Futures Up On European Strength
By Barry Ritholtz - August 13th, 2009, 6:00AM
With a positive GDP surprise from Germany and France, US Futures are up big. Expect further gains on top of yesterday’s FOMC rally — at the open, at least. These things tend to unwind at their own leisure.
Big day for secondary economic releases:
Retail Sales 8:30 AM
Jobless Claims 8:30 AM
Import and Export Prices 8:30 AM
Business Inventories 10:00 AM
Tomorrow is Consumer Price Index, Industrial Production, and Consumer Sentiment.
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August 13th, 2009 at 6:30 am
I dont understand how everyone criticizes Alan Greenspan for keeping rates too low too long at 1% and contributing to causing this housing/credit bubble years later. In hindsight, that is one of the elements widely used for the crisis we went through.
Now, we see asian markets up 70-90%, european markets and US markets up 40-50% after the detsruction of the crisis concluded its wrath and we now see economic data looking better and all the signs that the recessions are easing if not already over. Yet we still have 0-0.25%% rates for over 8 months now, QE policy, and credit facilities still in place.
What am I missing? Is the fed making the same mistake or are the problems much deeper that they demand this kind of action still today? Will we look back once again and say the fed left rates too low too far and caused another problem? I dont see many arguing for higher rates right now.
August 13th, 2009 at 6:32 am
All that buy and hold is dead chatter is really taking a beating. Futures blasting higher again. A tiny biotech that IPOed 10 years ago, has never come close to making a single dime, and its up 40% in 2 days. And that was after it rallied 700% off the bottom. One massive positive is no debt.
August 13th, 2009 at 6:48 am
France?! FRANCE???!!! We don’t want to be like France! Haven’t you been to a Town Hall meeting lately? We don’t want to have euro-conomies. We HATE them.
Pass the Freedom Fries, Poofter-boys… I’m switching over to Fox News where the stock market is still down at the March levels, I can find out the latest on how Obama has humiliated our once-great nation, and where we learn pre-existing conditions are just God’s way keeping you at you current job.
August 13th, 2009 at 7:02 am
@urbandigs
If rates go up then taxes go up to pay interest on the public debt. treasurydirect.gov’s debt position
and activity report for July 2009 lists average interest rate at 3.418% on $11,669,277,000,000 or
around $400 billion interest. If rates go up 2% then interest rises to around $600 billion. The Fed
knows there aren’t enough good paying jobs to support higher taxes to pay on the debt interest so
rates have to stay low, IMO.
August 13th, 2009 at 7:26 am
@urbandigs:
the reason extra money is bad is that debts go up massively. From the last open thread yesterday, we will essentially increase the national debt by 3 trillion dollars in just 15 months. Again essentially we will have a 13 trillion dollar national debt by the new year. This debt has to be serviced, and it will be. At 3% this is at least 400 billion dollars a year. At 4% it is 520 billion per year. It is no different than if you ran your household this way. Why do you think we as families have such trouble paying off debt? It is because as a family there are always bills to pay that keep you from paying the debt. To pay off debt you must be disciplined, something our national government has not been for decades.
If rates in the Greenspan era had stayed reasonable, less taxpayer money would be wasted at just debt service, which gains the country NOTHING. Think about it…..is it a sprint, or is life a marathon?
August 13th, 2009 at 7:37 am
On top of that, you get government spending going to things that the private sector could easily be doing themselves, such as now the news coming out of a House bill to spend TARP money renovating apartments and stopping commercial foreclosures:
http://contraryriches.blogspot.com/2009/08/tarp-money-for-apartment-complexes.html
August 13th, 2009 at 7:38 am
we still have retail numbers coming out- so we’ll see how the futures hold up
August 13th, 2009 at 7:44 am
from CNBC-
“Walmart, said sales at its U.S. stores open at least a year fell 1.2 percent percent. Wall Street on average expected a gain of 0.85 percent.”
August 13th, 2009 at 7:51 am
@ahab
yeah but it could’ve been -1.5%, so really it is a positive /sarcasm off
August 13th, 2009 at 7:52 am
does anyone have a breakdown or a link to a breakdown of France and Germany’s GDP? Were there any Eurozone countries that had terrible numbers, which were largely offset by the larger German economy?
August 13th, 2009 at 7:59 am
Spain & Ireland were/are super dependent on real estate booms – selling second homes to the Germans and Brits
August 13th, 2009 at 8:00 am
Record foreclosures again, ho hum…
http://www.bloomberg.com/apps/news?pid=20601110&sid=aGAr2pZ9UC1o
August 13th, 2009 at 8:02 am
Cohen-
in answer to your question-
“European recession shows signs of easing, output falls only 0.1 percent in second quarter
http://finance.yahoo.com/news/Euro-area-economy-contracted-apf-792973519.html?x=0&sec=topStories&pos=7&asset=&ccode=
August 13th, 2009 at 8:06 am
we’ll see if the claims number and retail sales mute the market after the open.
on another note, regarding the “you can print + GDP in a recession thread”
seems to me that we have a pretty good shot at seeing a + GDP in Q3, perhaps that will be the chance to buy some very cheap shorts as it seems almost certain that lots of people would use a + GDP as the sign that the recession is over. After all, despite it being common knowledge, I seem to recall before NBER announced the start of the great recession, I heard a lot of pundits stating “we haven’t had negative GDP yet” in an attempt to explain that we either weren’t in one, or it hadn’t started yet.
August 13th, 2009 at 8:31 am
Ouch. So much for that.
August 13th, 2009 at 8:35 am
well-
as emmanuel said- ouch-
retail sales are abysmal as are jobless claims
August 13th, 2009 at 8:50 am
Yes, Yes, but but France!
Just heard on CNBC: “We saved their @ss in World War II and 54 years later they decide to return the favor”