Deflation Concerns Spring Up as Economy Drifts
Wall Street traders are fretting about falling prices more than inflation because a raft of financial reports show the economy is starting to weaken, according to USA Today.
The newspaper predicted the Federal Reserve may have to shift gears to focus on preventing a bout of deflation from taking hold.
“Worst case scenario: a deflationary spiral like the one during the Great Depression, which
triggered individual and [...]
What you should know about the latest economic slowdown
The slowdown in economic activity is right on schedule – for the 4th year in a row
The “spring slowdown” is here again. As discussed earlier (see post), the previous three years saw a strong start in the US, followed by a slowdown in economic activity, particularly in manufacturing.
What’s especially troubling this year is that we are also seeing a corresponding slowdown in [...]
US Macro Data Plunges To 5-Month Low
Bloomberg Brief’s Rich Yamarone has some recent examples that may make this week’s GDP hopes look a little rich…
EL-ERIAN: Just As People Were Starting To Relax, The Sequester News Has Taken A Turn For The Worse
Just as people were starting to relax – feeling that the warnings had been too alarmist – the “sequester” news took a turn for the worse.
The consequences go beyond [...]
Roubini: Correction in second half
Dr. Doom says U.S. fiscal drag will eventually catch up with the stock market in the second half of 2013.
Dollar rally just getting started: Societe Generale
Faber: Rally will end ‘badly’
Is It Really 2007 Again?
Don’t Lose Sight of The Macro Message: U.S. Personal Income Fell $505.5 Billion, Sales Plunge, French Unemployment Rises Again to Highest Since 1999, Fitch Downgrades Italy, China’s Economic Crisis Looming, Dollar Breaks 10-year Falling [...]
The next few monthly jobs reports, including this Friday’s, will be watched especially closely to assess the balance in a rather unusual tug of war that has developed in Washington: between a dysfunctional Congress set on creating headwinds to a slowly-recovering US economy, and a central bank willing to roll out one untested measures after the other in its attempt to steer the economy towards higher growth and more [...]
Havens are looking expensive, writes Russ Koesterich
The market had hoped for a “Grand Bargain”. Instead, it got a small, ultimately insufficient fiscal deal. The best to be said of the agreement hammered out on New Year’s eve is that it beat the alternative. While investors still cheered, nobody should mistake this for an economic, fiscal, or financial positive. Ideally Washington would have crafted a deal coupling long-term tax and entitlement reform [...]
Dan Greenhaus of BTIG thinks that Wall Street might be sleepwalking into what’s looking more and more like a real economic disruption.
In his note tonight, he says that a government shutdown should practically be assumed, and that an increased fiscal drag (due to the sequester kicking in) should probably be factored in as well.
Read more: http://www.businessinsider.com/analyst-at-this-point-we-have-to-assume-that-the-government-is-going-to-shut-down-2013-1#ixzz2I0y5bgn0
Nouriel Roubini appeared on “Bloomberg Surveillance” with Tom Keene today and said that U.S. growth will be “barely 1.7%” in 2013.
Roubini also said that “there’s a highly likely chance we’re going to go over the cliff. If we do so, the market reaction is going to force the two sides to reach an agreement.”
Roubini on whether he’s bullish on the United States:
“In the long term, I think that the [...]
As earnings season is upon us, we will no doubt hear that expectations are so low that the market has it all priced in and upside is the only way to go (apart from the fact that Q4 expectations remain in the land of faeries and unicorns). Of course Q4′s hockey-stick is critically going to depend on the fiscal-cliff – post-election. As we noted here, there are few positive outcomes from the [...]
From Sober Look:
Back in May, we discussed the impact of several possible “fiscal cliff” scenarios on the U.S. GDP growth (the GDP drag). Those projections were developed by Goldman Sachs. We now have a similar analysis performed by Credit Suisse (CS). CS broke down the various possibilities into four likelihood “baskets”:
Basket 1 – The CBO’s “other spending and revenue changes” and the Obamacare tax increases. In our judgment, both highly [...]
Q: Where are we in the economic recovery?
A: There is an overall slowdown of global growth. Europe is in a recession in the periphery countries, and it’s getting worse. There is a double-dip recession in theUnited Kingdom, sluggish growth in Japan, and the data from many emerging markets are also suggesting a slowdown in China, Russia, Brazil, India and places like Turkey, Mexico and South Africa.
Q: What about the U.S.
A: We have [...]
We discussed earlier about the Fed’s ZIRP policy and the transmission mechanism through which its free-money ends up in the real-economy (or not as the case in point). Brevan Howard agrees that the outlook for the US is not plain-sailing and that US growth does indeed face cross-currents, with the labor market improving at a steady pace while aggregate demand slows. While the firm remains more stoic, seeing a generally favorable macro backdrop, [...]
Despite talk of various policy-easing options being considered at the Fed, the consensus remains that the central bank will refrain from major policy shifts and instead delay those decisions until its next meeting in January. Lately, the economic data from the US has remained upbeat – the University of Michigan Confidence rose to a six month high in December, while the latest trade deficit reading narrowed – which may provide [...]
The other global strategic thinker with a decent white beard, Bob Janjuah of Nomura, sees weaker growth, weaker earnings and a great deal more volatility in the short- and medium-term for the US. Not a fan of the decoupling miracle, Janjuah explains (following our last discussion of his thoughts) in this Bloomberg TV interview that US data is showing only a temporary improvement with the forthcoming fiscal drag into next year likely to slow the [...]
JP Morgan, whose Banker In Chief has not spared harsh words in the past to describe the POTUS, has released its just as uncompromising assessment of tomorrow’s Obama speech which if predictions are correct, will be such a load of hot air, that the mere non-news factor alone should send the market into a volumetric coma on Friday, hence pushing ES limit up easy [...]
A few quick macro thoughts on the debt deal - J.P. Morgan – As you are no doubt aware, a deal appears imminent to resolve the debt ceiling impasse. We see four main economic implications of this deal
1) No default. This had always been a low probability (<1%) very high cost outcome, which now seems off the table.
2) An eventual S&P downgrade is still more likely than not, [...]
BERNANKE SAYS ACCOMMODATIVE MONETARY POLICIES ARE STILL NEEDED
BERNANKE EXPECTS RECENT RISE IN INFLATION TO BE `TRANSITORY’
BERNANKE SAYS THE US ECONOMY IS GROWING WELL BELOW POTENTIAL
BERNANKE SEES `PROSPECT OF INCREASING FISCAL DRAG’ ON RECOVERY
BERNANKE SEES HIRING ACCELERATING IN SECOND HALF OF THIS YEAR
BERNANKE SAYS ECONOMIC GROWTH `UNEVEN’ AND `FRUSTRATINGLY SLOW’
BERNANKE SAYS GROWTH LIKELY TO PICK UP IN 2ND HALF OF THIS YEAR
Speech word cloud:
Full speech below:
The U.S. Economic Outlook
Few economists we read have much fiscal drag in this yearâ€™s macro forecasts and that could end up being a critical error. At the same time, one has to wonder what businesses are thinking when the trend in core capex orders and shipments start the year in decline â€” hopefully that is not more than a weather report (see more below). It is also [...]