vacant cities, malls, and corruption are all over news about China. Capital flight is the order of the day. China has to prop up the yuan or it might sink. One does not need to go to China to see the pollution or understand the untenable fraud inherent in its massive State Owned Enterprise (SOE) schemes. National Security Risk I am an outspoken critic of planned government, GDP lies, pollution, and in general everything associated with China's corrupt central planning model. It is questionable whether I could last a day without being arrested. In regards to Gillis, I have to ask: WTF was a delegation from Houston in China for in the first place? Most likely it was a taxpayer boondoggle. Regardless, Gillis was no more danger to China's "national security" than I am. But that's the problem, isn't it? I do not get to decide, nor does an unbiased jury get to decide what constitutes "national security". In China, some unelected Communist bureaucrat attempting to prop up his regime gets to decide what constitutes not only national security, but anything and everything else. If the state decides to burn Gillis at the stake, then that's precisely what will happen. How China is Ruled The BBC explains "How China is Ruled". The Chinese Communist Party has ruled the country since 1949, tolerating no opposition and often dealing brutally with dissent.Two-Bit China The idea that a centrally planned communist country will soon be the preeminent economic power and its currency the world's reserve currency is laughable. No one in their right mind believes Chinese growth estimates. And much of the growth we do see is nothing but malinvestment. China does not have a large, open, or liquid bond market that a global reserve currency requires. Heck, China dare not even float the yuan. As noted above, those in China better be careful about what they say. Anyone who bothers to bluntly speak the truth, like I just did, would not last a day in China. China may be a big economic power, but at the heart of it all, China is nothing but a two-bit, scandalous, central planning dictatorship when it comes to property rights, human rights, freedom of speech, and freedom of press. Those who gloat over China's miracle growth and think the yuan will soon supplant the US dollar are mistaken on both counts. Mike "Mish" Shedlock |
| Posted: 24 Sep 2015 08:45 AM PDT Those looking for "lift off" material for Fed hikes will not find it in the latest Durable Goods report from the US Department of Commerce. Durable Goods orders declined 2.0% in line with Bloomberg Consensus Estimates, but details and year-over-year numbers weak. Transportation equipment, specifically aircraft orders, are once again skewing durable goods orders which fell 2.0 percent in August as expected. Excluding transportation, durable goods were unchanged which is slightly lower than expected. Weakness here in part reflects a pause for core capital goods as nondefense ex-auto orders slipped 0.2 percent following two prior months of very solid growth.Shipments and Orders Current vs. Prior  The transportation decline was expected. The decline ex-transportation was not expected. Also note the revision to last month's ex-transportation number. These numbers certainly will not add to third quarter GDP estimates. Durable Goods New Orders  Durable Goods New Orders vs. Year Ago  Note the over-sized effect that transportation has on order. Yet the picture is not pretty even when transportation is excluded. Durable Goods New Orders vs. Year Ago Detail  Recession on the Way? The effect of QE, and central bank stimulus in general, is over (assuming it was ever really in play in the first place). If the strength in autos is over, and I suppose a global scandal on Volkswagen would mark a fitting top, then recession cannot be too far off. Mike "Mish" Shedlock |
| Japan Manufacturing PMI Borders on Contraction as New Export Orders Plunge Posted: 24 Sep 2015 02:54 AM PDT Japan's Manufacturing PMI is still growing, but barely. Key Points
Markit Comment Amy Brownbill, economist at Markit, which compiles the survey, said: "September PMI data pointed to a general slowdown in the expansion of the Japanese manufacturing sector. New order growth moderated, having increased in August at the fastest rate since January. Underpinning the slowdown in total new order growth was a sharp reduction in international demand as new export orders dropped to the greatest extent for 31 months. A number of panelists blamed a fall in sales volumes from China leading to a decrease in new exports. Subsequently, employment levels declined for the first time since March." Japan PMI Charts  Treading Water Japan is clearly treading water here as 50 is the break-even rate. Right now it looks like China will pull Japan down with it. And what about prices? Glad you asked.  Both input and output prices are back in negative territory. Wasn't Abenomics supposed to cure that problem? Indeed it was, not that it posed any real problem though. The only problem is going into debt to fight deflation. All you get out of it is more debt. Mike "Mish" Shedlock |
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