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Monthly Archives: April 2011

1Q 2011 GDP

The 1Q GDP advance estimate was released this week. The BEA’s first estimate is the economy expanded at a 1.8% annualized pace in the first quarter. As we know, there are 2 more revisions to come (and potentially a major unscheduled revision several years from now when no one cares / no economic damage can be done).  I initially forecast a 4.1% 1Q GDP […] Read the rest of this entry »

Weekly Short Economic Stories

In this week’s historic Fed press conference, Mr Bernanke was asked a question that is akin to — if QE is so beneficial, why not do more ? His response indicated he understands that with each successive QE launch, we see less benefit and increased inflation. To wit… “The trade-offs are getting less attractive at this point. Inflation has gotten higher. It is not clear that we can […] Read the rest of this entry »

Fed QE2 Announcement

On Wednesday, the Fed held its first same-day press conference (same day as the end of one of the planned Fed meetings). Mr. Bernanke wants to get in front of any press conferences that other Fed officials may have. In so doing he controls the message and neutralizes dissent. (is that good?)  The messages from the Fed meeting are: The QE2 program of $75B/month of new Tbond […] Read the rest of this entry »

QE2.5 : Will the Fed blink first ?

April 27th approaches. Ben Bernanke will announce the fate of QE2. This week saw a leak the Fed may not let QE2 end in June. Instead, the Fed may let their $75B monthly T-bond purchases stop in late June (as planned) but continue to use the $20-25B monthly proceeds of maturing bonds to buy more T-bonds. It is not surprising that the Fed might take this interim step. Rather […] Read the rest of this entry »

US debt warning from S&P

The week started with a bang.  S&P ratings agency issued a statement reaffirming US Treasury bond AAA credit rating, but they issued a negative outlook which means there’s a 1 in 3 chance of lowering the debt rating in the next 2 years. In the 70-year history of S&P, they’ve never put US sovereign debt on a negative rating watch. This is the least threatening […] Read the rest of this entry »

Weekly Short Economic Stories

1Q earnings season ramped up this week. Per previous comments, expect earnings season to be strong — but it will likely be the last strong earnings season for some time. Gold hit $1500/ounce this week — an all-time high. US Housing: March housing starts data showed a pick up. Almost a third of the slide in housing starts from the previous month was made up. The […] Read the rest of this entry »

More Warning Signs…

Here is one of the last postings on individual indicators. The greedometer will capture this and more. Margin debt is money borrowed from brokerages to buy investments (buying on margin). It goes asymptotic before major stock market peaks and best exemplifies greed. Year 2000 margin debt levels saw their highest readings up to that point. Then the stock market collapsed 47%. The same thing […] Read the rest of this entry »

Weekly Short Economic Stories

The Fed announced plans for Treasury bond purchases (QE2) for the next month. Purchases are continuing at the same $100B (+/-) per month pace. Somewhere in the week of June 6-10 will likely see the end of QE2. The stock market peaked, then rolled-over 2 days after the end of QE1. Since the ending of QE2 is anything but a secret, there will likely be intense […] Read the rest of this entry »

More Warning Lights……..

” The warning lights are flashing down at quality control. Somebody threw a spanner and they threw it in the hole.”   Lyrics from the 1982 song ‘ Industrial Disease’ by Dire Straights. I am reminded of the somewhat famous Dire Straights song because several key warning lights remain flashing. On their own, they’re not a slam dunk. But combine them, and add fundamental data, and the […] Read the rest of this entry »

Weekly Short Economic Stories

Good news came from US retailers this week. They reported strong sales in March. We started the year with 4% GDP growth estimates as far as the eye could see (not from me, but Wall St did). I am lowering the 1Q GDP estimate to 2.5%. My view on the rest of the year is the same: GDP drops to O% in 3Q, the goes back into contraction […] Read the rest of this entry »