I'm so confused

Readers of a certain vintage may recall that in the early days of John Travolta's career, even before he strutted along the halls of Rydell High, he trod the floors of the rather less salubrious James Buchanan High School as Vinnie Barbarino in Welcome Back, Kotter.  Barbarino was not the sharpest knife in the drawer, and occasionally when confronted with information overload would register his confusion like this:



Macro Man knows how he feels these days, and not just because the market is tricky.  For example, this past Saturday evening he received a text message from a friend (and MM reader) that Australia was poised on the verge of winning the Eurovision Song Contest.  Although they were beaten in the end by Ukraine, perceptive readers may have observed the anomaly in the previous sentence.  Macro Man loves maps, and owns a number of atlases and vintage maps of countries in which he's resided.  Upon consulting a number of them, he confirmed that not a single one depicted Australia in Europe, or even in the same hemisphere as Europe.  No wonder the EU has so many problems if they can't figure out which countries are in their continent or not!  (As an aside, count this one as a fillip for the Brexiteers- no need to remain in Europe to be part of the Eurovision and receive their annual dose of "null points".)

There are more practical sources of confusion as well.  Although Friday's retail sales data was solid, the underlying tone of the data remains tepid at best.  Nevertheless, it did come in stark contrast to recent dire warnings from retailers.   Is Amazon really cleaning their clocks that badly? If so, might we expect the P/E to drop down to double digits any time soon?

On the policymaker front, Fed staffers are now forecasting 2.8% growth for Q2, nicely above trend.

Except different Fed staffers are forecasting Q2 growth of just 1.2%, fairly disappointing and well below trend.

Is it any wonder FOMC members cannot come up with a coherent message of staffers' GDP forecasts (or at least tracking estimates) vary so widely?

There's been little cause for confusion about recent Chinese data- despite hopes of a continued rebound, it's been poor.   This weekend's retail sales figures, for example, were the lowest for a non new-year distorted month since the tail end of the SARS outbreak more than a dozen years ago.

One does wonder, however, if we're about to see an end to the confusion over what China is doing with the exchange rate.   Macro Man has written about this ad nauseum (probably literally, for some people), but it really is remarkable how few people have understood what China has done with its exchange rate.  And to be fair to the Chinese, they've done a masterful job, engineering a positive correlation between USD/CNH and the CNY CFETS basket.

However, they may have reached the limit of how far they can push this relationship, and it's perhaps notable that over the last couple of weeks weakness in the basket has been met with strength, not weakness, in USD/CNH.  With the dollar seemingly determined to strengthen again, the time may have come to dust off the "China worry" playbook yet again.

(As for real confusion, Macro Man still doesn't understand how West Ham didn't beat Stoke yesterday...)