US Economy


US debt-ceiling pushed higher

From Bloomie: The U.S. House voted to temporarily suspend the nation’s borrowing limit, removing the debt ceiling for now as a tool for seeking deeper spending cuts. The measure, passed 285-144, lifts the government’s $16.4 trillion borrowing limit until May 19. It goes to the Senate, where Majority Leader Harry Reid said lawmakers will pass the measure unchanged and


In a bull market, be bullish

The title of this post is one of the most important statements in all of Jesse Livermore’s great book “Reminisences of a Stock Operator” but it is also one of the hardest market axioms to adhere to because often rhetoric gets in the way. Often economic reality gets in the way or often our personal biases get in


Could the Fed kill gold?

I had a brief off-line discussion with DFM this morning as I noted this line in his morning wrap. Watch out for non-farm payrolls tonight – a strong number could feed on the fears unearthed by the minutes and we might see a perverse reaction of equity weakness and dollar strength. It got me thinking


About that “fiscal cliff” deal

Obama signed the “fiscal cliff” resolution into law yesterday but I’ve noticed a bit of confusion about exactly what was, and wasn’t, resolved under the deal. In case you’ve got any confusion about it here’s a wrap from HSBC explaining where we’re at. Near-term disaster avoided; problems remain Washington policy makers avoid a fiscal cliff, but fail


FOMC delivers QE4

As Capt’ Glenn moans, others act. The FOMC will replace Operation Twist with another $45 billion in long bond purchases and will continue to do so until unemployment hits 6.5%. From the Statement: Information received since the Federal Open Market Committee met in October suggests that economic activity and employment have continued to expand at


The IEA’s happy US oil forecasts

Cross-posted from FTAlphaville. When the International Energy Agency’s big annual report came out last week there was a big top line story picked up nearly everywhere: that US oil production will overtake Saudi Arabia by about 2020. This is due to projected rises in oil being wrung from the sort of shale formations that have been the


Obama wins

By Leith van Onselen Although there are still some undecided states, US Democratic President Barack Obama looks to have been re-elected to a second four-year term, with most major news networks declaring him the winner over Republican candidate, Mitt Romney. A win in the all important swing state of Ohio has helped to push him


Understanding the US fiscal cliff

By Leith van Onselen With the US Presidential Election being decided today, the above video primer by the Wall Street Journal (WSJ) on the US “fiscal Cliff” is useful. The fiscal cliff is $US600 billion in tax increases and spending cuts that will automatically become law at the beginning of 2013 unless Congress acts. Under


FOMC Statement: ZIRP forever!

Until 2015 anyway. From last night’s FOMC Statement: Information received since the Federal Open Market Committee met in September suggests that economic activity has continued to expand at a moderate pace in recent months.  Growth in employment has been slow, and the unemployment rate remains elevated.  Household spending has advanced a bit more quickly, but


US growth set to rebound?

Courtesy of Sober Look. Deutsche Bank’s economists are turning bullish on the US output growth in 2013. They believe that improvements in US home construction (see discussion) will have a multiplier effect – even though construction by itself accounts for only 1% of the GDP. And they are seeing some of this multiplier effect in


Romney canes Obama on deficit

I’m no fan of Republican plans for the US deficit. Mitt Romney pretty much espoused the same supply-side drivel that got America into its current mess. But I have to say, in debating terms he still gave Barack Obama a good whipping. Watch the below video and see what you think.


FOMC Statement

Here it is, QE3! Information received since the Federal Open Market Committee met in August  suggests that economic activity has continued to expand at a moderate pace in  recent months.  Growth in employment has been slow, and the unemployment rate  remains elevated.  Household spending has continued to advance, but growth in  business fixed investment appears to


America sqeezes its youth

By Leith van Onselen The September issue of the Atlantic contains an interesting article lamenting how America’s Generation Y (“the Millennials”) are shunning  big ticket purchases, such as new cars and housing. The article raises a bunch of possible reasons for this phenomenon. But one reason, more than any other, is to blame in my


FOMC Minutes turn dovish

Find the full FOMC Minutes below with highlighted key passages. This looks a bit more promising for QE3 yet is still very vague. So far the Fed has done a nice job of giving us virtual QE3 via the jawbone. This does not yet look like a decisive shift to actual QE. To be honest,


US earnings results unmask macro reality

Cross posted with full permission from Sober Look: Analysts have been pointing out that earnings for the S&P500 companies continued to surprise to the upside for Q2 results. The top-line numbers however were not nearly as impressive. In fact this has been the lowest percentage of positive revenue surprises since at least 3Q09 (see figure 1 below). Nasdaq:


ZIRP carries significant costs for US households

Courtesy and full permission of SoberLook: Ben Bernanke (Reuters): “Interest rates are low because our economy is still in a fragile recovery,” Bernanke told a town hall meeting in Washington with educators. “Lower rates are intended to restore more normal levels of employment and growth.” That may be true, but on average a prolonged low


Nada from FOMC statment

Here it is in black and white: no milky wilkies: Information received since the Federal Open Market Committee met in June suggests that economic activity decelerated somewhat over the first half of this year. Growth in employment has been slow in recent months, and the unemployment rate remains elevated. Business fixed investment has continued to


Why are equities so bid?

Courtesy of Global Macro Monitor. U.S. retail sales fall for the three consecutive months.  Chairman Bernanke disappoints the easy money crowd during his Congressional testimony.   Weekly jobless claimscome in much higher than expected. Companies miss big on the top line yet their stocks move higher.   Sovereign yield curves in the  European periphery moving toward inversion.   Equities keep


Zombie Bernanke

I’m not sure why stocks drew comfort from Ben Bernanke overnight. I’ve attached his testimony to the bottom of this post and there is nothing in it to suggest an imminent shift to QE3. Although Bernanke expressed a clear intention to deliver more stimulus if jobs growth slows, there is not much yet that can


FOMC Minutes disappoint markets

Looks like I’ve been wrong on imminent QE3, though certainly I still see it coming in the medium term. Last night’s FOMC Minutes said the following: A few members expressed the view that further policy stimulus likely would be necessary to promote satisfactory growth in employment and to ensure that the inflation rate would be at


ECRI says US already in recession

The ECRI was out overnight claiming that the US economy is already in recession. I don’t agree at this point though obviously the danger is lurking as the globe slows. And, as I’ve said before, any easing in the housing recovery and it’ll be game over. Still, it’s not easy to dismiss the ECRI. Their


Shrinking the US housing shadow inventory

Courtesy of Sober Look. In spite of the fear mongering taking place in the media and in the blogosphere with regard to the US housing “shadow inventory”, considerable progress is being made in shrinking the oversupply of distressed properties around the country. CoreLogic: – As of April 2012, shadow inventory fell to 1.5 million units, or four-month’


The US triple dip panic arrives

Sigh. Here is the Citi economic surprise index courtesy of Sober Look: The Citi Economic Surprise Index continues its relentless slide. The US PMI (52.9 vs. 53.3 expected), the Philadelphia Fed Diffusion Index (-16.6 vs 0 expected), Empire Manufacturing, Industrial Production, etc. are all coming in below expectations. It would seem that economists would adjust their