Category Archives: US Economy - 57 posts found

Peak in Heavy Truck Sales Point to Cyclical Pain

Heavy truck sales are oddly a good leading indicator for the economy.  It is odd because a lot of industrial production is coincident with the business cycle.  However, if you go back over forty years, you can see that recessions…


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USD Positioning Supports Weaker Dollar

In January and February we discussed our view that we thought the dollar would find it difficult to rally further and would instead display a modest weakening bias.  The initial leg up of the rally in 2014 was not due…


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Earnings to Fall Further

Profit margins are declining, and we expect them to fall much further.  As you can see from the chart below, Variant Perception’s leading indicator for wages does a very good job of leading US corporate profit margins by a little over…


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Commercial and Industrial Lending to Fall

You can take a horse to water, but you can’t make it drink.  This is generally the mistake made by many when it comes to credit.  If you expand the availability of credit, and make it more attractive, then more…


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Inflation Alive and Well in the US

We have focused on the theme of the misplaced fear of deflation at Variant Perception frequently over the past 18 months.  At several points, markets and commentators seem to have become preoccupied with a belief that growth-destroying deflation was imminent….


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The Market and the Economy

We discussed earlier last month how investors should not confuse the market and the economy.  The market might be volatile and suffering losses at the moment, but the US economy is still ambling along.  Manufacturing is likely in a recession, but…


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Buyback Boom Peaked, Debt Hangover Ahead

Over the past four years, companies that have bought back their stock have outperformed the market significantly. Most companies did not finance the buybacks with internal cash flow and borrowed at low rates to buy their own shares. The cost…


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Higher Volatility and Credit Spreads Ahead

All of our leading indicators for credit spreads and volatility point to wider volatility and higher credit spreads over the next two years.  The credit cycle is long in the tooth, and the best predictor of future credit spreads is…


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US Unemployment Rate is Not its Former Self

Structural factors are ensuring that the unemployment rate in the US today is not what it was in periods past.  Yellen has seemed to be more in the camp that the decline in the labour participation rate (PR) since the…


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Manufacturing and Services PMIs Diverge

There has been a sharp divergence between ISM services and non-services in the US. Many of our leading indicators for manufacturing have pointed to weakness. This suggests demand is tilting away from manufacturing and towards the service sector.  The breakdown…


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