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Good morning, Cascadia. Typing has been particularly problematic lately, so you haven't seen much from me as of late. This is mostly entered with voice-to-text! So please forgive errors. Regardless...
Leading economic indicators in December were slightly up. Interest rates, building permits, and jobs led the index. Sadly, the market appears to have entered at least a correction phase, as major indices have moved sharply downward. (Dr. Roubini of RGE Monitor thinks this entire rally is ending soon) Also, jobless claims unexpectedly jumped last week. And while the rise in building permits was meaningful, much of it was a dead cat bounce from the housing bottom - and not much of a bounce at that. Housing starts, which is to say the actual beginning of construction of new homes, actually fell unexpectedly.
On jobs, Mish has a column on the use of the Census hiring plans as a quiet jobs creation's programme. He asks, "Pray tell why does it take 1.4 million Americans to conduct a census, 3 times as many as in 2000?"
Over a global economic trend analysis, Mish posted a short column on credit card charge-offs, and the expected decline in total revolving credit. Essentially, total outstanding revolving credit is expected to decline by more than half from peak. Mish discusses the implications for spending. He has other charts of interest here. Meanwhile, Canadian personal credit has increased 39% in 21 months. This has indications of a bubble. It certainly outpaces the losses in the economy. Says Jonathan:
The US dollar index has risen sharply over the last few days; due to my keyboard vacation, I'm not really sure why. However, dollar strength and the US stock market indices inverse relation appears to have returned.
One of my favourite indicators, the M1 money multiplier, has continued to plumb new lows. This indicates that economic growth is not continuing to keep up with the increase in M1 money supply. This is to me a negative indicator, because it indicates that money borrowed is not producing adequate economic growth to sustain the borrowing made. We are, in fact, well below the lows reached in 2008 and most of 2009, during the peak of the recognised recession. (Static chart here.) Relatedly, while I'm not familiar with Nathan at Economic Edge, he does collect several similar charts from the Federal Reserve (mostly) in a rather long post here.
Most of this is behind a firewall, but you can read the headline, and that's the important part: Moody's has put US$572.7 billion worth of Alt-A residential mortgage-backed securities on watch. Karl at market sector also has an article on mass fraud via under-the-table payments and nondisclosure in bundled securities made up of secondary liens on housing. As always, he calls for prosecutions. If you're a regular reader of my journal, I'm sure you know what I think the odds are that might be. Meanwhile, I'm sure banks are grateful for the political distractions of the moment, as they prepared to hand out record bonuses fuelled primarily by taxpayer bailout.
The New York Times also has an op-ed on the other plots to wreck an America, as they put it, involving financial regulation or the lack thereof.
Other things to read: Karl's macro survey of the economy. If you somehow missed it, Google's letter to China. Marketwatch's angry letter to both parties.
Globally, retail sales are doing well in Australia. Factory prices are rising in Great Britain. Kyle Bass at The Business Insider has a rather worrysome column on Japan's monetary situation. Foreign Policy makes the classic "if this goes on" mistake regarding China. And Time Magazine Blames Canada (and Saudi Arabia, and China) in a pointless burst of blame-displacement and bullshittery. Really, they're talking about the giant floating money pool, but they're being stupid about it. And the Times of London discusses how Greece's economic crisis "may well become Germany's problem".
That's all for now. Good luck!
Leading economic indicators in December were slightly up. Interest rates, building permits, and jobs led the index. Sadly, the market appears to have entered at least a correction phase, as major indices have moved sharply downward. (Dr. Roubini of RGE Monitor thinks this entire rally is ending soon) Also, jobless claims unexpectedly jumped last week. And while the rise in building permits was meaningful, much of it was a dead cat bounce from the housing bottom - and not much of a bounce at that. Housing starts, which is to say the actual beginning of construction of new homes, actually fell unexpectedly.
On jobs, Mish has a column on the use of the Census hiring plans as a quiet jobs creation's programme. He asks, "Pray tell why does it take 1.4 million Americans to conduct a census, 3 times as many as in 2000?"
Over a global economic trend analysis, Mish posted a short column on credit card charge-offs, and the expected decline in total revolving credit. Essentially, total outstanding revolving credit is expected to decline by more than half from peak. Mish discusses the implications for spending. He has other charts of interest here. Meanwhile, Canadian personal credit has increased 39% in 21 months. This has indications of a bubble. It certainly outpaces the losses in the economy. Says Jonathan:
The $56 billion increase in outstanding personal lines of credit is the equivalent of a 4% increase in Canadian disposable income over the 21 month period. It has been a massive stimulus on the domestic economy...As yet, Canada has not experienced the housing bust, despite a hiccough in the growth curve earlier in 2009.
A housing bust would effectively stop this credit expansion and possibly shrink outstanding credit balances. When that happens, it will feel as though disposable income had just dropped by well over 13%. The result on the domestic economy and the circular effect of a credit deflation on house prices is predictable.
The US dollar index has risen sharply over the last few days; due to my keyboard vacation, I'm not really sure why. However, dollar strength and the US stock market indices inverse relation appears to have returned.
One of my favourite indicators, the M1 money multiplier, has continued to plumb new lows. This indicates that economic growth is not continuing to keep up with the increase in M1 money supply. This is to me a negative indicator, because it indicates that money borrowed is not producing adequate economic growth to sustain the borrowing made. We are, in fact, well below the lows reached in 2008 and most of 2009, during the peak of the recognised recession. (Static chart here.) Relatedly, while I'm not familiar with Nathan at Economic Edge, he does collect several similar charts from the Federal Reserve (mostly) in a rather long post here.
Most of this is behind a firewall, but you can read the headline, and that's the important part: Moody's has put US$572.7 billion worth of Alt-A residential mortgage-backed securities on watch. Karl at market sector also has an article on mass fraud via under-the-table payments and nondisclosure in bundled securities made up of secondary liens on housing. As always, he calls for prosecutions. If you're a regular reader of my journal, I'm sure you know what I think the odds are that might be. Meanwhile, I'm sure banks are grateful for the political distractions of the moment, as they prepared to hand out record bonuses fuelled primarily by taxpayer bailout.
The New York Times also has an op-ed on the other plots to wreck an America, as they put it, involving financial regulation or the lack thereof.
Other things to read: Karl's macro survey of the economy. If you somehow missed it, Google's letter to China. Marketwatch's angry letter to both parties.
Globally, retail sales are doing well in Australia. Factory prices are rising in Great Britain. Kyle Bass at The Business Insider has a rather worrysome column on Japan's monetary situation. Foreign Policy makes the classic "if this goes on" mistake regarding China. And Time Magazine Blames Canada (and Saudi Arabia, and China) in a pointless burst of blame-displacement and bullshittery. Really, they're talking about the giant floating money pool, but they're being stupid about it. And the Times of London discusses how Greece's economic crisis "may well become Germany's problem".
That's all for now. Good luck!
