GDPNow for the 3rd Quarter Surges Following Strong Trade, Inventory, and Income Reports

oee

3 years ago

What happened to your 3rd quarter of contraction? where is your recession? Where are the Robots that were supposed to create mass unemployment? Inquiring minds want to know.

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JeffD

3 years ago

Election fudging is becoming more blatant with each passing election.

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8dots

3 years ago

IAN destroyed tens of thousands homes, cars and food supply. The Dow tested ma200, before entering Nov 2/9 2020 gap. God punished NDX.

We hate each other more and more divided than ever before. // Zoomers stay home, hooked to the screen, avoiding reality. Their wealth is hugging zero. Tomorrow they will look for a job, start their own businesses, keep themselves busy, increasing wealth, making more money than old boomers, thanks to inflation. When the boomers expire they will transfer wealth. The more zoomers work the less they hate. They more wealth, the less crimes…

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Salmo Trutta

3 years ago

The Great Inflation was due to William McChesney Martin, Jr. changing from using a “net free” or “net borrowed” reserve approach to the Federal Funds “Bracket Racket” c. 1965. Note: the Continental Illinois bank bailout provides a spectacular example of this practice.

The effect of tying open market policy to a fed funds bracket was to supply additional (& excessive) legal reserves to the banking system when loan demand increased.

Since the member banks had no excess reserves of significance, the banks had to acquire additional reserves to support the expansion of deposits, resulting from their loan expansion. If they used the Fed Funds bracket (which was typical), the rate was bid up & the Fed responded by putting though buy orders, reserves were increased, & soon a multiple volume of money was created on the basis of any given increase in legal reserves.

This combined with the rapidly increasing transaction velocity of demand deposits resulted in a further upward pressure on prices. This is the process by which the Fed financed the rampant real-estate speculation that characterized the 70’s, et. al.

Interest is the price of credit. The price of money is the reciprocal of the price level. The money stock can never be properly managed by any attempt to control the cost of credit.

We should have learned the falsity of that assumption in the Dec. 1941-Mar. 1951 period. That was what the Treas. – Fed. Res. Accord of Mar. 1951 was all about.

We just keep repeating old errors. Greenspan’s Conundrum, Powell’s delay in tightening, etc.

https://research.stlouisfed.org/publications/review/2021/11/16/further-evidence-on-greenspans-conundrum

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Robbyrob

3 years ago

No end in sight for Fed-delivered beatings https://www.politico.com/newsletters/politico-nightly/2022/09/30/no-end-in-sight-for-fed-delivered-beatings-00059871

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Salmo Trutta

3 years ago

The rate-of-change in short-term money flows, the volume and velocity of money, the proxy for real output, bottomed in July. Will go up to Christmas. Contrary to Nobel Laureates Dr. Milton Friedman
and Dr. Anna Schwartz’s “A Program for Monetary Stability”: the
distributed lag effects of monetary flows (using the truistic monetary base, required reserves), have been mathematical constants for
> 100 years. I.e., the increase in the currency component of Friedman’s base, was contractionary.

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FromBrussels2

3 years ago

Yeah sure , the war industry is thriving like never before since you invented yet another enemy, not to mention the energy sector of course, since you forbade the reptile brains in Europe, you even call them friends, to buy cheap and reliable energy from Russia, as if it was not enough you now even physically blew up our reliable energy infrastructure from Russia. You are a rogue CRIMINAL warmonging nation , that s what you are , serving US’ interests ONLY, don t fool yourselves you DO NOT have any friends and you don t want them either as long as the $ remains the world’s reserve currency ! What I will never understand is how you managed to convince the morons we got for leaders to support and agree with your treacherous deceitful narrative, was it blackmail, extortion, corruption or WHAT ?? THAT is what I d like to know …. and please don t call it common sense , even our brainless idiots should know by now that everywhere the US of A shows up to meddle, a fn endless mess is guaranteed ! Who needs enemies with a fn friend like the fn US of A ?!

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vanderlyn

3 years ago

Reply to FromBrussels2

simple answer from a man who has amerikan and euro passport. pax dumbfu**istan took over where the british and french and spanish empire left off. we are just another crumbling evil empire in a long list of them. doing exactly what my ancestral home of the old romans did many centuries ago and for many centuries. the common middlebrow in amerika has been dumbed down so far that they cannot even use the term empire without getting panties in knots and clutching pearls. don’t fret, it makes life that much easier. like playing in the special olympics for the hunting and gathering here in the imperial city we call new amsterdam.

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8dots

3 years ago

After Nov election and IAN devastating, Ukraine ==> risk off. Biden might blame the republican if they win the house. Ukraine application to NATO was already rejected by US gov.

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8dots

3 years ago

After that warning from Admiral Radakin and other British experts leaked to fx traders, the British Pound plunged (??)….the space is a

neutral zone that nobody own. It’s not a direct attack on US, UK or NATO (British experts…)

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8dots

3 years ago

Get cash. Putin might attack the GPS, satellites in space.

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Doug78

3 years ago

Reply to 8dots

That would be the last time anything Russian will get into space.

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FromBrussels2

3 years ago

Reply to Doug78

….like your ‘moon rocket’…..lol

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Doug78

3 years ago

Reply to FromBrussels2

Read and weep.

https://payloadspace.com/q2-2022-orbital-launches-by-the-numbers/

As of this year US companies put into orbit more than 160 metric tons of satellites, China with 39 tons and Russia which put into orbit only 17 tons.

Russia is incapable of launching anything above orbit. Their plans for the Moon are a joke and the last time Russia sent something into deep space was way back in Soviet Times.

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FromBrussels2

3 years ago

Reply to Doug78

I won t read , neither will I weep….i just mentioned your ‘moon rocket’, didn’ t I ? I didn t even mention your disastrous Shuttle program….but that was before the US started to steal superior intellect from Russia with $$ supported by a unfair reserve currency status …..

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worleyeoe

3 years ago

“I did not see this one coming, and I doubt it sticks . . . “

Wait!!! Am I correct in understanding on the last day of Q3 this year, the GDPNow reading just shot up to 2.4%? Now, I’m not one to say we’re in a recession, but this sounds really fishy! We have had two quarters of negative growth and now just before the election, the economy pops and breaks the string of losing? I call major BS, FJB!!!

Be that as it may, in the last 30 months, the Fed & Congress have approved / pumped $13T into the economy and this is on top of the $10T that was spend during those months as part of the general deficit spending of the government.

That’s $23T in 2.5 years, people!!! Granted, not ALL of this has been spent. The $2T from this calendar year will take upwards of a decade to spend.

What part of MMT-based running of the economy does everyone not get? Inflations forever, baby!

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vanderlyn

3 years ago

Reply to worleyeoe

gonna take another 6 months to few years of fed raising rates to bring down price inflation due to such a hot economy from all the printing and helicopter drops…………….think ww2 post war boom. ain’t no recession. that’s just hooey from folks that think the fed will ease to fit their narratives or portfolios or politics……………i don’t think sleepy joe cares if Rs take the house. having nut job MAGA crew howling at the moon for next 2 years will make him look sane and folks eyes off inflation. inflation and unemployment truly are the misery index. we have inflation, but great employment. half misery index. not the full monty

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Captain Ahab

3 years ago

Reply to worleyeoe

I think I have finally figured out the prerequisite Black Swan needed for descent into economic oblivion. It is not an event, like everyone is expecting, but a person. Yes, Biden. Henceforth to be known as Black Swan Biden. As the great genius, Obama, observed; ‘Joe can f*&k up anything, not just little girls.

Time to tighten your financial seat-belts with nuke-proof gold, and finish assembling your certified-Green nuke-shelter, available from Costco.

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vanderlyn

3 years ago

Reply to Captain Ahab

economic oblivion??? get out of doors and take a stroll around the land. life has never been so comfortable and easy. 2 jobs for every guy, to lamely paraphrase the beach boys.

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worleyeoe

3 years ago

Reply to Captain Ahab

The whole Ukraine thing is starting to get really unpredictable. Prior to the continuing resolution, Biden has allocated $67B in aid. Now the CR adds $12B on top of that or about $80B. Russia has to view this as a significant provocation that they’re not going to let continue.

Now, Putin has annexed 15% of Ukraine and put nuclear weapons on the table. So, this means there’ a high likelihood Russia’s next military step is to use chemical weapons. Then comes some sort of cyber attack on Europe and, or the US and finally tactical nukes in Ukraine.

And, I don’t see this taking 6 months for this to commence with the use of chemical weapons. All of this is a MAJOR black swan event, and makes it even more unbelievable that someone hasn’t invoked the 25th amendment to remove FJB from office.

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PapaDave

3 years ago

Mish’s prediction of slow growth (whether it is an official recession or not) seems to be the case here. Which is what I have been saying for quite some time now as well. Which means energy demand will continue to grow modestly.

Supply remains the issue: Inventories continue to decline. SPR releases end in a month. US producers are keeping production flat. OPEC is 3.5 mbpd short of their production goals, because they have no more spare capacity to offer. And there is speculation they may actually cut production a little in order to support prices. And Russian production is in decline.

Meanwhile, Oil and gas prices have declined recently as financial markets are concerned about a recession. Yet, in spite of recessions, demand has only dropped in 2 years since 1965. (2009 and 2020)

In the short term, things are very volatile and you can’t really predict prices. In the long run, you can predict supply, demand and inventory levels, and the general direction of prices. And that direction will be up.

In a market that is worried about a possible recession, there are few places where you can hide. But oil and gas stocks look better than most.

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MPO45

3 years ago

Reply to PapaDave

I’m back in nibbling at oil & gas stocks. I have covered calls and naked puts on exxon – Oct 21 2022 expiry. the premiums are just too juicy. the volatility is amazing but I hope to be out before the next Fed meeting on Nov 2, let’s hope the market plays nice.

The money train adding more profits….choo! choo!

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PapaDave

3 years ago

Reply to MPO45

Nice. I continue to trade the daily volatility. My core position, which was mostly acquired in mid 2020, remains for the long term (this decade). At $80 oil these companies are gushing cash flow, paying off debt, buying back heavily discounted shares, and increasing dividends. 2023 is going to be very interesting. I expect upward pressure on oil prices as shrinking supply meets increasing demand. A supply crunch is very possible.

Here is one example of why I remain positive on oil and gas stocks.

Whitecap Resources. Just released drilling outlook and 2023 projections based on $80 WTI. Share price: C$8.74

“At current strip prices we anticipate reaching our first net debt milestone of $1.8 billion prior to year-end 2022, which is expected to trigger a 25% – 30% dividend increase and upon our final net debt milestone of $1.3 billion being reached (I expect mid 2023), we expect to return 75% of free funds flow back to shareholders. This includes an anticipated $0.73 per share annual base dividend that is 66% higher than our current annual dividend of $0.44 per share.

Significant Free Funds Flow. At US$80/bbl WTI crude oil and C$5.00/GJ AECO natural gas prices, we forecast funds flow of approximately $2.2 billion, or $3.47 per share, resulting in free funds flow of $1.2 billion, or $1.98 per share. Every US$5.00/bbl change in WTI impacts our free funds flow by $110 million and every $0.50/GJ change in AECO impacts our free funds flow by $45 million.”

At my estimate of $100 oil (average) next year, free funds flow is $1.64 billion, or $2.65 per share. Returning 75% to shareholders (if all dividend) is $2 per share (23%). And that doesn’t even count the natgas contribution. (Note: Whitecap traded at under $2/share in early 2020!)

And given the coming supply crunch, prices could go higher than that, because as we have seen lately, the financial market for oil can add a lot of volatility to the price, once it begins to anticipate future supply/demand imbalances. Right now, prices are down because financial markets are anticipating demand destruction from a possible recession. Earlier this year we saw prices of $120 when markets were anticipating a supply crunch. That supply crunch didn’t happen yet thanks to OPEC raising production by 5 mbpd and SPR releases of 1 mbpd. SPR releases end in one month. OPEC meets this week to discuss a possible cut, since they are out of spare capacity, and are unhappy with the current oil price. And Russian production is in a slow decline, which could accelerate after the European sanctions begin in December.

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vanderlyn

3 years ago

Reply to PapaDave

i love your posts. keep em coming. i’m here for fun, but mostly here to try and get trading ideas. from macro to micro analysis. thanks for your insights. hat tip to you. and to mish, for the macro analysis.

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PapaDave

3 years ago

Reply to vanderlyn

Thanks. Its my way of paying it back. I learned about the opportunity in oil in the comment section of this blog over 2 years ago. And I am very grateful to the people that were willing to share their ideas.

Interestingly, those prophets of wisdom were often trashed by many of the folks who now criticize me. Lol! You can’t fight stupidity.

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JRM

3 years ago

Atlanta FED numbers doesn’t make the rest of the USA the same number!!!!!

It doesn’t look like the investors are buying what the Atlanta FED is selling!!!

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MPO45

3 years ago

I went and bought some groceries today, I got two bags of stuff for under $100, could it be whatever Powell is doing is working?

https://www.youtube.com/watch?v=MoXzwbNSqFo

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vanderlyn

3 years ago

Reply to MPO45

rate rising already working on bringing down insane levels of stocks and bonds and i too notice even my grocery bags are not as shockingly high. what i always remind myself is the quality of food and ease of purchase has really never had more value. there are farmers markets in every city and town, like a throwback to ancient times of a century ago…………..amerikans are even learning to eat healthier. the post ww2 manufactured slop that was sold as food, was really such a deadly scam. we never bought into that in my household of childhood family of 40s to 70s. i’m healthy as an ox, too. sometimes i think part of it.

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JRM

3 years ago

Reply to MPO45

You mean two little cloth bags of groceries???

The content inside every package has shrunk massivly!!!

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Siliconguy

3 years ago

Reply to JRM

I noticed the shrinkflation too. 10 oz is the new 12 oz!

The box of cereal that stayed the same size is up 10%.

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Captain Ahab

3 years ago

Reply to MPO45

Two bags of paper towels, or toilet paper? Store brand?

Seriously, I suspect more inflation will come after the initial grocery store consumer-item surge. Factors and materials of production… commodity, energy, capital, and labor, all at globally impacted levels.

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MPO45

3 years ago

Reply to Captain Ahab

It was veggies, fruit, bread, cereals, snacks, cookies and frozen foods. it was all food, of particular note, the veggies and fruit were all half off for some reason. the store was fully stocked and I found items that I hadn’t seen in months. I did not have any meat items though.

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vanderlyn

3 years ago

if job creation and economic expansion after a locked up nation is a recession, i say keep this recession going.

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Zardoz

3 years ago

Reply to vanderlyn

Biden can’t even get a recession right!

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vanderlyn

3 years ago

Reply to Zardoz

well that is true. he’s only been part of ruling class of pax dumbfu**istan for 50 plus years. sleepy joe biden bucks to the moon. working man from bottom to top all employed. folks happy they are free from covid. working from home is a delight for many. rates rising which make sense for savers of all ages. did i mention strong saw buck. if this is a recession and bad times, bring em on. i’m a trader and loving this market. most folks have no stocks. just jobs and little lives of running to and fro. not a bad thing. i tip heavy to the working class. pat them on the head, too sometimes. like a petting zoo.

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vanderlyn

3 years ago

this has been the most obvious period in history of my long life, of a FED determined to keep raising rates. it’s post ww2 (insert covid) world wide shutdown style reactionary inflationary times. jobs plentiful. it’s 1947 to 51 GOOD inflation. jobs a plentiful. dollar strongest ever. domestic industrial plan with 300billion promised per annum. the raygunomics 50 years, which started with carter are over. it’s really great for old geezer savers, young savers and anyone that needs or wants to work for a living. the recession call is just very wrong. your r/e calls are very good. keep up the interesting blog.

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Six000mileyear

3 years ago

This data gives the FED more cover to continue raising rates. Even though Fed rates are no longer near 0%, they are significantly less than the rate of inflation that they are effectively stimulus or accommodating.

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GDPNow for the 3rd Quarter Surges Following Strong Trade, Inventory, and Income Reports

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