Economic Outlook

An “inauspicious” start to the new week morphed into a full-on rout in Asia Monday as purported “liquidity pressure” tied to forthcoming IPOs helped push Chinese stocks to their worst loss in months and tensions with Tokyo tanked South Korean equities.

The Shanghai Composite dove the most in the region, falling 2.6%, in the worst session since May 6, the day after Donald Trump restarted the trade war. The CSI 300 fell 2.3%, while small caps and tech shares ended the session down 2.7% after shedding as much as 3.4%.

While some of the selling was attributed to the prospect of a less accommodative Fed following Friday’s blockbuster June payrolls print, the imminent launch of China’s new tech board (later this month) sparked concern about liquidity being pulled away from other mainland shares….CLICK for complete article

How Malta Is Becoming the Global Capital of Crypto

Some things never change, like the Megalithic Temples built in Malta over 5,000 years ago. These days, however, that may be the only thing that remains unchanged in Malta. With a population of just under half a million and being mostly famous as a destination for European teenagers to study English during their summer vacation, Malta has recently become a star on the crypto map.

Having already had a positive experience hosting online gambling companies, which makes up a very significant portion (13%) of Malta’s GDP, the island is now turning its head toward the world of crypto in an effort to repeat its previous success. A lucrative tax incentive system, government initiatives, and clear and friendly crypto regulation are bringing fruitful results: Many large cryptocurrency exchanges, such as OKEx and Binance, have already established their headquarters in Malta….CLICK for complete documentary

The Fed’s Stealth Stimulus Has Arrived

Let me just throw this out there for us to kick around: The Fed has already accomplished more with its verbiage so far this year than it had in the past when it actually cut rates multiple times, all the way down to near zero, and did trillions of dollars of QE. We’re already seeing the first results. Here’s why.

The US government can directly stimulate the economy by borrowing trillions and spending them in the US on infrastructure, on its employees, armaments, etc. The Fed cannot do this. It can only try to manipulate the credit environment in a credit-based economy.

The way the Fed tries to stimulate the economy is to loosen up credit, meaning it wants to encourage banks and other entities to lend, and encourage or force investors to invest more by taking larger risks for less return, as they begin to chase yield. The hope is that this will result in easy access to borrowed money for businesses and consumers, that they can borrow cheaply, and that they will go out and spend and invest this money. This spending and investment stimulate the economy….CLICK for complete article

US GDP Growth Rebounds To 3.1% In Q1

Despite concerns over a slowing global economy and negative impacts of the ongoing trade war with China, the U.S. grew its gross domestic product by 3.1% in the first quarter of 2019, up from just 2.2% growth in the fourth quarter of 2018.

The growth was surprisingly strong given falling economic growth forecasts around the world, a volatile stock market, an ongoing trade war with China and more dovish commentary from the Federal Reserve.

After a fourth-quarter sell-off, the S&P 500 surged more than 14% in the first quarter, one of the strongest starts to a year in history. Concerns over a near-term U.S. recession eased, and economic growth numbers suggest the U.S. economy is on a stronger footing than previously feared….CLICK for complete article

China Launches World’s First Smart Oil Tanker

China unveiled the world’s first intelligent Very Large Crude Carrier, which will have a capacity of more than 2.257 million barrels, China News Service reports, adding that the vessel, named New Journey, was delivered to China Merchant Energy Shipping Co. in Dalian.

“At present, countries around the world are actively promoting intelligent navigation and developing intelligent technologies for ships, which plays an important role in improving maritime traffic safety, energy conservation, emission reduction and economic efficiency,” the news service quoted the vice chief engineer of the company that built the VLCC, Dalian Shipbuilding Industry Co., as saying.

Among the “intelligent” features of the vessel, according to Guan Yinghua, are assisted autopilot navigation, intelligent liquefied cargo management, comprehensive energy efficiency management, equipment operation and maintenance, and finally integrated ship-to-shore communication, China News Service reports.

The Economy Is Both Booming And Headed For Recession

“The economy at the moment is in a superposition of two states.”

A fixture of debates about the relative merits of Fed cuts in the current environment is the paradox of conflicting data, some of which suggests the US economy is rolling over, some of which suggests it’s not.

This is something that’s vexed Fed officials and while there are a number of ways to illustrate it, a simple visualization might simply show, on one hand, unemployment loitering at a five-decade nadir and, on the other, manufacturing surveys diving to Trump-era lows amid trade uncertainty.

Jerome Powell has, of course, spent quite a bit of time documenting the extent to which the data has a habit of sending conflicting signals. Trump’s trade policies cloud the outlook for corporate America and also for the Fed. With respect to the latter, there’s an argument to be made that the president is deliberately muddying the waters to engineer easier monetary policy….CLICK for complete article