Posts filed under “Think Tank”

The report card is in/Fed’s flow of funds

The Q1 flow of funds report from the Fed is out and the report card is in on the US consumer. Due to a rise in disposable income from Q4 (likely due to the sharp drop in gasoline prices and also tax refunds) and a drop in consumer credit (mortgage debt was flat), household debt (consumer credit + home mortgages) as a % of disposable income fell to 120% from 123% in Q4 ’08 and is at the lowest level since 2004 but remains well above the year end 2001 level of 96% and 83% range in 1995. Owners equity in their home fell to another record low to 41.4% from 42.9% in Q4. It first fell below 50% in Q4 ’07 and was 57.5% 10 years ago. Household wealth in their homes fell $448b from Q4 and is down by $4 trillion from the ’06 high. Bottom line, the data reflects the consumer deleveraging that is still ahead of us. I highlight the consumer balance sheet b/c of its huge contribution to GDP.

Category: MacroNotes

Business Inventories

April Business Inventories fell 1.1%, about in line with expectations and March was revised down by .2% to a decline of 1.3%. It’s the 6th straight month of 1% or more drops and reflects the dramatic inventory correction that our economy has experienced. At the same time, it provides the backdrop for the bullish camp’s…Read More

Category: MacroNotes

Report card day for the US consumer

Over the past few weeks we’ve seen a differentiation developing in the stock market with outperformance of those name’s that are exposed to growing inflation expectations and those co’s that have large exposure to overseas markets relative to those co’s that are US centric only, dependent on the US consumer and with little pricing power….Read More

Category: MacroNotes

Fed Emails Bash BofA Chief

Excerpts “… Ken Lewis’ claim that they were surprised by the rapid growth of the losses seems somewhat suspect. At a minimum, it calls into question the adequacy of the due diligence process BAC has been doing in preparation for the takeover.” –Dec. 19 email from Timothy Clark, senior advisor in the Fed’s division of…Read More

Category: Bailouts, Federal Reserve, Think Tank

Focusing on the Wrong “Special Master”

Good Evening: The capital markets absorbed a flurry of news today and came away with only some minor indigestion. Stocks and bonds were on the defensive before each market made comebacks of varying degrees, while the dollar and commodities were firm before giving up some of their gains. Aside from a surprising drop in crude…Read More

Category: Markets, Think Tank

volume/upcoming big event

NYSE consolidated volume today is on track to be as lackluster as yesterday which, not including any holiday influence, was the slowest since the first trading week of January. What are we waiting for you ask with the S&P having already climbed the mountain of its 200 day moving average? I believe it’s the June…Read More

Category: MacroNotes


As we await the results of today’s 10 yr bond auction to gauge sentiment on inflation, the US$, US government finances and foreign appetite for longer term treasuries, a less scientific take on inflation expectations is looking at the number of Google search results for Inflation and Deflation. Search results for Inflation total 40,500,000 and…Read More

Category: MacroNotes

Special Master

White House spokesman Gibbs said the new compensation Czar Kenneth Feinberg, who will review “the soundness, the appropriateness” of compensation for top execs of companies receiving government aid, will take the role of “Special Master.” Toto, I’ve a feeling we’re not in Kansas anymore. We must be over the rainbow.

Category: MacroNotes

10 yr auction

The $19b reopening of the May 6th 10 yr auction was mixed as a higher than expected yield of 3.99% was needed to bring out the buyers where the bid to cover of 2.62 was the most since Sept ’07 and above the one yr average of about 2.30. The level of indirect bidders, mostly…Read More

Category: MacroNotes

Gasoline prices, not again?

As if the US consumer didn’t have enough to worry about, following the DOE data, the front gasoline contract is rallying to the highest level since Oct 15th ’08. This morning, AAA said the national average for unleaded gasoline rose to $2.63, the most since Oct 28th ’08, up from the recent low of $1.62…Read More

Category: MacroNotes