Posts filed under “Economy”

Sometimes, There is No Pony

Wall Street has been sifting through the
horrific reports out of the Gulf of Mexico. Their rose-colored glasses allowed
them to see positives amongst the human and economic destruction: The stimulus
of rebuilding, the Fed pausing, cheaper oil. BusinessWeek  notes the Street has been

There were significant tribulations to be
overcome before Katrina hit, and the storm’s devastation only adds to

Consider these sources of economic pressure:

•  Oil prices are up almost 300% from their post 9/11 lows, and have more
than doubled since January 2004. Thanks to the demand side of the occasion, the
economy has been struggling under the costs. To quote Joan McCullough, the
supply disruption adds a “double whammy to prices.”

The Consumer is stretched fairly thin. Inflation
continues to snarl; the days
of easy cash
out refis
are behind
us. The catalyst for the next round of consumer spending is becoming
increasingly hard to see. At the least, I can suggest what it will not be: a
significant increases in wages (See the recent Census
Bureau report
) or a new
spurt in hiring. A recent
Manpower survey of execs taken before Katrina implied more of the same –
lackluster hiring, best described as “lumpy,” with
strong regional variance.

The Federal Deficit, already booming thanks to the unencumbered
profligacy of single party rule*, now looks to soar above half
a trillion dollars
for 2005; And the budget for 2006 is widely expected to
be even worse.

The War in Iraq, and all the costs associated thereto, has not gone away.
Our March 2003 prediction
for a final tab of a trillion dollars is looking increasingly prescient.
Katrina may have blown War coverage off the front pages, but the financial
burdens of this endeavor still remains a heavy one.

(Speaking of which) Off Balance Sheet funding: Since we’re
discussing these, let me remind you that a significant chunk of Federal
spending is so far “Off Balance Sheetthat it would make the CFO of
Enron blush. Its not just t
he war in Iraq funded via special legislation;
The other major expense is FEMA. This “Emergency” spending on an ad
basis makes the deficit appear smaller than it really is.

Perhaps it’s a coping mechanism, a form of gallows humor that encourages Investors to see positives in the face of awful destruction. Regardless, it needs to be taken in context – as it points out that markets are not perfectly efficient, and can be as fallible as its Traders.


* Save your emails; this isn’t a political statement, but rather is
an historical observation.

It doesn’t matter which party is in power, but when
it’s but a single, dominant party without a counter-balancing opposition, we end
up with excessive spending.

But don’t believe me, you can look it up
yourselves. Or, for a
typical example, see this article: No-Bid
Contracts Win Katrina Work

Category: Economy, Investing, Markets, Psychology, Trading

Employers remain cautious about hiring

Category: Economy

More Stupidity from the Conference Board

Category: Commodities, Economy

The Disconnect and Economic Classes

Category: Economy, Psychology

Market Cycles: 100 Year DJIA

Yet another look (see prior takes here and here) at the concept of market cycles. The past century  shows alternating Bullish and Bearish phases, secular periods each lasting for an extended time (between 10 to 20 years). > Dow Jones Industrials, 1903 – 2004 Note that markets are up slightly for 2005 since this chart…Read More

Category: Economy, Investing, Markets

Katrina Lowers Year End Expectations

Category: Commodities, Economy, Investing, Markets, Psychology

OS X Gas Widget

Category: Commodities, Economy, Web/Tech

Manufacturing versus Real Estate

Category: Economy, Real Estate

Predictions and Accountability

Category: Economy, Financial Press, Investing

Economic, Market Impact Of Hurricane Katrina

Good round up from Dow Jones:

Over a week after making
landfall, the broad economic fallout from Hurricane Katrina continues to
unfold. Economists are downgrading their third quarter growth forecasts for
the U.S. economy and not all think that rebuilding in the wake of the storm
will bring things back in the fourth quarter. Markets have stabilized
however, taking their cue from the price of oil and other refined energy
products, which have been hit by a major international effort to release
emergency energy reserves in an attempt to alleviate a supply crunch.
Estimates of the economic loss from the hurricane exceed $100 billion, with
the Senate’s top Democrat putting it closer to $150 billion.

are some of the main market and economic impacts:

Read More

Category: Commodities, Currency, Economy, Markets