Posts filed under “Think Tank”

$ index

For the Fibonacci followers out there, the DXY (US$ index) at the
current level of 78.38 (down sharply again) has retraced 61.8% of its
rally off the record low of April ’08. The implications the $ weakness
has for inflation and interest rates and thus for the cost of financing
massive deficits at the government level, of refinancing
corporate/consumer America and influencing the cost of living for the
average person is why policy makers must keep watch in the message it
sends to them.


Although the information contained herein has been obtained from sources
Miller Tabak + Co., LLC believes to be reliable, its accuracy and
completeness cannot be guaranteed. This report is for informational
purposes only and under no circumstances is it to be construed as an
offer to sell, or a solicitation to buy, any security. At various times
we may have positions in and effect transactions in securities referred
to herein. Any recommendation contained in this report may not be
appropriate for all investors. Trading options is not suitable for all
investors and involves risk of loss. Although the information contained
in the subject report (not including disclosures contained herein) has
been obtained from sources we believe to be reliable, the accuracy and
completeness of such information and the opinions expressed herein
cannot be guaranteed. An options disclosure document may be obtained
from Mr. Jay Stenberg, Miller Tabak + Co., LLC., 331 Madison Avenue, New
York, NY 10017. Additional information is available upon request.


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Category: MacroNotes

We loaded the final Q1 2009 data from the FDIC into The IRA Bank Monitor on Friday and the results are rather striking. As you will recall, our preliminary Stress Index score for the banking industry was over 5.7 or half an order of magnitude above the 1995 benchmark year. This result excluded the ratings for the lead units of the largest money center banks, data for which was not released until last week.

Category: Think Tank

Pending Home Sales

April Pending Home Sales, a measure of contract signings and thus a precursor to the existing home sales data, rose 6.7% m/o/m, much better than expectations of a gain of .5% and follows a 3.2% m/o/m rise in March and a 2% gain in Feb. The gain was led by a 32.6% gain in the…Read More

Category: MacroNotes

Jim Welsh Investment Letter – May 22, 2009


Jim Welsh of Welsh Money Management has been publishing his monthly investment letter, “The Financial Commentator”, since 1985. His analysis focuses on Federal Reserve monetary policy, and how policy affects the economy and the financial markets.


Investment letter – May 22, 2009


As noted in the March and April letters, there is a good chance that GDP will post a positive print in the fourth quarter of this year, and maybe in the third quarter. However, the most important issue in the next 12 to 15 months is whether the rebound in the second half of 2009 and first half of 2010 will gain enough traction to launch a self sustaining economic recovery. The short answer is no one knows. What we do know is that the drag to GDP from housing, inventories, and exports will be less in coming quarters. And, with the push coming from the stimulus plan, there will be a positive GDP print in the fourth quarter, if not the third quarter. Although most of the ‘growth’ will be statistical nonsense (less bad confused as actual growth), most economists will be satisfied since they assume that an increase in GDP automatically means a lasting recovery will follow. This view overlooks the many cyclical and secular hurdles that collectively threaten to transform the U.S. economy in coming years.

A dissection of the -6.1% decline in first quarter GDP will underscore why a turnaround in GDP is coming. The decline in residential construction subtracted -1.36% from GDP. However, single family housing starts have held steady for the last 4 months through April. (Apartment construction was very weak in April -42.2%, but that has more to do with commercial real estate than residential.) With housing starts already down 80% from their peak three years ago, there is a good chance starts will continue to stabilize near 350,000, a very depressed level. By the time the fourth quarter arrives, the drag to GDP from residential construction could be near zero, and possibly a slight positive. Businesses slashed inventories a record $103.7 billion in the first quarter, which shaved -2.79% from GDP. Last week, 52 million Social Security recipients began receiving their $250 economic recovery checks. Along with other measures within the $787 billion fiscal stimulus plan, consumers will have more disposable income, which will lift demand in coming months. This will help align sales with production and inventories, so the large drag from inventories will be far less in the second half of 2009.

In the first quarter, exports dived 30%, the largest drop since 1969, while imports plunged 34.1%, the steepest fall since 1975. The decline in exports knocked -4.06% off of GDP. But, in the quirky world of gross domestic product, the larger drop in imports added +6.05% to first quarter GDP, since imports represent production outside the U.S. If the impact of exports and imports were excluded, GDP would have fallen -8.1%, rather than -6.1%. Fiscal stimulus in the U.S. should revive demand for goods and services, including imports. The net result of improving exports and imports could be close to a push.
Business investment on new buildings and equipment plunged 38%, the most since 1947. This accounted for the bulk of the -4.68% non-residential investment subtracted from first quarter GDP. Although commercial real estate will remain weak in coming quarters, business investment has begun to stabilize. In the first quarter, Cisco’s revenue was down 17%, while Intel’s was off 28%. These are staggering declines, but both companies reported that the tech spending environment has stopped getting worse. Even if business investment doesn’t pick up by the fourth quarter, the negative drag on GDP will be less.

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Category: Think Tank

Baby We Were Born to Run

“In the day we sweat it out in the streets of a runaway American dream, at night we ride thru mansions of glory in suicide machines, sprung from cages out on highway 9, chrome wheeled, fuel injected and steppin out over the line.” Sorry but knowing that each and every one of us own a…Read More

Category: MacroNotes

We’re All “Dogs of the Dow” Investors Now

Good Evening: Grappling with an already confusing investment climate, investors were treated today to a GM bankruptcy filing and a scorching stock market rally. To the list of firsts previously set during the 2007-2009 bear stock market, we can now add the Chapter 11 filing of a current Dow component, the steepest 2-10 year yield…Read More

Category: Markets, Think Tank

Federal Agencies Propose Rule to Implement S.A.F.E. Act Mortgage Loan Originator Registration Requirements The Federal financial institution regulatory agencies are together issuing for public comment proposed rules requiring mortgage loan originators who are employees of agency-regulated institutions to meet the registration requirements of the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (S.A.F.E….Read More

Category: Credit, Federal Reserve, Think Tank

Inflation, growth and stock market performance

Continuing my point last week on REAL vs NOMINAL returns in stocks, the happy, go lucky days of the 2nd half of the 1990′s was best described with the famous buzzword ‘goldilocks,’ with the connotations of strong growth and low inflation with the Maestro running the show. The combination allowed P/E multiplies to rise at…Read More

Category: MacroNotes

C&I loans/decoupling

In the context of the debate of whether banks are lending or not to businesses and/or is the demand for loans still falling, Friday’s data from the Fed for the week ended May 20th has commercial and industrial loans falling to the lowest level since June ’08 and is down for 9 of the past…Read More

Category: MacroNotes

Income and Spending

April Personal Income rose .5%, much better than expectations of a drop of .2% while Spending fell .1%, .1% better than forecasts. The revisions to March were modest. The factor in the surprise gain in income was related to the Government’s stimulus plan where transfer payments rose smartly and there was also reduced personal current…Read More

Category: MacroNotes