Earlier this month, I published a piece in the Think Tank titled Apropos of Everything by regular TBP contributor Paul Brodksy of QB Partners.
It went viral, and Paul received literally 100s of emails about it. Many o you asked to be informed when the follow up was published.
It is now live in the Think Tank:
All three parts are your weekend homework assignments . . .
This is the follow up to Apropos of Everything by Paul Brodsky. It was one of themost popular pieces we ever published in the Think Tank.
This is parts II and III:
One of the more interesting conversations I have had lately has been with non-Apple users about Apple stock. It is an apt subject given Apple’s blow out numbers last night. Second-quarter profit ~doubled, demand for iPhones and iPads exceed supplies. Net income in Q2 was $5.99 billion ($6.40 a share), from $3.07 billion, or $3.33, a year earlier.
While I have long been a fan of the superior Mac versus Microsoft machines, it is the iPod/iPhone,/iPad phenomena that is driving Apple towards being the most valuable company on earth.
These investors are certainly aware of the sales and profit growth, but there is a sort of blind spot as to how far it could run. I have heard from various parties that the move in Apple’s stock is “ridiculous” “overdone” “insane” “proof of madness.” Apple’s stock price, despite the reasonable P/E, is “incontrovertible proof we are now in bubble territory.”
When I asked these folks if they own any Apple products, they nearly all say no. “My kids have an iPod” was the most I got out of any of them. (That’s more than we can say for Steve Ballmer’s spawn).
Which raises the question of hands-on-use. Can you be an investor in the Tech sector and NOT own an iPad? Can you seriously trade tech/telecom, and not have hands on experience with the Apple magic?
This question goes back to the days of Peter Lynch, the Fidelity Magellan manager who advised people to invest “in what you know.”
Can investors today ignore a hot product? Do you have to own the latest and greatest in order to trade the names? How important is this concept to the average investor?
>
Previously:
Popular or Best? (ATPM January 1998)
Analysts Still Underestimate Apple (Real Money, Jan 13, 2005)
Is Disney/Pixar the sequel to Apple/NeXT ? (January 30th, 2004)
Apple morphs into a Consumer Electronics Co (April 25th, 2004)
Apple to Music Industry: Monetize Your IP (April 28th, 2004)
Apple Now a Major Music Retailer (RealMoney.com 12/08/05)
Apple Now More Valuable Than Microsoft (May 26th, 2010)
A Few Thoughts on Steve Jobs/Apple (January 18th, 2011)
Strong tech earnings and the continued erosion in the value of the global reserve currency have the S&P futures retesting its Feb 18 high of 1337.50. To highlight the influence of the US$ weakness to the move in stocks, in gold terms the S&P 500 is flat on the year, in euro terms its down 3.2% and in C$ and A$ it is up just .5%. Our game is played though in nominal terms and that’s the focus and saving grace, if you own hard assets in particular. Gasoline prices rose last night for the 30th straight day to $3.84 per gallon, just .27 from a record high. Yields have now gone parabolic in Greece, Ireland and Portugal but Spanish debt is seeing a bid as China reiterated their support in their contribution to investing in the country. Germany’s Apr IFO business confidence figure was about in line with consensus at 110.4 vs 111.1 in Mar. Brazil raised interest rates last night by 25 bps to 12%, the highest since Mar ’09 but was less than the expected hike of 50 bps.
Washington’s Blog strives to provide real-time, well-researched and actionable information. George – the head writer at Washington’s Blog – is a busy professional and a former adjunct professor.
~~~
Proponents for oil, gas, nuclear and coal claim that we must expand these risky and oftentimes deadly types of energy production, or we will shiver in the dark like cavemen.
Proponents of alternative forms of energy say we should switch over to cleaner fuels to avoid a parade of horribles … and point to the Gulf oil spill, the Japanese nuclear crisis and the destruction of aquifers with natural gas fracking as examples. Defenders of fossil fuels and nuclear rebut this by saying that alternative energy isn’t ready for prime time yet.
Who’s right?
As I’ll show below, the question is not as simple as it may sound.
Return on Investment
As Thomas Homer-Dixon, director of the Trudeau Center for Peace and Conflict Studies at the University of Toronto, notes:
A better measure of the cost of oil, or any energy source, is the amount of energy required to produce it. Just as we evaluate a financial investment by comparing the size of the return with the size of the original expenditure, we can evaluate any project that generates energy by dividing the amount of energy the project produces by the amount it consumes.
Economists and physicists call this quantity the “energy return on investment” or E.R.O.I. For a modern coal mine, for instance, we divide the useful energy in the coal that the mine produces by the total of all the energy needed to dig the coal from the ground and prepare it for burning – including the energy in the diesel fuel that powers the jackhammers, shovels and off-road dump trucks, the energy in the electricity that runs the machines that crush and sort the coal, as well as all the energy needed to build and maintain these machines.
As the average E.R.O.I. of an economy’s energy sources drops toward 1 to 1, an ever-larger fraction of the economy’s wealth must go to finding and producing energy. This means less wealth is left over for everything else that needs to be done, from building houses to moving around information to educating children. The energy return on investment for conventional oil, which provides about 40 percent of the world’s commercial energy and more than 95 percent of America’s transportation energy, has been falling for decades. The trend is most advanced in United States production, where petroleum resources have been exploited the longest and drillers have been forced to look for ever-smaller and ever-deeper pools of oil.
Cutler Cleveland, an energy scientist at Boston University who helped developed the concept of E.R.O.I. two decades ago, calculates that from the early 1970s to today the return on investment of oil and natural gas extraction in the United States fell from about 25 to 1 to about 15 to 1.
This basic trend can be seen around the globe with many energy sources. We’ve most likely already found and tapped the biggest, most accessible and highest-E.R.O.I. oil and gas fields, just as we’ve already exploited the best rivers for hydropower. Now, as we’re extracting new oil and gas in more extreme environments – in deep water far offshore, for example – and as we’re turning to energy alternatives like nuclear power and converting tar sands to gasoline, we’re spending steadily more energy to get energy.
For example, the tar sands of Alberta, likely to be a prime energy source for the United States in the future, have an E.R.O.I. of around 4 to 1, because a huge amount of energy (mainly from natural gas) is needed to convert the sands’ raw bitumen into useable oil.
Professor Charles Hall of the SUNY College of Environmental Science and Forestry provides the following graphic to illustrate the point:
“Balloon graph” representing quality (y graph) and quantity (x graph) of the United States economy for various fuels at various times. Arrows connect fuels from various times (i.e. domestic oil in 1930, 1970, 2005), and the size of the “balloon” represents part(click for larger image.)
The take away message from the graph is that the energy return on investment was very high for oil in 1930, but it is very low today, since the cheap, easy-to-get-to (and less dangerous) oil is gone.
But what about alternative energies? Professor Hall writes:
The EROI for wind turbines compares favorably with other power generation systems (Figure 3). Baseload coal-fired power generation has an EROI between 5 and 10:1. Nuclear power is probably no greater than 5:1, although there is considerable debate regarding how to calculate its EROI. The EROI for hydropower probably exceed 10, but in most places in the world the most favorable sites have been developed.
(“PV” stands for photovoltaic – i.e. direct solar power.) Solar thermal has a much lower EROI, although Hall notes elsewhere:
Because passive solar design is incredibly site specific it is very difficult to determine just what the EROI might be. Rarely does an architect get quantitative feedback on the system, finding a numerical Energy Return on Investment (EROI) is nearly impossible.(Lyng 2006, Spanos 2005). Nevertheless if various passive solar designs are built into the house from the beginning then fairly large energy gains can be obtained with little or no investments. In other words it may cost little to put most of the windows on the south side, although that may greatly increase the gain.
An EROI could be calculated for a case specific location by dividing the energy saved each year over the energy inputted to make that house passive solar. The EROI for a passive solar would be very high because building passive solar is a one time expense and houses last half a century or more. Studies have shown that the energy savings can range anywhere from 30-70%, this would cause the EROI to change vastly from case to case. If the payback period is five years and the house lasts for 50 then the EROI would be, apparently, 10:1.
So what does this mean? Comparing Professor Hall’s two graphs, we can see that virtually all forms of alternative energy – wind, geothermal, photovoltaic, and hydro – have greater or equal EROI than fossil fuels and nuclear. Passive solar might be lower, unless it is incorporated into original building construction.
Experience Human Flight with the Melbourne Skydive Centre.
melbourneskydivecentre.com.au/
Shot on a GoPro
Experience Human Flight from Betty Wants In on Vimeo.
Produced: Betty Wants In
Music: “She is” – Salieri Music Inc
I can no longer say that not a single senior executive of one of the major nonprime lenders whose frauds hyper-inflated the housing bubble and caused the Great Recession has been convicted of his frauds. A single senior executive of one of the hundreds of fraudulent nonprime lenders was convicted yesterday, April 19, 2011. A jury found Lee Farkas, Chairman of the Board of Taylor, Bean & Whitaker (TBW), guilty of fraud. TBW was a large mortgage banking firm that made many nonprime loans, but the prosecution does not address the fraudulent nonprime lending.
To be fairer, this single overall case has produced four senior convictions.
Office of Public Affairs
Department of Justice
FOR IMMEDIATE RELEASE
Monday, March 14, 2011Former President of TBW Pleads Guilty to Fraud Scheme
WASHINGTON – Raymond Bowman, the former president of Taylor, Bean & Whitaker (TBW), pleaded guilty today to conspiring to commit bank, wire and securities fraud, and lying to federal agents about his role in a fraud scheme that contributed to the failures of TBW and Colonial Bank.In June 2010, Farkas was arrested and charged in a 16-count indictment for his role in the fraud scheme. Desiree Brown, the former treasurer of TBW, pleaded guilty on Feb. 24, 2011, and Catherine Kissick, a former senior vice president of Colonial Bank and head of its Mortgage Warehouse Lending Division, pleaded guilty on March 2, 2011, for their roles in the fraud scheme.
I congratulate everyone involved with the successful prosecutions. The TBW/Colonial Bank cases are the exceptions that prove the rule – the senior officers of the large nonprime lenders that caused the financial crisis have been able to loot with impunity. How did the TBW/Colonial Bank frauds come to prosecuted? They were very special cases and their frauds and their investigations reveal many of the pathologies that explain the severity of this crisis and the underlying frauds. First, according to the Department of Justice (DOJ), TBW was already failing by early 2002 – nine years ago! TBW was able to continue a fraud for over seven years (it was closed in 2009).
Court documents state that in early 2002, Bowman learned that TBW began running overdrafts in its master bank account at Colonial Bank because of TBW’s inability to meet its operating expenses….
Second, in addition to the fraud against Colonial Bank, TBW defrauded Freddie Mac by selling to Freddie Mac the same assets (bad loans) it was purportedly selling to Colonial Bank.
In his statement of facts, Bowman admitted that he learned from Farkas and other co-conspirators at TBW that within a year of its creation, Ocala Funding had a significant collateral deficit. As Bowman acknowledged, the government could prove that by August 2009, that deficit had grown to approximately $1.5 billion and that TBW had caused Colonial Bank and the Federal Home Loan Mortgage Corporation (Freddie Mac) to falsely believe that they each had an undivided ownership interest in thousands of the same loans worth hundreds of millions of dollars.
Third, note that while a Colonial Bank officer pleaded guilty for assisting these frauds against Colonial Bank, no one has pleaded guilty at Freddie Mac. The critical question is whether TBW actually delivered the key loan documents to Freddie Mac. Did Freddie Mac obtain an enforceable security interest or was it defrauded by TBW? Was Colonial Bank the only victim of the double sale/pledge?
Fourth, a number of states identified severe problems with TBW, and brought actions against it, before the Federal authorities took any action. Similarly, Alabama took the lead in closing Colonial Bank.
In August 2009, the Alabama State Banking Department, Colonial Bank’s regulator, seized the bank and appointed the FDIC as receiver.
Fifth, the criminal case was brought to the FBI’s attention by the Special Inspector General for the TARP program (SIGTARP) and perhaps the HUD/FHA inspectors. The FDIC did not initiate the criminal case or produce the key investigative findings. The record of the banking regulatory agencies’ failure to identify and make criminal referrals against the fraudulent lenders that drove the crisis remains intact.
Sixth, the task force that supported the TBW/Colonial Bank investigation did not include federal banking examiners or supervisors. The only federal banking regulatory personnel listed as supporting the investigation are the FDIC’s OIG staff. That is disturbing. The FDIC OIG is not expert in banking or banking fraud. It is an internal audit unit and its reports on failed banks reveal a repeated inability to identify fraud even when they describe actions that only make sense if the failed bank’s officers were engaged in accounting fraud. The FDIC has hundreds of examiners who have far greater expertise than their internal auditors with respect to banks and bank frauds. Again, even the FDIC (and the FDIC is by far the most vigorous of the federal banking regulatory agencies) did not make support for the first major fraud prosecution of a large nonprime lenders’ officers a priority.
Seventh, TBW was not subject to the Community Reinvestment Act. Its senior officers caused it to make bad loans, and cover up the losses on those bad loans in order to produce fictional short-term accounting income that would cause their compensation to increase. The title to Akerlof & Romer’s 1993 article says it all: “Looting: the Economic Underworld of Bankruptcy for Profit.” The question is why Freddie Mac would purchase loans from a mortgage banker that was notorious for the poor quality of its underwriting. The answer is that Freddie Mac’s senior managers’ rose dramatically when they purchased bad loans at a premium yield.
Eighth, the senior managers of Colonial Bank were either in on the fraud or grossly negligent. They allowed their SVP in charge of their Mortgage Warehouse Lending Division to assist TBW in carrying out an enormous, crude series of frauds for seven years. Colonial Bank’s controlling officers and directors also appear from the DOJ allegations to have entered into transactions designed to fund TBW’s fraudulent capital injection into Colonial Bank.
Ninth, neither the FHA nor the FDIC appear to have spotted any of these frauds even though they were enormous, crude, and growing over a seven year period. Indeed, the FHA and the FDIC appear to have been supportive for some time of TBW’s fraudulent (and fictional) injection of capital into Colonial Bank. The FHA allowed TBW and Colonial to grow so rapidly that they became among the FHA’s largest providers.
Tenth, the DOJ’s March 14, 2011 press release that I have been quoting from makes one point quite forcefully.
This prosecution was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.
Got that, “President Obama” deserves the credit. There’s some truth to this PR. President Bush’s Attorney General Mukasey notoriously refused to create a national task force to investigate the accounting control frauds that caused this crisis. He claimed that the mortgage frauds were so small-time that they were the equivalent of “white-collar street crimes.”
Mukasey was right in a way – because he was so wrong. Under his leadership the FBI investigated only the small time mortgage frauds. There are two great truths to investigating epidemics of accounting fraud:
Because he refused to look at the massive frauds he didn’t find any of the massive mortgage frauds. Because he looked at the small frauds he found tens of thousands of small frauds. Because his staff found only minor frauds he assigned only a minimal number of FBI agents to investigate mortgage fraud (120 nationwide in FY 2007 – one-eighth of the number of FBI agents assigned to investigate S&L frauds during the S&L debacle even though the current crisis is dramatically more severe than the S&L debacle). His staff of FBI agents assigned to mortgage fraud cases was divided up among scores of field offices. That meant that no field office could investigate even one of the large nonprime lenders. (The military rightly condemns these tiny units incapable of effective action against a major foe as “penny packets.”) Because his penny packets assigned to investigate the smaller frauds found – smaller frauds – Mukasey reached the “logical” conclusion that their investigations confirmed his assumption that mortgage fraud was equivalent to “white-collar street crime.”
Senator Obama warned of the wave of mortgage fraud and called for increased budgets for the FBI and DOJ to investigate and prosecute the frauds. He could have made the investigation and prosecution of the major accounting control frauds one of the nation’s top priorities. The result would have transformed his administration and the public support for those holding the elite frauds accountable. The DOJ press release says all the right things.
President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.
But DOJ has not “walked the walk.” Instead, we have one case brought not because of the underlying accounting fraud involving its lending, but because the leaders of the accounting control fraud sought to rip off TARP and came to the attention of one of our two (the other is Elizabeth Warren) most vigorous and effective public servants – Neil Barofsky (SIGTARP). Unfortunately, Mr. Barofsky has resigned.
Bill Black is an associate professor of economics and law at the University of Missouri-Kansas City, a white-collar criminologist, former senior financial regulator, and the author of The Best Way to Rob a Bank is to Own One
.
Charles Plosser and the 50% Contraction in the Fed’s Balance Sheet
By John Mauldin
April 18, 2011
>
Dr. John Hussman is no stranger to Outside the Box readers. And his recent posting has my mind reeling. In essence he is saying that if the Fed wants to stop the QE and allow rates to rise, they must either reverse the QE or bring on inflation. And he does it with numbers and his usual strong reasoning. I really did read this 3-4 times, thinking through the implications.
“There are a few possible outcomes as we move forward. One is that the economy weakens, and the Fed decides to leave interest rates unchanged, or even to initiate an additional round of quantitative easing. In this event, it’s quite possible that we still would not observe much inflation, provided that interest rates are held down far enough. Unfortunately, the larger the monetary base, the lower the interest rate required for a non-inflationary outcome. T-bills are already at less than 4 basis points. In the event of even another $200 billion in quantitative easing, the liquidity preference curve suggests that Treasury bill yields would have to be held at literally a single basis point in order to avoid inflationary pressures.”
You can read his latest work at www.hussman.net .
Note on Finland. The True Finns took over 19% of the vote, with the largest party getting slightly more than 20% and the number two a little less. Basically, 15% of Finnish voters used the True Finns to register their displeasure at the bailout at the cost of Finnish taxpayers. Germany is starting to talk about “restructuring” Greek debt, another word for default. The German banks must be getting in better shape if the talk is out in the open among German leaders – much as I said a year ago. Stay tuned.
Your wondering how the Fed will pull this off (without a real problem developing) analyst,
John Mauldin, Editor
Outside the Box
John P. Hussman, Ph.D.
Last week, an unusual event happened in the money markets that should not escape the attention of investors. The yield on 3-month Treasury bills plunged to less than 5 basis points. As I noted this past January in Sixteen Cents: Pushing the Unstable Limits of Monetary Policy , a collapse in short-term yields to nearly zero is a predictable outcome of QE2, based on the very robust historical relationship between short-term interest rates and the amount of cash and bank reserves (monetary base) that people are willing to hold per dollar of nominal GDP:
“Barring external upward pressures on interest rates, a further non-inflationary expansion of the Fed’s balance sheet of $400 billion, to $2.4 trillion (as contemplated under QE2), would imply the need for 3-month Treasury yields to fall to just 0.05%. Higher rates would be inflationary, because monetary velocity would not be sufficiently restrained. In effect, a further expansion in the monetary base requires that short-term interest rates decline enough to ensure a significant drop in velocity.
“In terms of liquidity preference, a completion of QE2 requires liquidity preference to increase to 16 cents per dollar of nominal GDP – easily the highest level in history. We hit 15 cents at the peak of the credit crisis. To get past that, short-term interest rates will have to decline to the point where there is no competition from interest rates at all, but where the slightest amount of interest rate pressure would either drive inflation higher or force a massive contraction in the Fed’s balance sheet to avoid that outcome. Then what?”
On further review, that “16 cents” figure actually underestimates how extreme the situation will be within a few weeks. The monetary base has already surpassed $2.4 trillion. Indeed, as of Wednesday, the U.S. monetary base stood at $2.49 trillion. QE2, as presently contemplated, will actually bring the U.S. monetary base to over $2.6 trillion. As the Fed notes in its report Domestic Open Market Operations during 2010:
“With progress towards its statutory objectives of maximum employment and price stability disappointingly slow in the fall of 2010, most Committee members judged it appropriate to provide additional monetary accommodation. Accordingly, the FOMC announced at its November meeting that it intended to increase the total face value of domestic securities in the SOMA portfolio to approximately $2.6 trillion by the end of June 2011 by purchasing a further $600 billion of longer term Treasury securities in addition to any amounts associated with the reinvestment of principal payments on agency debt and MBS.”
With nominal GDP at about $15 trillion, the U.S. economy will then have to hold well over 17 cents of base money per dollar of GDP. In order to prevent inflationary impact from this level of monetary base (that is, to prevent base money from becoming a “hot potato” that nobody is willing to hold), we estimate that 3-month Treasury bill yields will have to be sustained no higher than a few basis points until the Fed reverses course.
Market participants widely assume that they are relatively “safe” to take speculative risk through mid-year, on the belief that the Fed’s policy of quantitative easing will be sustained through the end of June. But looking at the monetary data, it is not clear that the Fed’s statement “by the end of the second quarter” means “precisely until the end of the second quarter.”
Some items of interest today:
• CEOs earn 343 times more than typical workers (CNN/Money)
• Flash Crash To The Upside In Gold? (Adventures in Capitalism)
• Key to job growth, equality is boosting tradable sector of economy (Washington Post)
• 10 Doomsday trends America can’t survive (Marketwatch)
• The Much Abused Spirit of Contrarianism (Jesse’s Café Américain)
• Capitalism is failing the middle class (Reuters)
• Auto Rate Markups Cost Americans $25.8 Billion Over the Lives of Their Loans (CRL)
• Robert Lane Greene on Language and the Mind (The Browser)
• What Defines a Meme? (Smithsonian)
• Face Blind (Wired)
What did I miss . . . ?
Pardon our belated look at Existing Home Sales (but we’ve been busy).
For this post, we will look at our favorite chart — Existing Home Sales (NSA) — and also teach you how to read a National Association of Realtors news release.
Our favorite chart, courtesy of Calculated Risk, is below. It shows the Existing Home Sales BEFORE they get seasonably adjusted. The pattern you see is the home sales pattern — bottoming in December January, and peaking in June/July/August. Note the ongoing weakness — until the tax credit kicked in. Now, in 2011, we see more signs of weakness.
As to the National Association of Realtors, there is a small secret to reading their news eelease: You need to ignore every other paragraph. It typically looks like this:
Data data data Data data data Data data data Data data data Data data data Data data data Data data data Data data data Data data data Data data data Data data data
Spin Bullshit Spin Bullshit Spin Bullshit Spin Bullshit Spin Bullshit Spin Bullshit Spin Bullshit Spin Bullshit Spin Bullshit Spin Bullshit Spin Bullshit Spin Bullshit Spin Bullshit
Data data data Data data data Data data data Data data data Data data data Data data data Data data data Data data data Data data data Data data data Data data data
Spin Bullshit Spin Bullshit Spin Bullshit Spin Bullshit Spin Bullshit Spin Bullshit Spin Bullshit Spin Bullshit Spin Bullshit Spin Bullshit Spin Bullshit Spin Bullshit Spin Bullshit
The secret is to focus on the data, and ignore the spin.
For example:
Sales of existing-home sales rose in March, continuing an uneven recovery that began after sales bottomed last July, according to the National Association of Realtors.
Lawrence Yun, NAR chief economist, expects the improving sales pattern to continue. “Existing-home sales have risen in six of the past eight months, so we’re clearly on a recovery path,” he said. “With rising jobs and excellent affordability conditions, we project moderate improvements into 2012, but not every month will show a gain – primarily because some buyers are finding it too difficult to obtain a mortgage. For those fortunate enough to qualify for financing, monthly mortgage payments as a percent of income have been at record lows.”
Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, increased 3.7 percent to a seasonally adjusted annual rate of 5.10 million in March from an upwardly revised 4.92 million in February, but are 6.3 percent below the 5.44 million pace in March 2010. Sales were at elevated levels from March through June of 2010 in response to the home buyer tax credit.
NAR’s housing affordability index shows the typical monthly mortgage principal and interest payment for the purchase of a median-priced existing home is only 13 percent of gross household income, the lowest since records began in 1970.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 4.84 percent in March, down from 4.95 percent in February; the rate was 4.97 percent in March 2010. Data from Freddie Mac and Fannie Mae show requirements to obtain conventional mortgages have been tightened, with the average credit score rising to about 760 in the current market from nearly 720 in 2007; for FHA loans the average credit score is around 700, up from just over 630 in 2007.
“Although home sales are coming back without a federal stimulus, sales would be notably stronger if mortgage lending would return to the normal, safe standards that were in place a decade ago – before the loose lending practices that created the unprecedented boom and bust cycle,” Yun explained.
OK, I cheated — I moved a paragraph to make this funnier. But the idea is that you look at the data and ignore whatever it is they are spinning about it.
>
Chart courtesy of Calculated Risk
>
Source:
Existing-Home Sales Rise in March
NAR, April 20, 2011
http://www.realtor.org/press_room/news_releases/2011/04/rise_march
"Markets can remain irrational longer than you can remain solvent." —John Maynard Keynes
After 3 quarters in a row that averaged just 1.2%, Q4 GDP grew 2.8%, a touch below expectations of 3.0% BUT Nominal GDP grew well below forecasts. Because the price deflator was up just .4% vs the estimate of 1.9%, Nominal GDP was up 3.2% vs the estimate of 4.9%. Personal Consumption rose 2.0% vs the forecast of 2.4%. Fixed Investment rose 3.3% helped by a 5.2% increase in equipment and software spending and residential construction rose by 10.9%. Trade was a slight drag on GDP growth and government spending was as well led by a 12.5% decline on national...
read more »
Tweet
Facebook
Reddit
Digg this!
