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one thing or another
Jun. 15th, 2010 10:23 amGood morning, Cascadia! Good afternoon, points east.
When the powers that be start talking about the economic benefits of currency collapses, pay attention. The Bank of England is warning that "Investors are placing bets on a Black Monday-style crash in the British stock market at the fastest rate since the collapse of Lehman Brothers bank in 2008." Hungary's government had a Hungarian T-bill auction fail, falling short 30% of desired sales. Quietly, a week ago, the G20 shifted from 'stimulus' bias to 'deficit reduction' and Paul Krugman is incensed. Mish Shedlock thinks they've done something right, for once. BMO Capital Markets is telling its clients to get the hell out of equities and go to cash.
The Euro is up sharply today, 1.3%; US Dollar index is down almost a percent from this morning's high.
Canada's housing market may have turned; Garth Turner thinks there's still time to handle things better than the US, but the overall trend is quite negative. See also americaCanada's notes on listing ratios. The Can$ is gaining strength against the US$ again.
This article talks about 'the quiet coup' of regulatory capture in the US. Not much you haven't seen from me, but at least it's filtered up to places like The Atlantic. More on who pulls what strings here, as banks refuse to take back knowingly-bad instruments previously sold to FreddieMac and FannieMae. Who gets to pay for that? Ah, c'mon, you know who. The best case is US$160B; the worst case is US$1T with a T. Realistically, you're looking at around US$500B unless the economy moonshots, which seems unlikely. All as US government debt is about to reach parity with US GDP. Oh, and redefault rates on reduced/restructured mortgages are hanging out at around 50%. New mortgage applications fell sharply after government incentives expired; the pulled-forward-demand theory is holding up so far. Relatedly, the homebuilders' index plummeted to 17, a horrible number. Retail sales rose 2.9% - against a year ago. They fell, week-to-week.
One problem with any idea of a strong recovery is that state budget problems are going to drag economic growth down into at least 2011. Pension plans are disasters of the first order. One particularly bad case is the Illinois Teachers Retirement System fund, which is underfunded by 61%.
US Treasury cash balance is down to $4.3B. That's just a transition number but still kinda neat, because it's less than that of, say, Microsoft. Not at all unrelatedly - it's all a big falloff in employment tax income - Social Security net tax/outflow has gone negative, several years before anticipated. The surplus has theoretically been going into a trust-fund/"lockbox," but that's pure fiction. The Federal government has this "lockbox," but then spends ("borrows") the money anyway.
Retail sales last month in the US were fairly poor, and unexpectedly so. Mish comments here, with a lot of the same graphs. Credit outstanding continues to contract. The May unemployment report was very bearish, with only 20,000 private-sector jobs added, much worse than predicted. Also, the birth/death model added 215,000 mythical jobs to the non-seasonal figure (DO NOT SUBTRACT FROM 20K, THAT'S NOT VALID MATH), almost all of which will be erased next January. At this point it really just is a fluffer number. The U-6 number is 16.6% (seasonally adjusted). The Empire State Manufacturing Survey report improved, but less than consensus expectations.
Dr. Roubini of RGE Monitor thinks the US is going to avoid a technical double-dip recession but unemployment and deficits will rise in 3Q 2010 so it'll feel like one anyway. US U-3 unemployment will climb back to or above 10%, and the Eurozone will probably have a second dip. And an eta, wow: European Commission President Jose Manuel Barroso "set out an ‘apocalyptic’ vision in which crisis-hit countries in southern Europe could fall victim to military coups or popular uprisings as interest rates soar and public services collapse because their governments run out of money." Wow.
Canadian and US stock markets are rallying strongly today after sharp opens upwards. that's all for now; good luck.
When the powers that be start talking about the economic benefits of currency collapses, pay attention. The Bank of England is warning that "Investors are placing bets on a Black Monday-style crash in the British stock market at the fastest rate since the collapse of Lehman Brothers bank in 2008." Hungary's government had a Hungarian T-bill auction fail, falling short 30% of desired sales. Quietly, a week ago, the G20 shifted from 'stimulus' bias to 'deficit reduction' and Paul Krugman is incensed. Mish Shedlock thinks they've done something right, for once. BMO Capital Markets is telling its clients to get the hell out of equities and go to cash.
The Euro is up sharply today, 1.3%; US Dollar index is down almost a percent from this morning's high.
Canada's housing market may have turned; Garth Turner thinks there's still time to handle things better than the US, but the overall trend is quite negative. See also americaCanada's notes on listing ratios. The Can$ is gaining strength against the US$ again.
This article talks about 'the quiet coup' of regulatory capture in the US. Not much you haven't seen from me, but at least it's filtered up to places like The Atlantic. More on who pulls what strings here, as banks refuse to take back knowingly-bad instruments previously sold to FreddieMac and FannieMae. Who gets to pay for that? Ah, c'mon, you know who. The best case is US$160B; the worst case is US$1T with a T. Realistically, you're looking at around US$500B unless the economy moonshots, which seems unlikely. All as US government debt is about to reach parity with US GDP. Oh, and redefault rates on reduced/restructured mortgages are hanging out at around 50%. New mortgage applications fell sharply after government incentives expired; the pulled-forward-demand theory is holding up so far. Relatedly, the homebuilders' index plummeted to 17, a horrible number. Retail sales rose 2.9% - against a year ago. They fell, week-to-week.
One problem with any idea of a strong recovery is that state budget problems are going to drag economic growth down into at least 2011. Pension plans are disasters of the first order. One particularly bad case is the Illinois Teachers Retirement System fund, which is underfunded by 61%.
US Treasury cash balance is down to $4.3B. That's just a transition number but still kinda neat, because it's less than that of, say, Microsoft. Not at all unrelatedly - it's all a big falloff in employment tax income - Social Security net tax/outflow has gone negative, several years before anticipated. The surplus has theoretically been going into a trust-fund/"lockbox," but that's pure fiction. The Federal government has this "lockbox," but then spends ("borrows") the money anyway.
Retail sales last month in the US were fairly poor, and unexpectedly so. Mish comments here, with a lot of the same graphs. Credit outstanding continues to contract. The May unemployment report was very bearish, with only 20,000 private-sector jobs added, much worse than predicted. Also, the birth/death model added 215,000 mythical jobs to the non-seasonal figure (DO NOT SUBTRACT FROM 20K, THAT'S NOT VALID MATH), almost all of which will be erased next January. At this point it really just is a fluffer number. The U-6 number is 16.6% (seasonally adjusted). The Empire State Manufacturing Survey report improved, but less than consensus expectations.
Dr. Roubini of RGE Monitor thinks the US is going to avoid a technical double-dip recession but unemployment and deficits will rise in 3Q 2010 so it'll feel like one anyway. US U-3 unemployment will climb back to or above 10%, and the Eurozone will probably have a second dip. And an eta, wow: European Commission President Jose Manuel Barroso "set out an ‘apocalyptic’ vision in which crisis-hit countries in southern Europe could fall victim to military coups or popular uprisings as interest rates soar and public services collapse because their governments run out of money." Wow.
Canadian and US stock markets are rallying strongly today after sharp opens upwards. that's all for now; good luck.
