Posts filed under “MacroNotes”

Commodity Inflation

With the CRB index rising to within just 1% of its high of 2009, the
implied inflation rate in the 10 yr TIPS has broken out to the highest
level since Sept 30th at 1.575%. On Tuesday, Bernanke said that he
expects inflation to be quite contained over the next couple of years
while at the same time expecting the economy to start growing by year
end. This goldilocks forecast sounds great but if he’s correct and the
economy does stop contracting by Q4, it’s hard to believe that commodity
prices will remain tame at the same time. Commodity producers over the
past year have responded aggressively to the massive demand destruction
seen and have underinvested in response and its not that easy to just
ramp up again at a quick pace. It is also for this reason on the supply
side, that if commodity demand just stops going down, prices should
rise.

Category: MacroNotes

U6

The comprehensive unemployment rate which is referred to as U6 and includes part time workers that want full time jobs and discouraged workers that have stopped looking but will take a job if offered, rose to 15.8% from 15.6% and 9.2% in April 2008.

Category: MacroNotes

Payrolls

April Payrolls fell 539k, 61k better than expected BUT the 2 prior mo’s were revised down by 66k, so taken together, it was about in line with estimates. Giving the # a boost was the 72k person increase in Govt hiring, led by 66k within the Federal Govt. Construction fell by 110k, mfr’g by 149k,…Read More

Category: MacroNotes

Clarity, For Now

Clarity is what every investor craves especially in a world of alot of dark alley ways that multiply in a recession. At this moment in time, the ‘stress test’ has given the markets clarity as to the current exposure of 19 banks to a specific set of scenarios and kudos to those that are able…Read More

Category: MacroNotes

Claims data

Initial Jobless Claims totaled 601k, 34k less than expected and down from a revised 635k last week (up by 4k) and down for a 2nd week to the lowest since Jan 23rd. Continuing Claims though continues its move higher by 56k, 1k more than expected and the differential between the two figures is evident that…Read More

Category: MacroNotes

‘Stress Test the movie,’ hopefully they’ll be no sequel

As we get the official results of the ‘stress test’ today, a key assumption used by the Treasury was a stressed scenario of a 10.3% unemployment rate. With Friday’s report on payrolls, we may be at an unemployment rate of almost 9% and at the current pace, we’ll be at 10% by year end. Thus,…Read More

Category: MacroNotes

ADP

ADP reports that 491k jobs were lost in the private sector, much less than expectations of a fall of 645k and a big improvement from a revised -708k reading in March (down from 742k). It’s the smallest job loss since the -352k figure in Oct ’08. Small and medium sized businesses continue to see the…Read More

Category: MacroNotes

How Do You Raise Capital Without Having to Raise Capital?

According to the leak du jour, BAC needs $34b in equity capital in order to absorb the losses estimated in the ‘stress test.’ Considering that they’ve already received $45b in preferred stock from the US taxpayer, an accounting maneuver of converting that to common can, Voila, cure their capital needs without raising a penny of…Read More

Category: MacroNotes

How best to deal with debt?

Ben Bernanke and the FOMC have the fed funds rate currently at zero and with a straight face in the Q&A today, he says he’s committed to price stability. He has one unspoken goal in his policies and that is to inflate our way out of this current economic malaise. The Fed and Treasury are…Read More

Category: MacroNotes

LIBOR continues its drop

Another day closer to the release of the bank ‘stress test’ brings us another leak in the morning papers and today reveals that 10 of the 19 banks MAY need to raise capital and/or convert preferred to common in order to improve the TCE ratio. The relevance of the outcome is only important for those…Read More

Category: MacroNotes