GDP Contributions

The above chart simply shows last quarter GDP growth rate and the component parts of the GDP equation that contributed to growth.  PCEs were strong as was gross private domestic investment.  Also consider that inventory adjustments subtracted a full percentage point from the above total; had that number printed a "0" we would have seen growth...

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Chicago Fed President Offers Intriguing Policy Idea

From the Chicago FedI believe that we can substantially ease the public’s concern that monetary policy will become restrictive in the near to medium term and, hence, reduce the restraint in expanding economic activity. This can be done by clearly spelling out in our policy statements the conditionality of our dual mandate responsibilities. What should such a statement look like? I think we should consider committing to keep short-term rates at zero until either the unemployment rate goes below 7 percent or the outlook for inflation over...

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Bonddad Linkfest

The Fed may hibernate until SpringOECD forecasts weak growth until 2013EU inflation holds at 3-year highJapan intervenes to halt yen riseFed panel is divided on directionSlow recovery feels like recession Sector rotation shows broad market strengthMarket is currently short-term overboughtWeaponized Keynesians are backRecovery Measu...

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China Says "Not Yet"

Despite European hopes and spin that the Chinese will bailout Europe, by funding a large part of the EFSF, China is not rushing to write Europe a cheque.Klaus Regling, went to Beijing to discuss terms. However, his poorly planned, uninvited visit and the comments of Nicolas Sarkozy about Beijing having a "major role to play" in proposals to expand the European Financial Stability Facility (EFSF) only seem to have irritated the Chinese.China, quite rightly, wants more clarity on terms and conditions etc before it considers investing anything.The...

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Morning Market

This week I wanted to start with copper.  Over the last month it has formed a double bottom on strong volume and has now reversed from that into a counter-rally.  Prices are now above the 50 day EMA and have ample space to run.  This is a very encouraging chart, especially considering copper's overall economic importance.On the 5-minute...

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Weekly indicators: gasoline usage plummets edition

- by New Deal democratIn the rear view mirror, 3Q GDP increased 2.5%. The primary difference from the last two poor quarters was that government consumption did not actually contract. In monthly reports, September's durable goods orders decreased but was considerably better than expected, as were "core capital goods" which have now, like real GDP, exceeded their pre-recession peak. Personal income just barely rose, but spending was up a strong 0.6%. New home sales also exceeded expectations, and the Case-Shiller report once again remained...

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The Republican Keynesians

This is incredibly funny.  From the party that says government doesn't create jobs and that government spending doesn't help the economy: It took months of fighting — the threat of a government shutdown, the graver threat of a default on the national debt, and now a new threat of major, automatic cuts to Medicare and defense programs — but Congress’ deficit obsession has finally exposed the rarest of all species: Republican Keynesians.With just a under a month until the deficit Super Committee must recommend policies that cut the...

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So Much for the Double Dip Talk

From the BEA:Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 2.5 percent in the third quarter of 2011 (that is, from the second quarter to the third quarter) according to the "advance" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 1.3 percent.Yesterday, SilverOz (not NDD, sorry) took a preliminary look at the numbers and concludedI just wanted to take a quick look at Q3 2011 GDP, which...

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Morning Market

Over the last few weeks, I've been hesitant about the risk on trade.  No more.  Yesterday we say a strong break-out in equities in conjunction with a sell-off in the Treasury markets -- where we finally saw some volume increases on the sell-off.  The reasons for this rally were: the EU coming to some type of agreement and the US printing...

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Where's The Money Hunny?

Despite all the hoopla exuded by the Eurozone "leaders" over their "plan" to save the Euro, there are quite a few nagging questions over the details of that "plan".Not least, the elephant in the room, where is the money coming from?Klaus Regling, the head of the eurozone bail-out fund, has popped over to China today to try to twist some arms there.Good...

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Bonddad Linkfest

Indian food inflation increasesSouth Korean growth slows, but still decentTurkey ends its low interest rate policyState tax revenue jumps 10.8%Business investment increases 2.4%Colleges prices increaseInequality and mobilityGloom holds back US economyFloods in Thailand cause drop in rice cropIncome inequality increases in...

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The Beige Book, Part V; Real Estate

From the Beige Book:All twelve Districts reported that real estate and construction activity was little changed on balance from the prior report. Residential construction remained at low levels, particularly for single-family homes. That said, Philadelphia, Cleveland, and Minneapolis noted small increases in single-family construction, and construction...

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Europe Agrees to Greek Debt Deal

From the NY TimesEuropean leaders, in a significant step toward resolving the euro zone financial crisis, early Thursday morning obtained an agreement from banks to take a 50 percent loss on the face value of their Greek debt...... The leaders agreed on Wednesday on a plan to force the Continent’s banks to raise new capital to insulate them from potential sovereign debt defaults. But there was little detail on how the Europeans would enlarge their bailout fund to achieve their goal of $1.4 trillion to better protect Italy and Spain. ...

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A Quick Look at Q3 GDP

I just wanted to take a quick look at Q3 2011 GDP, which I think is actually a bit better (the internals) than what the headline shows. The advance headline of up 2.5% was in line with expectations and is generally speaking a less than stellar number, but the breakdown may be a bit more promising.First, private inventories subtracted a full 1.08 percent from the total (ie with inventory levels unchanged, we would have seen a 3.5% print on headline GDP). This decline in inventories is unlikely to persist (provided we stay out of recession) into...

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The Eurozone Agreement

After much pantomime and farce, there has been agreement of sorts on a way forward to try to save the Eurozone from collapse.The key points are: - Banks will take a 50% "haircut" on Greek debt- The bailout fund will be leveraged to Euro1Trillion- Banks have 6 months to raise Euro106BNSo, will this work?It has bought some time. However, the Eurozone (in its current) form will eventually implode because of its inherent internal contradictions (eg you cannot have one monetary policy when there is such a disparity of growth between the member states).That...

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Morning Market

The SPYs rally continues.  Notice there are now two price clusters (see arrows) where -- after rising -- prices have consolidated their gains using the 110 day EMA as technical support.  The EMA picture continues to be positive and the last two days have seen a small bump in volume.  UPside resistance is a it below 126 while support...

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The Beige Book , Part IV; Lending

From the Beige Book:Financial activity was reported to have weakened some since the last report. Dallas noted that the improvement in financial conditions had stalled, and Chicago indicated a further tightening of credit conditions, particularly for financial firms. In addition, New York reported noticeably weaker activity in the securities industry....

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Greedy Bastards!

MEPs have just voted for a 5.2% increase in the 2012 EU budg...

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The collapse of consumer confidence continues

- by New Deal democratYesterday the Conference Board reported the lowest level of consumer confidence since March 2009.This mirrors what I have been seeing in the daily Gallup consumer sentiment poll. Here is that poll since January 2008 (confidence is the dark green line):Note the sharp loss of confidence at the time of the autumn 2008 financial collapse,...

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Draft Statement of EU Heads of State

Pathetic! Source DRAFT STATEMENT OF EU HEADS OF STATE OR GOVERNMENTAt today's meeting, in line with paragraph 7 of the European Council conclusions of23 October concerning relations between the EU and the Euro area, the members of the European Council were informed by President Van Rompuy about the state of preparations of the Euro Summit that will take place later in the day.They welcomed the consensus proposal on measures to restore confidence in the banking sector reached by the Council (ECOFIN) on 22 October. On this basis, they agreed...

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Another Day, Another Crisis in The Eurozone

Another day of rumour, tension and dashed hopes in the ongoing farce that is the Eurozone crisis.Today Eurozone "leaders" are meeting in Brussels, to allegedly hammer out a rescue package for Greece and the beleaguered Eurozone.Tensions are running high, not least because it is apparent that only in the last week have the "leaders" bothered to look closely at the figures required to save the Eurozone. Seemingly they got quite a shock.In Greece the Finance Minister, Evangelos Venizelos, has finally got around to presenting Greek bankers with...

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Morning Market

Yesterday, we say the equity markets retreat a bit.  The 5-minute charts shows prices retreating to the technically important level of 123, while the daily chart shows prices pulling back to just below the 200 day EMA.  This is a standard sell-off situation and should not be interpreted as a break in the upward trend yet.  Instead, we...

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Bonddad Linkfest

India hikes rates 25 BPEurope starts to settle on a planChina acknowledges need for more corn (and wheat) importsMore jobs for machines, not peopleEconomists predict scant growth in 2011Can aging population explain income stagnation?Schools fear worst budget cuts aheadAgribusiness defies slowdownBrazil cuts rates as economy slowsSkills shortage threatens manufactur...

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Regulatory Uncertainty Isn't Causing High Unemployment

From the Treasury Department:If regulation was a significant drag on business today, we would expect to see profits constrained after recent regulatory reforms were passed into law.  However, corporate profits as a share of gross domestic income have about recovered their pre-recession peak, and earnings per share in industries most affected by recent regulatory changes, such as energy and health care, have among the highest earnings per share of those in the S&P 500.  This growth is inconsistent with a corporate sector held...

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The Beige Book, Pt. II; Services

From the Beige Book:Reports regarding nonfinancial services were mixed in September. Richmond noted slower overall activity, and St. Louis cited reduced demand for telecommunications, media, and education services. Demand for accounting and legal services was reported to have been unchanged in both Dallas and San Francisco. On the positive side,...

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Morning Market

The above 10-day, 5 minute chart shows prices consolidating between 119 and 123; followed by their break-out on Friday and their continued move higher yesterday.  Also note how the range high of 123 became support for the break-out.While prices have continued their break-out, I am still concerned about the lack of volume.  While no rally...

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A Continent of SPIVs - Kicking The Can Down The Road

Sir Mervyn King, governor of the Bank of England, is appearing before the Treasury Select Committee (TSC) today.He has told them that he has little faith in whatever "plan" is agreed by the Eurozone "leaders" (aka "Clown College"). In his view, whatever is decided at tomorrow's EU summit will not solve the region's underlying problems; it will only buy one or two years of breathing space.Quite! In the unlikely event that Clown College can come up with a plan to "kick the can down the road" for a year or so, how will this be financed?It...

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Repairing Infrastructure Can Help to Repair the Economy

From the Washington Post:This sort of a program is in many ways vastly superior to the spending increases and tax cuts we saw in the American Recovery and Reinvestment Act of 2009. The limitation of most of the spending increases and tax cuts in the last rescue plan was that they were merely temporary fixes; they had no long-lasting effects. As long as the money flowed, they were stimulative; once the spending stopped, the stimulus stopped as well.We still enjoy the benefits of the interstate highway system, which allows goods to be moved...

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The Beige Book, Part II: Manufacturing

From the Beige Book:Contacts indicated that manufacturing and transportation activity increased since the last report in most Districts. A large number of Districts reported higher production of autos and other transportation-related equipment. Cleveland, Atlanta, and Chicago noted increases in auto production, and Boston, Richmond, Chicago, and...

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