Posts filed under “Think Tank”

Philly Fed not as robust as the Empire

The Philly Fed manufacturing survey did not follow the big upside in the NY data, coming in .5 point less than expected at 11.5 and it fell from the Sept level of 14.1. It is though positive for a 3rd month for the first time since ’07. There was improvement in three key components, New Orders rose 3 pts to 6.2, the highest since Dec ’07, Employment rose to -6.8 from -14.3, obviously still weak but the least so since Sept ’08 and backlogs rose 6 pts to -1.3. Inventories surprisingly fell though sharply to -31.8 from -18.1 and that contrasts with the hoped for inventory build story but the NY survey saw a rise in this category. Prices Paid and Received both moved higher. Also in difference to the NY survey, the 6 month outlook fell 8 pts to the lowest since April. Again, the Philly and NY surveys have proven to be uncorrelated and thus leaves us more confused but the trend is up and the ISM will reconcile the degree of improvement.

Category: MacroNotes

Lotta data

The October NY manufacturing survey blew past expectations, coming in at 34.6, twice the forecast. It’s the highest level since May ’04. The number only measures the direction of improvement, not the degree so don’t extrapolate that we are partying like its May 2004 but there is no question today’s figure was impressive. New Orders…Read More

Category: MacroNotes

As seen for Q2, earnings season is great but revenue season is mixed

Earnings season continues to be excellent relative to expectations while revenue season is mixed, the same theme as seen in Q2. Based on my little earnings cheat sheet, 18 of 20 co’s have beat earnings estimates while only 10 have exceeded revenue estimates. All in one day today we get information on the labor market,…Read More

Category: MacroNotes

FOMC minutes, easy for longer but is the fire still raging?

The minutes from the FOMC Sept meeting didn’t reveal much in terms of gaining any clues of when they might raise interest rates in light of their more optimistic view of the economy in terms of expecting 2nd half improvement that they expect to continue into ’10. Based on their still sanguine view of inflation…Read More

Category: MacroNotes

DJIA 10,000, let’s reminisce

With the DJIA approaching 10,000 again, let’s reminisce about 1999, the year it first passed that magic level on March 29th. Millennium by the Backstreet Boys was the best selling album, American Beauty won the Academy Award, the Euro was established, SpongeBob SquarePants aired for the first time, Hugo Chavez was elected President of Venezuela,…Read More

Category: MacroNotes

FOMC Meeting Comments

FOMC Minutes (September) > Minutes from September’s meeting will reveal a wide range of views on the FOMC regarding the timing of the central bank’s withdrawal of the monetary stimulus. Some policymakers have lobbied for the central bank to begin tightening aggressively soon. Others, including Fed Chairman Ben Bernanke, appear to want to proceed with…Read More

Category: Federal Reserve, Think Tank

Business Inventories/data shows drag still but improvement to come

August Business Inventories still reflect the drag from inventories as they fell 1.5% vs expectations of a drop of 1%. Because sales rose by 1%, the inventory to sales ratio fell to 1.33 from 1.36, the lowest since August ’08 but it sets the backdrop for an improvement in manufacturing into year end as the…Read More

Category: MacroNotes

A Discourse on the Method . . .

. . . of Rightly Conducting the Reason and Seeking Truth in Contemporary Economies & Markets, with sincerest apologies to the memory of Rene Descartes.



Seventeenth century medicine, Moliere observed, was a field where most men died of their remedies and not of their diseases. So too, twenty-first century interventionist monetary policy seems to kill more wealth than if recessions were left alone to run their course. Instead of bloodletting, our “physicians” pump us full of liquidity until we explode, and then pump more into us as we lay gushing.

In the US our chief surgeon, the Fed, has been able to operate unilaterally, virtually unencumbered by Congressional restrictions or mandates, so that Wall Street banks (its literal owners and first constituency) don’t die. And the Fed needn’t worry about claims of malpractice because, as we now see, when push comes to shove its insurance carrier is the US Treasury, which is another way of saying the same taxpayers that lay bleeding.

Transitive properties still hold: if A equals B and B equals C, then A must equal C. Applied here: if US taxpayers (A) fund the US Treasury (B), and Treasury backs the Fed (C), and the Fed backs Wall Street banks (D), then US taxpayers (A) back the ongoing profitability of Wall Street banks (D). Perhaps this explains why all those crisp new electronic dollars created from thin air last fall went directly to creditor banks rather than to debtor homeowners?

Saving the system was generally perceived then to be saving the US economy or saving the commercial paper market or saving depositors from losses. In fact these systems were never at risk given the Fed’s willingness to print money and cover all bets. Whether carefully designed or the result of impulsive reactions, there was a decision made at the highest levels of government. The only conclusion to draw was that the “system” saved was the system of government intermediation into the private sector economy and it was accomplished by saving the government’s ports of entry — Wall Street’s largest and most influential banks.

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Category: Think Tank

Sept Retail Sales

Sept Retail Sales were better than expected as they fell just 1.5% m/o/m, .6% better than forecasts, as the CARS program ended (motor vehicles, parts fell 10.4%). Ex the influence of auto’s, sales rose .5%, .3% more than expected and ex auto’s and gasoline, sales were up .4%, .2% higher than estimated. Component supplier Intel…Read More

Category: MacroNotes

Impressive earnings, impressive execution but how’s end demand?

Solid execution with big upside in revenues from INTC and JPM provides an interesting backdrop to the Retail Sales data today. Intel has benefited from inventory rebuilding, especially ahead of the Windows 7 launch (replacement cycle hopes) and netbook sales. The question of sustainability will be sell through to the end consumer and the Retail…Read More

Category: MacroNotes