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Monthly Archives: August 2010

US GDP revised lower for 2Q 2010 (we called it)

I have been warning that the initial BEA estimate of 2Q GDP was going to be revised down considerably from the initial +2.4% growth rate to the +1.0% range by the third estimate on September 30th. Friday’s revised 2Q GDP estimate was posted as +1.6% -perfectly midway between what they said last month, and where we’re saying we’ll end up in next month’s 3rd […] Read the rest of this entry »

Depreciate the dollar to save us

I have written about depreciating the dollar before. Here is some recent supporting and related news from our friends in Europe and Japan…. In Europe, something odd is happening. The recently-weaker Euro currency is allowing Germany to experience a mini economic boom. Last week, Germany announced its fastest quarter of economic growth since 1990. I recall writing in a client newsletter about the potential […] Read the rest of this entry »

Housing + (un)Employment update

Previous articles have connected the dots between housing and employment. There’s a feeedback loop whereby as employment worsens, it makes housing  weaker, which then reduces consumer equity and ability to borrow & spend. Rinse, repeat….   Thursday saw the weekly initial claims unemployment report, per usual. 476,000 new claims were expected. 500,000 was reported.  Economic recoveries usually see initial unemployment claims of half this number. […] Read the rest of this entry »

The Fed can’t decide whether we’re in an ordinary recovery or a depression

Mixed signals from the Fed is causing bond and stock markets to interpret our economic prospects in a wildly different way. The Fed is responsible for setting short term interest rates. Normally, that’s the main tool the Fed uses for having the economy speed up or slow down. But what do you do if short term interest rates have been lowered pretty much to zero, […] Read the rest of this entry »

Employment + Housing = trouble

The top story this week is the July employment report from the Bureau of Labor Statistics -the BLS.  Wall St expected 100,000 new private payroll jobs created but this would be offset by losses in jobs from census workers, and from state, local, and federal workers of around 165,000. So on the whole, the market was expecting 65000 jobs lost.  What we got was: 71,000 […] Read the rest of this entry »

Bond market and stock market try to understand the economy

The Fed is apparently considering cranking up the printing press again.. Next week, if the Fed announces they’re planning to begin quantitative easing again via their buying Treasuries, that will demonstrate 2 things: Thing 1:  that you can sleep better knowing the Fed will spend whatever it takes to stop deflation. (tongue firmly in cheek) Thing 2: that the economy is so weak and […] Read the rest of this entry »

US Stock Market Slide …any minute now…

The US stock market hit the highest point that it is going to hit for the 2010 year – in April. A combination of federal stimulus that made for larger income tax refunds, plus cash for appliance clunkers, plus the housing tax credit —all combined to give the consumer a short term sugar rush (the April stock market peak). Those of you with children know what happens after a sugar rush: […] Read the rest of this entry »

The US economy is now in recession

What do you think it means when a Federal Reserve Governor (the St Louis Fed Governor – this week) publishes a statement indicating the Fed should begin buying US Treasuries to help stop deflation?   It’s a sign that the Fed sees a weakening economy, that deflation is here, and that they’re out of bullets. In 2009, when the Fed would announce that interest rate would stay low, the […] Read the rest of this entry »