Posts Tagged ‘Elliot eisenberg’
Less is Less
One reason the economy has been growing slowly is due to large productivity increases. GDP is 3% higher than before the bust, yet employment is down by 1.6%. Similarly, industrial production is 2% shy of its all-time high, yet capacity utilization is 4% below what it was on 12/07. As a result, spending on plant…
Read MoreHome Building Continues
Despite Case-Shiller showing a 12.1% rise in home prices for the year ending 4/13, it’s probably the end of big price increases. The recent jump in mortgage rates (which reduces demand) and the first sustained month-over-month increase in housing inventories (which increases supply) will moderate future price rises. But probably not new residential construction as…
Read MoreEmerging Volatility
As the Fed flooded the US economy with cash, some of it ended up in emerging markets where risks and returns are higher than here. With US rates now rising, financial markets in those countries are being badly hit. Simultaneously and unrelated to the exodus of hot-money described above, some of these same economies like…
Read MoreBang Up Banks
While rising long-term interest rates will hurt banks by reducing the value of their bond portfolios, that will be a one-time hit and banks are exceptionally well capitalized and will easily withstand the losses. Conversely, a widening spread between short-term rates and long-term rates will boost bank profits on new loans as banks generally borrow…
Read MoreVicious Volatility
On days like today when stocks, bonds, precious metals, commodities and emerging markets all fall, portfolio diversification, doesn’t help. Remember that. Separately, financial markets have wiped out all of May and June’s gains not because QE3 will end, but because participants are unconvinced that the economy can withstand higher interest rates without slowing. And that…
Read MoreFractious Fed
With the Fed (and everyone else) forecasting improved economic conditions in the second half of ’13, it’s not surprising that the Fed again reiterated that it MAY start tapering QE3 later this year. Interestingly, the Fed has been consistently over-optimistic when it comes to forecasting. Thus, I still think tapering commences no earlier than November.…
Read MoreCars in Neutral
Since hitting a low of 9 million in annualized auto sales in 2/09, strong demand has propelled new-car sales to 15.3 million as of 5/13. However, sales have flat-lined of late and are barely higher than in 1/13. This is in part why manufacturing growth is weakening. Yet automakers are cranking out more cars than…
Read MorePump it Up
Despite a US Energy Information Administration report that global oil reserves are 10% higher than in 2011, due to the discovery of 345 billion barrels of shale oil, don’t expect lower pump prices. This is because unlike Alaskan oil, shale oil comes from hundreds of small wells, with high production costs. If prices fall, pumping…
Read MoreDarling Deflation!
The Friday File: With fear of inflation finally receding, the new concern is deflation. While high unemployment keeps wage growth in check, the price for sage business advice has absolutely tanked. Last year, lunch with Warren Buffet was auctioned off for a record $3.5 million; this year, just $1,000,100, a stunning 71.4% decline! At that…
Read MoreWorkless Policy
With the Obamacare requirement that most employers offer affordable health insurance to their employees soon to become law, expect total employment to rise and hours worked/worker to fall. This is because employers will force their employees, where possible, to work less than 30 hours/week. But employers will have to compensate by hiring more workers to…
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