[joyfulbozo]

When evaluating 2014’s results and looking ahead to this year, almost immediately I recognized that we are not there yet. While the composition of growth accelerated and was broad-based in 2014 and expectations for 2015 remain positive, we still have a ways to go to achieve full economic potential.

Business spending is expected to grow in 2015, but at a slower pace than in 2014. Overall, economic outlook 2015 is positive as fundamentals are in place here in the U.S. and most of the catalysts for growth are bullish. In a nutshell, economic growth is expected to be above its recent post-recession trend. The baseline outlook calls for growth in the economy (as measured by real GDP) to land between 2.7 and 3.2 percent, a marked improvement over the past several years.

[GHung]

Using the stock market to assess overall conditions is a bit like saying the cancer patient is doing better because he's gained weight due to the giant watery tumor growing in his abdomen. Meanwhile, said patient continues to smoke, diabetes is taking his toes, one at a time, his cardio-vascular system is clogged due to his ongoing high-cholesterol diet, alcoholism and prescription drugs keep him "good spirits", but the doctors continue to insist his overall health is slowly improving.

[Pops]

You've been reading my chart!

[Fishman]

Hey, now that's funny. Baltic Dry Index at absolute bottom numbers. Enough said

[dolanbaker]

It is improving...





if you change the definition of a healthy economy!

[Byron Walter]

Hey, now that's funny. Baltic Dry Index at absolute bottom numbers. Enough said

Or not. The BDI is not a very good indicator when viewed in isolation. Small changes in ocean going freighter availability vs demand can cause large oscillations in the BDI. You really need to look at all the leading indicators and they generally are looking reasonable for the first half of this year... at least in the US. I'm guessing that GDP will probably limp along at just under 3% for the first half.

At this point we don't know if Europe is going to get out of the current slump or whether or not China is going to avoid a hard landing.

But of course eventually we will have to pay the piper as debt in the private and public sectors cannot grow at a rate faster than the GDP indefinitely. Seems like we've entered an era where ROI is limited by numerous structural factors and debt is not being used so much for productive activities as it is to avoid a major hangover. That might not end too well, eh?

[GoghGoner]

2014 was an improvement for the US economy, however, 2015 looks gloomy to me as global weakness spreads.

Cattle Hides Replace Entrails as Dark Omens of Economy

Two thousand years ago, the haruspices of ancient Rome peered at animal entrails to divine the future. Today’s seers have refined the technique, searching for clues to the fate of the global economy -- and the modern omens aren’t promising.

A gauge of growth rates for raw materials including cattle hides, tallow, plywood and burlap has been signaling economic contraction since September. The last time the growth rate of the JoC-ECRI Industrial Materials Price Index was falling to these levels, the world was mired in recession. At the same time, the price-tracking Bloomberg Commodity Index is near a 12-year low, with bear markets for more than half of the 22 items it measures.

[dinopello]

At the same time, the price-tracking Bloomberg Commodity Index is near a 12-year low, with bear markets for more than half of the 22 items it measures.

Sounds like a buying opportunity !

Just keep a healthy amount of cash around just in case.

[aspera]

The BDI is not a very good indicator when viewed in isolation.

That may be true. Yet, the last five years of BDI data has a way of disrupting my calm.

BDI.JPG

[PrestonSturges]

2014 was an improvement for the US economy, however, 2015 looks gloomy to me as global weakness spreads.

Cattle Hides Replace Entrails as Dark Omens of Economy

Two thousand years ago, the haruspices of ancient Rome peered at animal entrails to divine the future. Today’s seers have refined the technique, searching for clues to the fate of the global economy -- and the modern omens aren’t promising.

A gauge of growth rates for raw materials including cattle hides, tallow, plywood and burlap has been signaling economic contraction since September. The last time the growth rate of the JoC-ECRI Industrial Materials Price Index was falling to these levels, the world was mired in recession. At the same time, the price-tracking Bloomberg Commodity Index is near a 12-year low, with bear markets for more than half of the 22 items it measures.

Meh, just before the crash in 2008, people were going nuts speculating on used newspaper and even sawdust. I can live without wild commodities swings.

[Pops]

The BDI isn't all that great as a crystal ball.

http://www.businessinsider.com/the-trut ... dex-2012-1

[GoghGoner]

USA deflated in January. First time since 2009. May not be so temporary is my guess.

http://www.telegraph.co.uk/finance/economics/11437050/US-falls-back-into-deflation-for-first-time-since-crisis.html

"There is little danger that this temporary bout of falling energy prices will develop into a more insidious debt-deflation spiral," he added.

The fall in headline inflation means that the US has now joined the eurozone in deflationary territory. The currency bloc entered deflation in December, while recent figures have shown that prices fell even more swiftly in January.

Economists believe that 2015 may be the first year since before WWII that inflation will fall below 2pc across the advanced countries which make up the G7.

[Pops]

Not Deflation, not really disinflation, just falling oil price.
LOL, this is a good thing, take advantage.

Analysts stressed that the “core” measure of inflation - which attempts to strip out the more volatile components of the measure - was stteronger than expected.
Core inflation rose by 0.2pc in the year to January, higher than the 0.1pc economists had pencilled in.

None of the conditions of deflation are present, not falling wages, not generally falling prices, not demand, only falling oil price. All the employment numbers are up;wages, participation, employment.

Deflation:
A general decline in prices, often caused by a reduction in the supply of money or credit. Deflation can be caused also by a decrease in government, personal or investment spending. The opposite of inflation, deflation has the side effect of increased unemployment since there is a lower level of demand in the economy, which can lead to an economic depression. Central banks attempt to stop severe deflation, along with severe inflation, in an attempt to keep the excessive drop in prices to a minimum.

The decline in prices of assets, is often known as Asset Deflation.

http://www.investopedia.com/terms/d/deflation.asp

[GoghGoner]

The deflation was actually triggered in 2011 and has only now spread to the USA after stopping in Europe. Once again I say, oil prices do not live in a vacuum. Oil prices are symptom not the cause.

[Pops]

what deflation?

Give us a couple of dots aside from oil - which is oversupplied.

[ralfy]

"Commodity prices collapse to lowest in 12 years"

http://www.telegraph.co.uk/finance/comm ... years.html

[Pops]

The Bloomberg Commodity index, which tracks the prices of 22 different commodity prices such as gold, natural gas and oil, fell 0.3pc to 99.84 in early trading, the lowest point since August 2002.

Come on ralfy, we know the price of oil is down, but the demand is up so where is the deflation?

When everything is priced in dollars and the dollar is strong, everything is going to be cheaper:


--
Here is Dollar Index vs commodities index, notice the correlation?



Now if all currencies were strengthening and not just the dollar, that would be a good deflation argument.

But as it is the dollar is super strong, because
we QE'd and it helped compared to the EU austerity,
we fracked and that lowered our imports, which raised our trade balance
now the EU is gonna QE so their paper is cheaper and the US$ higher
our gov budget deficit is even lower.

You all act like it pains you that Mad Max ain't knocking, take advantage.

[GoghGoner]

China, Japan, and Europe are all facing deflation. China's money supply (M2) was at a record low last month. I guess in global capitalism these things can spread like a cold. It appears that low commodity prices (US coal prices are at a six year low today) might be the mechanism but that is just a new thought to me.

Deflation is already greatly affecting commodity producers across the globe. Seems like that slowdown is having quite an effect on the future availability of resources. I don't see that as a positive for our current civilization. I do like the cheap gas for a minute, though.

Germany Sells Five-Year Debt at Negative Yield

Beginning in March, the E.C.B. is aiming to make €60 billion a month in purchases of government bonds and other debt to try to stimulate growth.

Negative-yield bonds are the fastest-growing asset class in Europe, with about 30 percent of European sovereign bonds trading at a negative yield, Mr. Gallo said. Some corporate bonds have also fallen to a yield below zero in the secondary market, he said.

[Pops]

China's money supply (M2) was at a record low last month.

Really, this shows exactly the opposite:

Money Supply M2 in China increased to 124270 CNY Billion in January of 2015 from 122840 CNY Billion in December of 2014. Money Supply M2 in China averaged 41588.37 CNY Billion from 1996 until 2015, reaching an all time high of 124270 CNY Billion in January of 2015 and a record low of 5840.10 CNY Billion in January of 1996. Money Supply M2 in China is reported by the People's Bank of China.

I don't know where you guys get this stuff, maybe you could give a link? I'm always ready to embrace doom.

Germany Sells Five-Year Debt at Negative Yield

The EU central bank is going to start buying up bonds soon, I wonder what happens then?
LOL, the buyers of todays bond sell and make money.

[GoghGoner]

Embrace Pops . I guess I missed the word growth from all the articles.

http://www.reuters.com/article/2015/02/15/china-economy-lending-idUSL4N0VO01B20150215