Eurodollar University

The discussion dives into the alarming decline in US consumer confidence, suggesting it signals a looming economic downturn. Experts argue that ignoring this trend as a mere 'vibe-cession' overlooks the mathematical and historical evidence. The episode critiques traditional economic indicators while stressing the vital role of public sentiment in forecasting unemployment rates. As consumer confidence plummets, predictions of skyrocketing unemployment emerge, challenging conventional wisdom about the health of the economy.

Steve Van Metre, an economic expert, and Goolsbee, a Bloomberg Fed adviser, dive deep into troubling revisions in U.S. economic data. They reveal how constant downward revisions hint that the economy might be overstated. Discussing consumer behavior, they note affluent shoppers are now turning to budget retailers. The pair also worry over stagnation in retail sales, questioning if current growth is merely debt-driven. As unemployment claims rise, the narrative of a soft landing is challenged, leaving listeners alarmed about the future of economic stability.

Dive into the intriguing world of financial volatility as rising interest rates loom over a turbulent economy. The podcast examines the 'September effect,' highlighting how historical trends can influence current expectations. Explore the paradox of increasing rates amidst signs of recession and low growth. Learn how market participant sentiment creates a self-fulfilling cycle, shaping the future of interest rates with fascinating insights into macroeconomic fundamentals.

Steel prices are facing a dramatic drop, nearing levels not seen since 2016. Major producers expect conditions to worsen, signaling a looming crisis in the industry. This decline isn't just about steel; it's tied to China's economic struggles that ripple outwards, impacting other resource-dependent countries. Weak domestic demand in China exacerbates the situation, alongside ineffective stimulus measures and a struggling real estate market, hinting at broader economic challenges on the horizon.

This was supposed to be all about "inflation" and instead everything is coming up jobs - including the latest CPI report. From Home Depot's most recent admission to now US refiners taking drastic steps to avoid getting caught with an energy glut (yep, that's right), the entire economy flipped from "sticky inflation" to Uh-Oh over employment. Eurodollar University's Money & Macro AnalysisBloomberg It’s Inflation Week in the US. But Everyone’s Talking About Jobshttps://www.bloomberg.com/news/newsletters/2024-08-12/fed-rate-cuts-it-s-us-inflation-week-and-everyone-s-talking-jobsHome Depot https://corporate.homedepot.com/news/earnings/home-depot-announces-second-quarter-2024-earningsCNBC Home Depot expects sales to weaken as consumers grow more cautioushttps://www.cnbc.com/2024/08/13/home-depot-hd-q2-2024-earnings.htmlBloomberg Oil Refiners in US Slow Down, Stoking Global Crude Glut Worrieshttps://www.bloomberg.com/news/articles/2024-08-11/oil-refiners-in-us-slow-down-stoking-global-crude-glut-worrieshttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

While the world was distracted by US recession provoking a Japanese stock market crash, China was continuing to meltdown. In just the past few days the country reported: a record drop in foreign money fleeing China; the first contraction in bank lending to the real economy in nineteen years; record low market interest rates; and the PBOC going off the rails trying to derail that bond rally. And we thought China was in rough shape...last month. Eurodollar University's Money & Macro AnalysisBloomberg China Goes to New Extreme in Crackdown on Bond-Market Frenzyhttps://www.bloomberg.com/news/articles/2024-08-13/china-goes-to-new-extremes-in-crackdown-on-bond-market-frenzyBloomberg China Regulators Tell Some Rural Banks to Renege on Bond Tradeshttps://www.bloomberg.com/news/articles/2024-08-12/china-regulators-tell-some-rural-banks-to-renege-on-bond-tradesBloomberg China Brokers Curb Bond Trading Amid PBOC Warnings on Rallyhttps://www.bloomberg.com/news/articles/2024-08-12/chinese-brokers-curb-bond-trading-amid-warnings-on-rallyBloomberg China Asked State Banks to Keep Record of Government Bond Buyershttps://www.bloomberg.com/news/articles/2024-08-09/china-s-state-banks-asked-to-record-buyers-of-government-bondshttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

How in the world does sudden fear over a US recession lead to a crash in Japanese stocks? Even more important, what might that crash suggest about the US recession? Our world is more interconnected than you've been led to believe. Our entire economic worldview is oriented around national groupings not because that’s the way the world works but because it keeps central bankers in a job. What globally synchronized is telling us now is that job losses are going to painfully rise - ours, not theirs. Eurodollar University's Money & Macro AnalysisBank of Japan New Procedures for Money Market Operations and Monetary Easinghttps://www.boj.or.jp/en/mopo/mpmdeci/mpr_2001/k010319a.htmWorld Bank Research Paper Global Recessionshttps://documents1.worldbank.org/curated/en/185391583249079464/pdf/Global-Recessions.pdfhttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

In this discussion, Jeremy Siegel, a well-respected economist known for his insights on market trends, teams up with financial analyst Steve Van Metre. They delve into the possibility of an emergency 75 basis point rate cut by the Federal Reserve, considering the unsettling state of the labor market and rising unemployment. Siegel reveals his hesitations about advocating for immediate cuts, while they analyze the impacts of Fed policies on job growth. The pair navigates the intricate balance between inflation control and economic stability, amidst rising layoffs and cautious optimism.

Though calm was restored after a wild few days in global financial markets, key market signals remained steadfastly negative. One of the most crucial of those even dropped to a level we've only seen three other times in more than 35 years - all three some of the worst cases. Moreover, that one was corroborated by a record low for swaps also set this week. Eurodollar University's Money & Macro AnalysisCNN Money Fed explains the big rate cuthttps://money.cnn.com/2007/10/09/news/economy/fed_minutes_analysis/index.htm?postversion=2007100914The New York Times Dow Breaks 3,000 but Ends at 2,980.20https://www.nytimes.com/1990/07/14/business/dow-breaks-3000-but-ends-at-2980.20.htmlThe New York Times 10.08 RISE PUTS DOW AT 1,020.35https://www.nytimes.com/1981/04/25/business/10.08-rise-puts-dow-at-1020.35.htmlhttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

The discussion pivots around recession fears and their impact on the labor market, noting a drop in credit card balances as a key warning sign. Analysts critique falling construction spending, indicating employer pessimism. Consumer behavior reflects ongoing struggles as travel demand wanes, while airlines like Delta and Southwest face significant challenges. The potential disconnect between consumer price trends and Federal Reserve actions raises questions about future economic stability.