Posts filed under “MacroNotes”


We’ll hear again from the 4th branch of government today, the Federal Reserve, to tell us their plan to replace the upcoming expiration of Smother the Yield Curve. Between Fed speeches and WSJ articles, it seems likely that we’ll get $45b per month of unsterilized Treasury purchases, thus bringing the monthly dose of electronically printed money to $85b including the ongoing MBS program. Fed policy will again try to pull forward economic activity as for example, any new car or home purchased today because of artificially engineered cheap money is one less car purchased later when the price of money is more dear. With diminishing returns on helping the economy clearly seen in 2012, we’ll see in 2013 whether that will be the case for asset prices as it may take more and more help to maintain the same level of sustenance. With the avg 30 yr mortgage rate moving again to a record low for the week, the MBA said purchase apps were up just .7% after a .1% increase last week but that it is to a one yr high. Refi apps rose 8% to an 8 week high. One other thing of note ahead of the FOMC, the 5yr 5yr forward inflation breakeven closed yesterday at 3.07%, the highest since July 2011.

In Asia, an 8 month low in the yen coincided with an 8 month high in the Nikkei. Japan said machinery orders bounced back in Oct. India’s IP in Oct jumped 8.2% y/o/y vs est of 5%.

In Europe, the UK reported an unexpected drop in jobless claims and the pound is at a 1 month high vs the US$. Yields are lower for a 2nd day in Italy and Spain after Italy sold the max amount of 1 yr bills they hoped for notwithstanding political uncertainty. Euro zone IP in Oct fell 1.4% m/o/m vs the est of flat.

II: Bulls 45.7 v 43.6, 2 mo high. Bears 23.4 v 25.5, lowest since May.

Category: MacroNotes

Trade Deficit/imports, exports weak

While out online late yesterday, today’s paper version of the WSJ is reporting that the “Obama-GOP Cliff Talks Take Positive Step…Neither Side Gives Details, but Strict Moratorium on Public Comments is Considered Sign of Progress at Bargaining Table.” We’ll see but while we wait, small businesses are getting more and more fed up. The NFIB…Read More

Category: MacroNotes

Political dysfunction in Italy is common/China/DC

If there is one certainty in Italian politics, it’s uncertainty. As the US has had just 12 President’s since WWII, Italy has had 26 different PM’s. The difference now though of course is the fragile state of the country’s finances where consistent policy is most desired. With the Monti resignation announcement which will take place…Read More

Category: MacroNotes

Student and auto loans still driving consumer credit gains

In the just reported consumer credit data released by the Fed, revolving credit outstanding on a seasonally adjusted basis rose $3.4b m/o/m to $857.6b. That is the highest since May but looking at a longer term chart reflects more bouncing along the bottom. While nominal GDP growth is at new highs, revolving credit outstanding remains…Read More

Category: MacroNotes, Think Tank

Confidence falls sharply, DC patience thin?

UoM Consumer Confidence fell sharply in Dec to 74.5 from 82.7 in Nov and below expectations of 82. It’s a 4 month low and is down from the highest level since Sept ’07. Most of the drop came in the Outlook component which fell by 13 pts to the lowest of the year while Current…Read More

Category: MacroNotes, Think Tank

Labor Dept said little impact, ADP said big

Nov Payrolls gained 146k, 147k of which was in the private sector. Expectations were for 85k and 90k respectively. The two prior months were revised down by 49k mostly in the public sector. The main difference between today’s # and ADP was the viewpoint of each on the impact of Hurricane Sandy. The Labor Dept…Read More

Category: MacroNotes


Both the BoE and ECB left policy unchanged as expected. Impressively in light of all the economic concerns in Europe, the German DAX today is rallying to the highest level since May ’11 and the CAC is at the best level since Aug ’11. German factory orders in Oct rose 3.9% m/o/m, well above the…Read More

Category: MacroNotes

ADP job’s report gets cut by hurricane

The supposedly new and improved ADP employment report said private sector job gains in Nov totaled 118k, 7k less than expected and down from 157k in Oct. The hurricane though had a large influence on the number as ADP estimates that 86k were lost due to it with the manufacturing, retailing, leisure and hospitality and…Read More

Category: MacroNotes, Think Tank


A stock market that has performed as bad as Spain in 2012, finally got some love overnight. The Shanghai index rallied 2.9% to a 3 week high just two days after closing at the lowest level since Jan ’09. The Hang Seng index was also up 2.2% to close at the best level since Aug…Read More

Category: MacroNotes, Think Tank

Fiscal negotiations/RBA/other

Not surprisingly, the more detailed Boehner proposal presented to the White House was rejected and the game goes on. Imagine what our Founding Fathers would think of this process after they created a document with specific enumerated powers. I digress to monetary policy where the Reserve Bank of Australia cut interest rates by 25 bps…Read More

Category: MacroNotes, Think Tank, Uncategorized