We May Be Witnessing Inflections In The Economy And The Markets Right Now
In recent years, we’ve seen the economy slow and the stock market turn during the spring.
Economic reports are piling up to suggest the U.S. economy is heading for yet another spring slowdown.
This week will be loaded with more economic reports and a wave of earnings announcements. Companies like General Electric, Bank of America, McDonald’s, Google, and Johnson & Johnson will publish [...]
This Is The Fed’s Worst Fear: Falling Unemployment, With Growth Still Weak
According to Morgan Stanley‘s chief economist Vincent Reinhart, this represents the Fed’s #1 fear.
…the Fed’s chief fear will be that market participants will expect policy tightening to come sooner and more sharply than is consistent with sustaining the economic expansion. All the talk about tapering off, or even ending, QE has been careful to be conditional on the outlook. If [...]
While certainly not always correct; the InTrade markets trading on the various outcomes of the Presidential have become increasingly liquid and active in recent weeks. As Morgan Stanley’s Vince Reinhart cleverly notes, by analyzing the odds for control of the Senate, the House, and the Presidential winner, one can arrive at some rather useful insights into the conditional probabilities of various tax-and-spending-related outcomes.
Critically, he notes that while Obama is a [...]
Whew. Those were a crazy couple of weeks we just wrapped up.
Morgan Stanley’s interest rate strategist Matthew Hornbach writes:
When the history books are written or market participants look at charts three months from now, the past two weeks may go down as the most important of 2012 – aside from how the US government handles the fiscal cliff (which may not occur this year anyway). The ECB introduction of the Outright Monetary Transactions [...]
We’ll need to start talking about Greece again pretty soon.
It hasn’t been at the front of anyone’s mind in awhile, and that’s in large part because Europe is shut down for the month, but come September, the question of Greece’s fate in the Eurozone will become an issue again.
In a recent note, Dan Greenhaus at BTIG wrote:
A few clients have asked for some specifics surrounding our “fall nervousness” related to Greece [...]
The meme is spreading.
Previously we associated the phrase “ice age” with SocGen’s Albert Edwards, who uses it to describe this peristently miserable market and economic environment that’a chracterized the world for the past 5 years.
Now even Morgan Stanley’s top economist Vincent Reinhart is adopting it, as his latest weekly note refers to our “:ittle Ice Age” in the title.
Read more: http://www.businessinsider.com/morgan-stanleys-reinhart-we-are-in-a-little-ice-age-2012-7#ixzz1zwKU1Jhh
In his latest US Macro Dashboard note, Morgan Stanley chief economist goes back tot he Fed, and explains why the Fed hasn’t done more.
He only sees one explanation…
Fed officials are apparently resigned to a poorly performing economy and harbor doubts about the efficacy of their policy instruments. If this were not true, they would have done more so that their outlook did not imply the twin failures of unemployment running above its [...]
Most people agree that yesterday’s jobs report was a disaster.
To many, this just meant the chances of more quantitative easing had increased. Surely, this is why gold prices spiked yesterday.
Vincent Reinhart, Morgan Stanley’s chief U.S. economist, thinks there’s an 80 percent chance that a new quantitative easing program is announced at the June 19-20 FOMC meeting.
“Slower employment growth, worsening strains in European markets, and a gloomier assessment of US politicians’ ability to steer clear [...]
via Carmel Asset Management ‘s the ultimate Spanish doomsday presentation:
1. Spain’s national debt is 50% greater than the headline numbers
Spain’s debt-to-GDP balloons from 60% to 90% of GDP with regional and other debts
2. Spain’s housing prices will fall by an additional 35%
Spain built one house for every additional person added to the population during the past two decades; the fall will decrease GDP by ~2% each of the next two years
3. Spain [...]
In a recent presentation for Morgan Stanley, economist Vincent Reinhart looked at 15 financial crises since WWII to see how the US “recovery” stacks up.
Among the crises: Japan in the early 90s, the East Asian crisis of 1997, as well as ones in Argentina and Mexico.
Anyway, the answer, the US is definitely falling short.
Here’s a look at how we stand against the averages.
by Reggie Middleton
I urge everyone to download your respectve models (contingent upon your subscription level) from The BoomBustBlog BNP Paribas “Run On The Bank” Models Are Available For Download and plug in your respective assumptions BEFORE Europe’s Lehman Moment arrives – for if when it does, most nations will be powerless to do anything about it. “Why?” you ask! Well, as so adroitly articulated in [...]
As always happens, about a week after Goldman telegraphs the need for QE3, which they did last Friday, the WSJ’s Fed mouthpiece Jon Hilsenrath reaches out to the media and proceeds to give the secret QE handshake. Now in its third iteration. In an “exclusive” interview with the Fed’s last tree monetary affairs committee, Donald Kohn, Vince Reinhart and Brian Matigan, Hilsenrath observes that [...]
People have been speculating about the prospects for QE3 since before QE2 even got off the ground.
And with the recovery sputtering and stocks plummeting, the drumbeat has gotten even louder. It helps that Jackson Hole — the conference where Bernanke announced his plans last year — is right around the corner.
And now the talk begins for real. WSJ’s crack Fed Report Jon Hilsenrath interviews some former Fed officials (Donald [...]
Several studies of financial crises show that interest rates seldom indicate problems long in advance. In fact, we should probably be particularly concerned today because a growing share of advanced country debt is held by official creditors whose current willingness to forego short-term returns doesn’t guarantee there will be a captive audience for debt in perpetuity.
Those who would point to low servicing costs should remember [...]
A global public debt crisis, in which private sector deleveraging is offset by public debt, to the point where Reinhart and Rogoff say “no more” (and often times beyond) has only four possible outcomes. These are: 1) a debt trap; 2) hyperinflation; 3) austerity but in conjunction with actual economic growth and 4) default. Currently in the developed world, the only two outcomes actively pursued, [...]
Who ever thought the saying, “It’s the economy stupid” from James Carville in 1992 would become a staple in presidential elections 20 years later?
That expression made its way into the campaign in 2008 and according to Carville it could be theme of the 2012 campaign as well as President Barack Obama seeks reelection. In an appearance Monday’s “Imus in the Morning” on the Fox [...]
The final results show isn’t until tonight, but the news about the American Idol Winner may have already leaked.
A top story on Drudge Report says, “Un-cool, un-hip, country-fried singer wins American Idol.” Drudge quotes a source that says Scotty took almost double the amount of votes over runner-up Lauren Alaina. The story is still developing.
If these sources are indeed correct, has America made the right decision? [...]
AMERICAN IDOL: The Final Two: Lauren Alaina (L) and Scotty McCreery (R).
By Michael Becker/FOX
After 95 million votes, the first person to make the finale is Scotty McCreery.
Are you surprised?
Didn’t think so.
He wishes Lauren Alaina and Haley Reinhart luck as he takes his seat. The two women hold hands as they await the results.
Ryan Seacrest announces that Lauren will join Scotty onstage next week. “We say goodbye, but a [...]
from reader T. Willerson
Letter to congress
It’s here: Your moment at the plate. You’ve whiffed more than a few … and, yes, we’re counting. But you’ve been gifted another at-bat, and the President’s tired. Seventh inning stuff is coming out of his teleprompter, and this full-count fastball will be straight, level, and slow. You won’t see another one like this for five years.
1)Â U.S. Health Premiums Outstrip Income Gains: Chart of the Day
“In 15 states, health-insurance premiums are the equivalent of at least 20 percent of median household income for people under 65, according to the report. The data comes from the governmentâ€™s Medical Expenditure Panel Survey.
The proportion of U.S. gross domestic product devoted to health care doubled to 18 percent between 1980 and 2009, Schoen said. ”
2) Reinhart [...]
Nomura’s chief macroeconomist, Richard Koo, whose views we have often repeated on Zero Hedge, is out with his latest prediction which unfortunately has nothing good to say about the future of the US: “We have shownâ€”using the example of the Â¥2,000trn in output that was saved in Japan and the fact that the fiscal stimulus provided by World War II quickly pulled the worldâ€™s economies [...]
By Dian L. Chu, Economic Forecasts & Opinions
The United States economy grew at a sluggish annual rate of 2 percent in the third quarter, the Commerce Department reported last Friday. On the bright side, the economy is growing faster than the 1.7 percent growth in the second quarter and has registered the fifth straight quarter of expansion.
But here comes the dark side â€“ the [...]
In 1997, home prices in Hong Kong were in its final run-up to the all-time high which were unmatched even today.Â Then it crashed as the aftermath of the Asian Financial Crisis.
Centa-city Leading Index, showing home prices from 1997 to 2004, Source: Centaline
Home Prices in Hong Kong dropped 60-70%? over that 6-year period after the Asian Financial Crisis.Â Although there were some growth in some of [...]
This is consistent with growth in final domestic demand and historical relationships between economic growth and the ECRI series.
But why should this be after $2.5 trillion or thereabouts of unprecedented fiscal and monetary polices have ended or are in the midst of withdrawal?
1) As explained by Reinhart and Rogoff recoveries from financial crises are protracted affairs and require time to work off imbalances and recover. Through policy we are [...]