Wednesday Commodity Round-Up

Last week, we looked at copper. This week, I'll be looking at gold to see what the pace of the recent sell-off is doing to the market.On the longer chart (1-year) notice that uptrends are still intact, despite the current sell-off.On the shorter chart, prices fell to the 50 day EMA, rose and fell back and are now meandering their way higher. The...

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Indian Growth Slows

From the WSJ:Gross domestic product expanded 7.8% on-year as growth in mining and manufacturing output weakened, the government said Tuesday. The reading was below the median expectation for 8.2% expansion, according to a poll of 19 economists. The economy had expanded 8.3% in the October-December quarter. For the full fiscal year ended March 31 the economy grew a provisional 8.5%, in line with the government's projection of 8.6%. That was well ahead of the 8.0% growth in the previous fiscal year, when the economy was shrugging off the effects...

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The "Growth Problem"

From the WSJ:The world's largest economy may be facing a growth problem. After a disappointing first quarter, economists largely predicted the U.S. recovery would ramp back up as short-term disruptions such as higher gas prices, bad weather and supply problems in Japan subsided. But there's little indication that's happening. Manufacturing is cooling, the housing market is struggling and consumers are keeping a close eye on spending, meaning the U.S. economy might be on a slower path to full health than expected. "It's very hard to generate...

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Treasury Tuesdays

Last week I wrote the following about the Treasury market:The Treasury market is benefiting from concern about the stock market and the EU situation. Interestingly enough, there does not appear to be any concern on the part of bond traders regarding the budget situation in Washington. However, as I mentioned last week, remember that on the other...

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The Greek Tragedy - Update

The FT reports that the EU is considering another bailout of the embattled Greek economy, which could include outside intervention in the Greek economy (eg in tax collection and the privatisation of state assets).Allegedly, around Euro30BN of the new bailout could be raised from privatisation and a change in repayment terms for private debtholders.All very well, in theory. However, those putting together the rescue package all need to agree on the terms and conditions (not that likely) and the Greek people need to be prepared to submit to further...

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Equity Week in Review and Preview of the Upcoming Week/Month

Last week I wrote the following about the markets:In short, the technicals of the market are now signaling more caution signs. Important, long-term trend lines have either been broached or are currently very close to being broken. Underlying technicals (A/D, CMF, MACD) are weakening. This mirrors the issues with the fundamental economy right...

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Weekly Indicators: Purchase mortgage application silver lining edition

A quick note from Bonddad: with the market closed on Monday, we'll be back on Tuesday.- by New Deal democratThis was a sparse week for new data, but what data there was finally put the fear of double-dip recession on people's minds. This fear is something I predicted back in January would come to pass about now, due to Oil and austerian idiocy. As it turned out, there was a big assist from Japan as well.The rear view mirror showed first quarter GDP unchanged at +1.8%. In monthly numbers, new home sales were up, but still bouncing along the bottom...

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My Economic Concerns

There are three areas of the economy that are causing me concern.Consider the following charts of the 4-week moving average of initial unemployment claimsThe above chart shows that, overall, the trend is still lower and that claims have made decent headway from their highs. However, also note that we're still not below the 400,000 level in any meaningful...

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The Greek Tragedy - The Return of The Drachma?

Jean-Claude Juncker, the chairman of European Finance Ministers, has stated that Greece may not receive further IMF funding because it is unlikely to be able to guarantee its funding over the next 12 months.He is quoted in the Telegraph:"The IMF can only be active when there is a refinancing guarantee for 12 months."Needless to say, this statement caused a fall in the Euro and flight from Greek debt.Greece realises that it is staring into a financial and political abyss. Maria Damanaki, European Commission's Greek representative, is quoted by AFP:"We...

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Friday Dollar Analysis

Last week, I wrote the following about the dollar:Right now, we're in the middle of a technical bounce higher so far has not disrupted the overall trend. A strong move above the 50 day EMA over the next week or so will change that. In addition, if we see important technical crossings (the 10 or 20 moving over the 50) a re-evaluation will be necessary...

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Indian Prices Continue to Rise

From the WSJ:Food inflation in India accelerated in the week ended May 14, diminishing hopes of any near-term relief for consumers from red-hot prices and mounting pressure on the central bank to tighten monetary policy more. The wholesale price index for food articles rose 8.55% from a year earlier, quicker than the 7.47% rise in the week to May 7, according to data issued Thursday by the Ministry of Commerce and Industry. The index was up 0.6% to 186.7 week-on-week. Bond prices fell slightly, with the 8.08% paper maturing in 2022 down ...

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This is one weird slowdown

- by New Deal democratYesterday, Macroeconomic Advisors cut their 2Q GDP forecast, which caused Professor Brad Delong to say "IT'S TIME TO PANIC !!", which in turned caused Professor Paul Krugman to reiterate his "Third Depression Watch," which in turn has caused Doomers everywhere to cream themselves in barely concealed delight.So I was all set to do an "I told you so," citing my January 11 forecast of "good growth" in the first quarter, followed by:... in March or April, a debt ceiling increase will have to be passed. This Congress gives every...

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Greg Mankiw's Interesting Idea

Which is for the Fed to consider using the cost of labor as the preferred measure to determine Fed interest rate action.This paper assumes that a central bank commits itself to maintaining an inflation target and then asks what measure of the inflation rate the central bank should use if it wants to maximize economic stability. The paper first formalizes...

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Mr. Luskin, PLEASE GO GALT

I detest Donald Luskin. He is intellectually lazy and shallow; his commentary is nothing more than oft repeated catch-phrases. Most importantly, if someone offered him the same amount of money to say the exact opposite thing I'm sure he would.His new book is called "I Am John Galt." For those of you who are unfamiliar with what this means, here's a bit of background:John Galt is a fictional character in Ayn Rand's novel Atlas Shrugged (1957). Although he does not appear in person until the last third of the novel, he is the subject of its...

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The Ongoing Farce of The FSA Report About RBS

The ongoing farce of the FSA's report about the collapse of RBS continues.The Treasury Select Committee has now published the terms of reference for the independent review of the FSA's report (which is still yet to be published). The review has been called for as MPs and others are heartily fed up with the FSA's handling of the matter.Sir David Walker, a banker, and Bill Knight, a lawyer, will conduct the review which will have two aims:- Assess whether the unpublished FSA report is "a fair and balanced summary" of the evidence gathered by the...

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Thursday Oil Market Analysis

Last week, I wrote the following about the oil market:So, a move below 96 is a good shorting opportunity. I would wait to go long at levels above 104; there is simply too much traffic below that level to get through to go long before that point.Nothing has changed in my analysis this week:Prices are using the 200 day EMA for technical support. ...

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Richmond Fed Contracts

From the Richmond Fed:Manufacturing activity in the central Atlantic region paused in May, after expanding during the previous seven months, according to the Richmond Fed's latest survey. The index of overall activity was pushed into negative territory by weak readings for shipments and new orders, while employment growth held steady. Other indicators suggested additional softness. District contacts reported that capacity utilization turned negative and backlogs fell further, while delivery times grew more slowly. In addition, manufacturers...

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Will Home Prices Fall Any Further?

There's been a great debate/discussion in the economic blogsphere between David Altig at Marcoblog, Barry Ritholtz and Calculated Risk about housing prices. The topic is simple: how much farther (if anywhere) do home prices have to fall? First, let me post the various graphs from the previously linked posts to show on what everyone is basing their...

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Anyone But Brown

The BRICS group of the world's major emerging economies (Brazil, Russia, India, China and South Africa) are peeved that the search for a new head of the IMF, following the demise of DSK, is purely Euro focused.BRICS claim, with some justification, that only having a European leading the fund somewhat undermines its "international" credentials and legitimacy.I concur, if a suitable non European candidate can be found.However, a few counterpoints need to be raised:1 The World Bank is always headed by an American. As long as that is the case, the...

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Wednesday Commodity Round-Up

Today, I again want to look at copper, but largely because of an article from yesterday's WSJ:Dr. Copper is feeling under the weather. But will his ailment prove fatal? The charts don't look good for the metal widely regarded as having a Ph.D. in economic forecasting. Monday's 3.1% fall in the Comex front-month copper contract, to under $4 a pound,...

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Bank loans finally make a bottom

- by New Deal democratOne of the refrains from the last few years has been that "Banks need to write off hundreds of billions of dollars of bad loans so that their balance sheets can be repaired and they can afford to loan money again" and until they started to increase loans, there could be no recovery.Responses that banks loans always turned after...

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The Pied Piper of Doom is still a math-challenged buffoon

- by New Deal democratThe Pied Piper of Doom claims he doesn't make "predictions," so to be fair, the following statement he makes this morning isn't a "prediction." It's a prediction:[T]he fact of the matter is, barring some miraculous act of God in coming months, around half of all U.S. homeowners with mortgages (or, approximately 35% of ALL American homeowners—that’s somewhere in the neighborhood of 60-70+ million present and former members of the U.S. middle class) will be underwater (owing more on their homes than they’re worth) by the end...

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High Commodity Prices and the Slowdown

I believe one of the reasons for the current slowdown is high commodity prices. And while oil an gas get all the attention, I believe that food prices share a fair amount of the blame for the latest slowdown. As I noted a little over a week ago, the latest retail sales figures show that food spending is still increasing at the expense of other retail...

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Chinese Whispers

It seems that it is not just Portugal, Ireland, Greece and Spain (aka "PIGS") that are under the gimlet eyes of the ratings agencies.The UK has now also come under attack from the ratings agencies. Bloomberg reports that Dagong Global Credit Rating Co., one of China's official ratings firms, has cut its credit rating for the UK by one notch to A+.Dagong cite the UK's deteriorating ability to repay debt, much the same reason used by other agencies when they downgraded the "PIGS".However, we are not alone, the firm also reduced its rating on the...

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Treasury Tuesdays

Last week I wrote the following about the Treasury market:My analysis of the Treasury market has not changed. The market is moving higher, but keep the stops tight. Also remember that yields are dropping, and we're getting near levels when yields shouldn't be moving much lower without a change in the fundamentals. I'd still use 2.75 on the 10...

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The Japan Effect

The huge drop down is obviously the earthquake. Since the, the market has been trading sideways. We have a triangle top forming, but the lower line of the consolidation pattern is still emerging -- and could go below support at the 9.8 area as well.The point of this chart is to remind us that Japan is still digging out from an earthquake. This process...

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Will There Be A Second Half Rebound?

Both NDD and I see a slowdown occurring right now. The question for both of us now is, will the economy snap back? Consider this articles reasoning as a possible answer to that question:Stocks, commodities and other risky investments have sold off in recent weeks amid worries about slowing global economic growth. But the relatively tame downturn in stocks is evidence that many investors expect the rally to resume in the coming months. These investors don't expect the market to match its powerful rally in the first four months of the year,...

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State Revenues continue to surprise positively - and it's still not enough

- by New Deal democratMost state budgetary years run from June 30 to June 30, so we are rapidly approaching the moment of truth where we find out how badly states are harmed by the ending of federal assistance. Two months ago when I last looked at this issue, we only had data through the end of last year. It appeared that state budgetary problems, while bad, would not be quite as bad as originally feared. Now we have the final data through last December, preliminary data for the first quarter of this year, and at least some raw information...

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The Greek Tragedy - No Surrender

The Telegraph reports that the Greek Prime Minister, George Papandreou, has ruled out debt restructuring in favour of more domestic austerity in order to "resolve" the Greek financial crisis.Needless to say the ECB fully support this approach.All very well, in theory maybe. However, the reality is that if the austerity package is passed by the government the people of Greece will be asked to endure more financial pain not to save their economy but to save the Euro experiment.This is something that they are not prepared to endure, and is not a cause...

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Equity Week in Review and Preview of the Upcoming Week/Month

Last week, I wrote the following about the market:In short, none of the other markets are giving us any hope for an upside break-out. I would treat the equity markets as currently consolidating we they wait to see what the overall economic direction is.This week I've grown far more cautious and concerned about the market. First, defensive sectors...

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Weekly Indicators: the slowdown confirmed edition

- by New deal democratThis past week brought a spate of poor numbers, highlighted by the decline of -0.3 in the April LEI, only the second decline in 2 years. Housing permits and starts declined, as did existing home sales. Industrial production and capacity utilization also were flat or declined. The Empire State and Philly regional manufacturing...

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