Positives:

1) ISM mfr’g and services indices solid
2) ABC confidence rises 3 pts and is 1 pt within the best since Sept ’08
3) German unemployment rate falls to 7.4%, the lowest since Mar ’92.
4) Canada reports blowout jobs #, 630k adjusted for US population size
5) Debt of Spain, Italy, Portugal, Greece and Ireland rallying in anticipation of expanded EFSF program
6) Avg hourly earnings rise twice expectations in Jan payroll report
7) Jan retail comps better than expected

Negatives:

1) Treasury yields break out across the curve, yes economy improving but inflation pressures building
2) Bernanke ignores market signals and company commentary on potential input cost pressure pass thru and he continues full speed ahead
3) China state sector mfr’g PMI falls to 5 month low
4) Indian Sensex falls to lowest since Aug due to inflation concerns (Indonesia raises rates)
5) Euro Zone CPI up 2.4%, most since Oct ’08

Category: Markets

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

9 Responses to “Succinct Summation of Week’s Events (2.4.11)”

  1. mathman says:

    Here’s another negative (worldwide):

    http://www.businessweek.com/magazine/content/11_07/b4215058743638.htm

    and a nice poem for your Friday afternoon ” tea” (beverage of your choice) while you ponder the course ahead:

    http://guymcpherson.com/2011/01/infallible-unsinkable-inconceivable-a-bell-curve-in-three-parts/

    Enjoy your weekends, appreciate those around you (even if silently).

  2. carleric says:

    Gosh, Bernanke behaves like some academic in over his head…what a surprise!

  3. jeff in indy says:

    looks like mtg rates are headed up until this is sorted out:

    http://www.cnbc.com/id/41429486

  4. GeorgeBurnsWasRight says:

    Still think we may be preparing for a re-run of that great 1970′s hit, Stagflation.

  5. gordo365 says:

    @Georgeburnswasright – I was just thinking the same thing. My fri afternoon analysis:

    - Monetary policy. The fed wants inflation. Pay back debt with cheaper dollars. Monetize debt.
    - Fiscal policy. Congress can’t/incapable of solving debt problem. Third rail. Republicans = reduce tax income. Dem = increase spending. Is that a compromise?
    - Going to have crisis before debt solution. Going to have chest pains before lose weight and quit smoking.
    - I’m guessing the crisis = much higher rates on federal borrowing.

    Result is some type of stagflation. No growth. High inflation. Monetary and fiscal policy backed into a corner or at odds with each other.

    - Once we have the crisis – and can address the debt – the debt solution is going to make the crisis worse.
    - Debt service tops $1T per year. Bondholders are front of line. Raise taxes or cut spending just to maintain parity – not even reduce deficit/debt.

    Is there a solution to debt problem that doesn’t make funding crisis worse?
    - Raise taxes – reduce growth
    - Reduce spending – reduce employment/growth.
    - Print money – buy treasuries – increase inflation.

  6. RW says:

    The phrasing of point 1 in the negatives is logically incoherent. Yes it’s fashionable to sweat inflation and folks were doing it even when the economy was crashing but:

    a) If the economy is really improving then the more likely explanation for bond prices falling is a normal supply/demand rotation out of bonds into productive and/or risk assets; this is a positive.

    b) “Inflationary pressures building” well, yes, but hyperbole aside that means the pressure of more destructive deflationary pressures is easing and a stronger dollar, which would be bad for exports, is now less likely. Another positive.

  7. Joe Friday says:

    GeorgeBurnsWasRight,

    “Still think we may be preparing for a re-run of that great 1970′s hit, Stagflation.”

    Eh, one needs to have inflation first before you can have stagflation.

  8. Joe Friday says:

    gordo365,

    “Monetary policy. The fed wants inflation. Pay back debt with cheaper dollars.”

    No, the fed wants some inflation to counter deflation.

    ~

    “Raise taxes – reduce growth”

    Where’s the evidence that raising taxes reduces growth ?

  9. Jack says:

    Let’s say Bernanke does see trouble ahead: what does he do? If he’s “full speed ahead” right now, what action does he take when he recognizes something different is needed?

    I ask this in all ignorance. It seems to me that the last year has lived up to the consensus opinion that our economy’s improvement will be slow, maybe very slow, but it will improve over time.

    What should Bernanke have done differently and what should he be doing right now? The guy’s taking a lot of heat, seems to be sticking to his guns, gets excoriated by segments of the econo/politico world and the US economy is meeting expectations, low as they are.

    I kinda like the guy.