Posts filed under “Think Tank”

At this point, what the market wants is different than what the Fed

The key CPI report is expected to be flat m/o/m but down 1.9% y/o/y, the biggest decline since 1949. The core rate though remains sticky and is expected to rise .1% m/o/m and 1.6% y/o/y. While the markets want inflation to be in line to less than forecasts because it will keep the Fed with very easy policy and would push further out into the future the dreaded exit strategy, the Fed has rates at ZERO because they want some inflation. They are fighting to an extraordinary extent to get some inflation, so what the Fed wants in this respect is different than what the markets are hoping for. Any respectable central bank has to cringe everyday that they have rates artificially at zero. IP is expected to rise by .4% and it would be the first jump since Oct ’08 and this is a key data point in measuring the hoped for increase in inventories. Capacity Utilization is also expected to tick higher after hitting its lowest level on record. The Aug preliminary UoM confidence figure is expected to rise 3 points to 69. The Shanghai index fell 3% and is now 12% below the high of last week and is at a 6 week low. Hong Kong exited its recession in Q2 as GDP rose 3.3% q/o/q, better than forecasts of a gain of 1.2%.

Category: MacroNotes

30 year auction

The 30 year bond auction was good as the yield was a touch below where the when issue was trading right before and the bid to cover of 2.54 was above the average seen this year of 2.32 and the 2nd highest going back to May ’08. Indirect bidders totaled 48.1%, about the same as…Read More

Category: MacroNotes

The FOMC Meets: Actions Speak Louder Than Words

Jim Bianco on FOMC Actions The Financial Times – Short View: Fed’s exit strategy Nobody is expecting the Federal Reserve to change its target Fed funds interest rate on Wednesday. It will remain at 0.25 per cent after the federal open market committee meets. But there has been a flurry of speculation that the Fed…Read More

Category: Federal Reserve, Think Tank

Business Inventories

June Business Inventories fell 1.1%, .2% more than expected and May was revised lower by .2% to a drop of 1.2%. Because sales rose by .9%, the inventory to sales ratio fell to 1.38 from 1.41 and is at the lowest level since Oct ’08 when it was 1.36. In addition to the drop in…Read More

Category: MacroNotes

Retail Sales and Jobless Claims

July Retail Sales unexpectedly fell .1% vs an expected clunker led gain of .8%. Ex auto’s, sales fell .6% vs an expected gain of .1%. Ex auto’s and gasoline, sales fell .4% vs forecasts of flat. Motor vehicles, parts sales rose a strong 2.4% due to the clunker plan but it seems that the spending…Read More

Category: MacroNotes

How much does free money work?

The first quantification of the impact that the stimulus of free money has on a particular sector comes out at 8:30 when July Retail Sales are reported and we see how much auto sales rose. Sales are expected to rise .8% but ex auto’s they are expected to rise just .1%. Jobless Claims, also of…Read More

Category: MacroNotes

An Update on the “Mini-TARP Employee Bonus Pool” Idea

Good Evening: Since Monday’s commentary, U.S. stocks have swooned and jumped without much to show for it. Sure, they went down by more than 1% on Tuesday and up by a similar amount today, but the major averages are just about back to the closing levels posted on Monday. Yesterday’s retreat was in part blamed…Read More

Category: Markets, Think Tank

Was China tipped off to what the FOMC will say ahead of the 10 year

Ahead of both the 10 year auction from the Treasury and the FOMC statement from the Fed, I wonder if the Fed tipped off the Chinese on what they will say in terms of either extending or just fulfilling the existing program of buying US Treasuries. China of course being the biggest foreign holder has…Read More

Category: MacroNotes

Lotta stuff going on

The FOMC tells us what they are thinking at 2:15pm and all eyes are on whether they extend their purchases of US Treasuries past the expiration of the plan in Sept. On March 18th they introduced this new form of QE and since then, 10 yr bond yields have risen from 3% to 3.67%, the…Read More

Category: MacroNotes


The FOMC statement said that economic activity is “leveling out,” an improvement from the “pace of economic contraction is slowing” that was said at the June meeting. The rest of the paragraph on the economy was very similar to the June meeting. The commentary on inflation is about identical to the previous one as they…Read More

Category: MacroNotes