70 Words
TOO BIG TO FAIL
Neil Barofsky, the Special IG for TARP put it well in his latest report: “perhaps TARP’s most significant legacy, the moral hazard and potentially disastrous consequences associated with the continued existence of financial institutions that are ‘too big to fail.’ While he’s right we may be on to “too big to save”. When banks get…
Read MoreISM REPORTS GROWTH!
The monthly Institute of Supply Management Report on Business (ISM) is a survey based index of more than 300 manufacturing firms that tracks 11 dimensions of activity across 18 Industries. Readings below 50 indicate recession. Value above 50 indicate growth. The index ranges from 0 to 100. The Jan ISM rose to 60.8 (it’s highest…
Read MoreMORE ON Q4 GDP
Q3 saw a boost to GDP due to inventories so the Q4 reversal must be seen in that light. Monday’s personal income & spending report gave details on how ’10 ended. Real personal consumer expenditure (PCE) spending rose 0.4% MoM in Dec but real personal disposable income was up only up 0.1%. How? Because consumers…
Read MoreCONSUMPTION DRIVEN GDP
While 3.2% GDP growth in Q4 is excellent it was driven entirely by consumption which makes up 70% of GDP. The other 30% of the economy fared poorly in Q4 essentially stagnating (a puny 0.2% annualized growth rate). So while the consumer enjoyed its fastest growth rate since Q1 ‘06, the rest of the economy…
Read MoreGOOD NEWS
New home sales spiked 17.5% MoM in Dec, eclipsing the 3.5% median expectation. But, there’s always a but, the gain was led by a 70% jump in new home sales in the West. Every other region was flat. So all it took was a pop from 4,000 sales to (hold your breath) 7,000 sales in…
Read MoreDRY BULK
The Baltic Dry Index measures the cost for shipping dry bulk. This price can fluctuate wildly because supply of large cargo vessels is tight & inelastic. It takes 2 years to build a new ship & excess ships can’t be mothballed like planes. Since dry bulk consists of materials that function as raw materials for…
Read MoreLOSING LONDON
On the Data Front: December consumer spending surprised to the high side at 0.6% (consensus was 0.3%) and oil is down from its lofty heights on talk of increased supply coming out of Riyadh. Gold is also down based on the illusion that Germany will bail out the whole Club Med area. However, the big…
Read MoreCONSUMER CONFIDENCE?
26 I think consumers felt better as ‘11 got underway. According to the latest Conference Board survey the index came in better than expected in Jan. rising to 60.6 from 54 in Dec. But, the Univ. of MI Consumer Confidence survey showed a near-two point dip in Jan. To put the CB’s Jan reading of…
Read MoreBond Market Message
Bond markets are sending a strong message! That short term interest rates are higher in Canada than here is testament to the relative strength of their economy. The fact that their long rates are lower than ours suggests their long term fiscal and inflation outlook is also better than ours; they have no yawning budget…
Read MoreGOOD NEWS jobless
Initial jobless claims for the week of 1/15 unexpectedly improved dipping to 404k from the downwardly revised 441k the week prior. This should translate into a better payrolls report when the data are released on 2/4. Also, the architectural billings index jumped 3.2 points in December to a 3-year high of 54.2. This index leads…
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