Submitted by Taps Coogan on the 10th of February 2020 to The Sounding Line.
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Evercore ISI Chairman Ed Hyman, one of the fathers of modern market research and perennially ranked as one of the most respected institutional economic advisors in the world, recently spoke with CNBC about the US economy and the effects that the Coronavirus is having on the Chinese economy.
Some excerpts from Ed Hyman:
“We thought (the US jobs report) was good, not great. So, the unemployment rate ticked up… average hourly earnings, which I keep thinking are really going to take off, they didn’t really take off. They were only up 3.1%… It’s sort of a Goldilocks report… The (US) economy is in a really good position when you take all the other indicators that we have like unemployment claims…”
“Our team has GDP growth (in China) at zero in the first quarter… and we survey about 21 companies in China and that survey dropped about two points to just 41. So, it was as high as 70 in years past. So, China is really slowing and that worries people for sure. But, I think there is still a lot of momentum here and I would like to point out that there is a lot of liquidity in the system. Money is everywhere…”
“I don’t think (the China slowdown) is going to have that much of an impact on us. I know that’s hard to believe but we are so solid… the data here in the states, not just the employment data which is for January. We survey companies every week. Into February that (data) is still strong… We survey temp and permanent employment agencies and they say business is still very solid. Consumer confidence is still very solid here. So far, the virus is more over there… If you look back at 2003, when they had the SARS, they US economy actually accelerated during the SARS (outbreak). Lot of differences… (but) the economy was very weak in 2003. Today the economy is very strong. You also have a huge amount of monetary stimulus in the system. I am shocked that you have no inflation…”
While the Mr. Hyman’s glowing assessment of the domestic US economy may be a bit rose-colored, as we have noted before, the true determinant of the market’s longer term directionality is likely to be what the Fed chooses to do with its balance sheet, not the Coronavirus, and not any slowdown in China. As the last decade has shown, financial markets can ignore pretty much anything when they are being flooded with hundreds of billions of dollars in freshly printed money and trillion dollar federal deficits.
There is more to the interview, so enjoy it above.
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