August 24-30, 2024
Big news. For the first time, we will not give macroeconomic statistics as the main news. But this is a fundamental issue. We are talking about the arrest of Pavel Durov, the frontman and symbol of the social network Telegram in France. Why is this news fundamentally important? Because it is a symbol of a radical change in the economic model in the world.
No, we do not think that there was freedom of speech and democracy in the world. But, all violations up to now have had, in general, a national character. And in general, there was a feeling in the world that there is some order, the violation of which is impossible or is harshly suppressed. The arrest of Durov (which we will definitely not discuss, since it has nothing to do with macroeconomics) finally dispels illusions about how the IT world is structured.
And, accordingly, a huge layer of transnational business will now begin to die. Because the main question will be: which intelligence agency are you working for? And the main task of any business will be protection from those same intelligence agencies. Of course, not right away, but this path is practically inevitable. And it’s time to get used to it. And take it into account.
Macroeconomics. Sales in Italy’s industry -3.7% per year, 15th minus in a row:
Рис. 1
Investor sentiment in Switzerland has fallen for the first time in 7 months:
Рис. 2
Japan’s leading indicators hit 14-month lows:
Рис.3
Germany’s IFO Business Climate Index is the weakest in six months:
Рис. 4
At the same time, the assessment of the current state is at the bottom since spring 2010 (not counting covid):
Рис. 5
The Texas Fed manufacturing index has been in the red for 28 straight months, breaking its 2007/09 low of 27 months:
Рис. 6
In the services sector of the same region there are 27 minuses in a row, also more than 15 years ago (24):
Рис. 7
And this is in Texas, where industry and high-tech are fleeing from California! That is, things are worse there than in Germany!
The Richmond Fed index has hit rock bottom since April 2009 (excluding the Covid slump):
Рис. 8
That is, the carpet recession has not yet been surpassed. And that’s good.
The US goods trade deficit is the highest in 26 months and one of the worst in history:
Рис. 9
This is about investments in the real sector.
Pending sales of existing homes in the US have returned to Covid lows, which, in turn, are a record low in 24 years of observations:
Рис. 10
The average price of housing in the US has fallen again:
The assessment of the current state of affairs by consumers in the US (research by the University of Michigan) is the worst in 2 years. Previously, similar values were only seen in the fall of 2008:
Рис. 12
US unemployment claims remain near 3-year high:
Рис. 13
The number of unemployed in Germany has been growing monthly for 20 months in a row:
Рис. 14
It hit a 9-year high (excluding Covid):
Рис. 15
The unemployment rate shows a similar picture –
Рис. 16
Main conclusions. We see that in many respects, the crisis phenomena are approaching the lows of the Covid era. Which at that time seemed catastrophic and certainly not regular. Macroeconomic data only partially confirm these indicators, but this is where the question of their adequacy arises. In particular, if we assume that Larry Summers’ estimates (https://fondmx.pro/en/weekly-wrap/no-signs-of-improvement-found/) of inflation in the US are adequate (and according to our estimates, they are underestimated!), then the recession in the American economy began back in the fall of 2021.
In such a situation, the assessments of regional banks and consumers become completely adequate. And given the recognition of the distortion of labor statistics (see the previous review: https://fondmx.pro/en/weekly-wrap/what-it-takes-to-have-a-house-make-from-paper-now-it-s-ours/ ), a natural question arises: why, in fact, can’t it be that there are serious distortions in inflation statistics? And if they are, then all the contradictions in the assessments of different statistical agencies disappear.
Since we have written about distortions in inflation and labor statistics data many times throughout the history of our reviews (i.e. for more than 5 years), for us the answer to the question about the dynamics of the global economy in general and the US economy in particular is obvious: since the fall of 2021, they have been in a state of recession. Its scale can be debated, but the trend itself is unambiguous!
And finally, two graphs. The first is the ability of American households to buy an average home:
As we can see, the gap between the money needed and the average home price is growing.
The second picture shows how far behind American industry is compared to speculative industries:
And here, again, we will not comment, Since everything is clear anyway.
Well, in conclusion, we wish our readers a successful weekend at the end of summer, and, accordingly, a smooth entry into the autumn work rhythm!