For the 13th straight week, US economic data disappointed (already downgraded) expectations, sending Citi’s US Macro Surprise Index to its weakest since August 2011 (crashing at a pace only beaten by the periods surrounding Lehman and the US ratings downgrade). The last time, Us economic data disappointed this much, Ben Bernanke immediately unleashed Operation Twist… but this time Janet Yellen is hiking rates and unwinding the balance sheet?


As Citi notes, breaking down this move, we can see that the recent data
disappointments have been driven by a steady fall in the underlying
data, rather than overly exuberant expectations. In other words, economists have been adjusting expectations downwards, but the data has been falling at a faster rate.  

And this week once again saw ‘hard’ data collapse ( for example: inflation, retail sales, housing, industrial production) as ‘surveys’ held steady…


For now, stocks don’t care…


And in case you are hoping for a sudden turnaround… any minute now, don’t bet on it – the lagged response to China’s collapsing credit impulse is just beginning to have its effect on the rest of the world…


Still not convinced, look at this week’s US trade data…YoY gains in import and export prices are also rolling over notably tracking the decline in China’s credit impulse.


And this is the environment in which Janet Yellen is hiking interest rates?

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