Update on Fed Atlanta’s GDPNOW: US 2Q 2015 GDP .8%; More Central Banks Ease as Global Trade Sputters!

Well how about that, the US statistical 2Q economy reportedly improved. 

Based on US Federal Reserve of Atlanta’s real time forecasting GDPNOW, based on May 26th, 2Q GDP improved by a puny .1% to .8%! (bold mine) 

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2015 was 0.8 percent on May 26, up slightly from 0.7 percent on May 19. Following this morning's advance durable manufacturing report from the U.S. Census Bureau, the forecast for second-quarter real equipment investment growth increased from 3.5 percent to 5.1 percent while the forecast for the change in inventory investment in 2009 dollars increased from -$22 billion to -$19 billion.

Still, the incredible gulf between the consensus and Fed Atlanta’s estimates. So who will be right?

 

Moreover, this week Central Bank News reported that this week’s rate cut by Hungary and Kyrgyzstan marks the 36th interest rate cut since the start of the year

 

Here is CBNews:  

A total of 36 central banks and monetary authorities worldwide have eased their policy stance so far in 2015 while 14 have tightened their policy, with the National Bank of the Kyrgyz Republic joining the rate-cutting spree on May 25 by cutting its policy rate by 150 basis points.

 

From July 2014 through January this year, the central bank of Kyrgyzstan raised its policy rate by a total of 500 basis points to curb inflationary pressures from a depreciation of the som currency. But since late April the som's exchange rate has bounced back and inflation has eased steadily after hitting 11.6 percent in January.

 

Central Bank News, which already tracks the policy rates of 90 central banks 

So from Central Bank News' tally board from the 90 central banks, rate cutters outpace rate hikers by 2.6 to 1.

 

And yet that’s just based on the 90 central banks and from the perspective of rate cuts.

But there are more. As previously pointed out, there have been other (frontier market) central banks which rate cuts haven’t been included. 

In addition, there have been non interest rate credit easing measures such as Singapore via changes in her currency basket and QE. 

There have also been regulatory based easing such as in Indonesia where the government “will loosen its loan-to-deposit ratio (LDR-RR) and the loan-to-value policy on mortgage loans and down payments on auto loans to "keep the economic growth momentum", again from Central Bank News, even as the central bank maintained current policy stance.

For global central banks to increasingly use crisis resolution measures indicates that they have been panicking!

 

Panicking on what? Here is a clue.

Based on CPB Netherlands Bureau for Economic Policy Analysis, global trade for March seems to have reversed and have increasingly shown signs of weakening. 

Based on preliminary data, the volume of world trade fell 0.1% in March from the previous month, following a revised 0.6% decline in February (initial estimate: -0.9%). Monthly import and export volumes showed considerable volatility at the region and country level, showing up in opposite movements in the initial estimates of global import and export volumes. A positive turnaround occurred in both import and export growth in advanced economies. Imports bounced back strongly in the United States. They contracted deeply in Japan however. In emerging economies, import growth accelerated, but export growth became heavily negative on account of a deep fall in emerging Asia’s exports.

And trade deterioration has likewise been manifested via Industrial activities

According to preliminary data, world industrial production was stagnant in March, following a revised 0.1% increase in February (initial estimate: 0.2%). Production continued to contract in advanced economies, but kept growing in emerging economies. Of the major advanced economic blocks, the group Other advanced economies was the only one where production expanded. Results in emerging economies were more mixed. Global production momentum was 0.3% in March (non-annualised), down from 0.6% in February. Momentum declined in both advanced and emerging economies, the decline being more pronounced in the latter group than in the former. The only increase in momentum occurred in Africa and Middle East, where it became less negative.

Well, for me this represents the periphery to the core phenomenon or the feedback loop of hissing global bubbles in progress.

 

Record stocks in the face of record imbalances at the precipice.