July 2010
70 posts
Weak demand for ECB 3-month loans eases worries →
The ECB ended one funding mechanism and opened another (shorter duration). While this data was widely regarded as positive, I remain skeptical (surprise!). In particular, headlines are still being written about sovereign debt and bank stability, and not in a positive way.
Fortunately, there are partial metrics for bank liquidity, the -bors. The 3-month LIBOR hasn’t moved in a week, so...
Spain's Aaa Rating on Review for Downgrade at... →
Once again, the only surprise here is if you were expecting an actual default before the ratings agencies made a move.
June 2010
40 posts
Liquidity
Liquidity seems to be drying up in almost every market other than the US Treasury market. Citi had a brief mini-crash today. Spanish banks can’t seem to find financing anywhere other than the ECB, and I have what I hope are erroneous readings on some futures tapes. Understand that if the market does start a significant move down—and the rejection of the 1040 probe on the S&P gives...
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Recap 6/29
Just last night I wrote:
I believe we will soon see some of the last good news for the almighty US Consumer, if we haven’t already.
…
Please, don’t be surprised by the “unexpected” collapse in consumer spending.
So I am embarassed to admit that I was surprised by the “unexpected” collapse in consumer confidence. I don’t care much for the confidence...
unsolicitedanalysis-deactivated asked: I'm half-tempted to just load up the credit cards with whatever I want, get some decent weapons, and wait for Q3-Q4. That iPhone needs a Cole Haan wallet, am I right?
Quick Checkup on the Consumer
I believe we will soon see some of the last good news for the almighty US Consumer, if we haven’t already. The BEA’s Personal Income and Outlays, May 2010 report was released today. Consumption grew by 0.2% in May, which was up from a whopping 0% in April. 0.2% isn’t much to celebrate if you are looking for recovery-type numbers. Bloomberg’s title, “Consumer Spending...
“Subprime mortgages were not at the core of the global crisis; they were only...”
– Fed Governor Kevin Warsh in It’s Greek to Me, June 28, 2010
We’re still screwed.
(via CalculatedRisk)
Maybe we need to reconsider "good"
Moorewr asks: How do we get out of this? What’s a “good outcome” for the poorer US of the future?
Good question. I wish I knew. There are pie-in-the-sky possibilities, such as the invention of a maintainable and controllable fusion generator. How sweet would that be, to have a giant cable running down the center of every freeway and an inductance drive on your car? Also,...
If you wanted the TL;DR version, would you really...
“I want the word “reform” back. Between health care “reform” and financial...”
– Yves Smith in Misnamed Financial Services “Reform” Bill Passes, Systemic Risk is Alive and Well
dailyrenegade asked: http://crfb.org/stabilizethedebt/ So I found this budget simulator and I wanted to get your opinion. Is this at all realistic, is it too simplified, is it spot on, is it skewed/biased, etc?
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Bank Failure Friday
Another Friday brings more bank failures. Three banks were added to the FDIC Failed Bank List:
High Desert State Bank, Albuquerque, NM - $81.0 million in total deposits and an estimated hit to the Deposit Insurance Fund (DIF) of $20.9 million. This required a loss-share agreement between the FDIC and First American Bank on $67.6 million of High Desert State Bank’s assets.
First National...
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Unemployment: New Claims Down Sharply
This week’s Unemployment Insurance Weekly Claims Report has been released. New claims came in at 457k. Last week’s number was revised up 4k. Some of the media cheer should be tempered by the revision, but also by the fact that we’ve made no real progress in months. It is good to see a significant move in the correct direction, though. New claims were inside the Bloomberg consensus range of...
hilker asked: what am i to think when my favorite bearish economist goes to vegas during a major recession?
vruz asked: will there be a place to return to by the time your holidays end?
squashed asked: Is the hour the bank executive spends at the beach more valuable than the hour the guy who mows his grass spends at the beach? On one hand, the bank executive could, conceivably, sell the hour of his time for hundreds or thousands of dollars while the grass-cutter could only sell it for $20. On the other hand, an hour is an hour and both decided to spend it at the beach. Is one of these...
Before I head out on vacation... →
… give me questions to ponder. Please.
Detroit Finally Passes Foreign Competition in... →
We’re number 5! We’re number 5! We barely made the list of the top 5 for the first time in history!
Some victories just sound better than others. Implicit in celebrating this victory is acknowledging the fact that American automakers have produced unreliable crap for the past 20 years. Emphasis in original:
For the first time ever, the J.D. Power Initial Quality Study has found...
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Unemployment: New Claims Up
“Layoffs continue at a rate not consistent with a recovering jobs market.” Even Bloomberg is getting infected by the gloom from these repeatedly less-than-stellar reports. This week’s Unemployment Insurance Weekly Claims Report has been released. New claims came in at 472k. Last week’s number was revised up 4k. New claims were outside the Bloomberg consensus range of 445k to 460k. From...
Citigroup Halts Foreclosures in Oil Spill-Harmed... →
Oops. I meant to somehow work this in to my last post. I just found it interesting. Key bit:
The three-month halt starts tomorrow and will apply to loans owned by the bank’s mortgage unit, not debt that Citigroup services for other lenders or investors, the company said today in an e-mailed statement. Homeowners within about 25 miles of the coast will be covered and evictions will be halted if...
BP Cancels Dividend to Set Aside $20 Billion for... →
Interesting. This was initially reported as 2 quarters of dividend suspension (as opposed to 3 claimed in the article), which would amount to $5 billion. Either way, it looks like BP has at least two years to fill the $20 billion pot, all of which could be accomplished by extending the dividend cut, should it come to that. The announcement I heard stated that some of the money would be coming from...
unsolicitedanalysis-deactivated asked: Both of us?! We can't possibly be allowed to be gone at the same time, the bulls might take over.
Fannie-Freddie Fix at $160 Billion With $1... →
That’s quite a range in the estimates, and doesn’t include all of the other cash (the homebuyer tax credit, for example) that has been dumped on this problem. And to get an idea how close we are to hitting that low end:
Fannie and Freddie, now 80 percent owned by U.S. taxpayers,
already have drawn $145 billion from an unlimited line of
government credit granted to ensure that...
On BP: “Very Difficult, If Not Impossible” to... →
On the plus side, it appears near impossible to limit liability after the fact. Going forward, I expect all the obstacles to legal firewalls to be overcome.
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6/14 recap
There were some interesting things that happened between Friday and today. I’m not really sure what the best order to tackle these topics is, so I’ll just say what springs to my head first.
Moody’s downgraded Greece to Junk - This should not surprise anyone, except for those expecting an actual default a month before the downgrade.
Riddle Me This - Imagine if BP had provided...
Screw George Soros. It’s time to party like it’s 1999 (the first time the Dow crossed 10,000 to the upside).
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Unemployment: New Claims Flat
We’ve been riding a cycle of gradual decreases in new unemployment claims followed by surges that reset our progress. Now it’s not even clear that we’re gradually decreasing. This week’s Unemployment Insurance Weekly Claims Report has been released. New claims came in at 456k. Unfortunately, last week’s number was revised up 6k, flipping the data from gain to decline. I’m...
The Downside of Keynesian Economics: Santa Barbara... →
This one hits close to home. I know people who work there. I know several more with accounts.
Fed's Bernanke doesn't see double-dip recession →
Given that he didn’t see the first recession, is this good news or bad news?
Ok, I had nothing to write about today. G.19 showed total consumer credit expansion, but revolving credit contracted at a rapid clip.
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Bank Failure Friday
This Friday brought some more failures, including a genuine closure. Three banks were added to the FDIC Failed Bank List:
TierOne Bank, Lincoln, NE - $2.2 billion in total deposits and an estimated hit to the Deposit Insurance Fund (DIF) of $297.8 million. The FDIC and Great Western Bank entered into a loss-share transaction on $1.9 billion of TierOne Bank’s assets. All 69 branches will...
Too much blood in my coffeestream
I had to do a substantial rewrite of that last post. When I first went through the numbers, I mistyped the unadjusted numbers in my calculator. I got +90k jobs, unadjusted, instead of +1.09 million. Only when I finished the industry breakdown did I realize that there was something very wrong.
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Unemployment: 9.7%
The unemployment rate fell in May’s Employment Situation Report. On a seasonally adjusted basis, 431,000 jobs were added. On an unadjusted basis, 1.09 million jobs were added. The Bloomberg consensus for the adjusted number was 540,000 (consensus range was 225,000 to 635,000). From the report:
Total nonfarm payroll employment grew by 431,000 in May, reflecting
the hiring of 411,000...
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Unemployment: New Claims Down
This week’s Unemployment Insurance Weekly Claims Report has been released with no surprises. We’re still effectively moving sideways. We are above where we were just a few weeks ago. New claims came in at 453k while last week’s number was revised up 3k. New claims were inside the Bloomberg consensus range of 445k to 475k. From the report:
In the week ending May 29, the advance figure for...
unsolicitedanalysis-deactivated asked: The rational actor assumption is always bunk - supply and demand is only law insofar as it is what a theoretical society of rational optimizers would facilitate.
Supply and demand econ is like Newtonian physics - works great until you hit extremes, and if you look really closely the aggregate rules are betrayed by the behavior of subatomic building blocks. Any policy model...
Supply and demand econ is like Newtonian physics - works great until you hit extremes, and if you look really closely the aggregate rules are betrayed by the behavior of subatomic building blocks. Any policy model...
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$13,050,826,460,886.97 →
I was off by a bit in my estimate. We finally hit it.
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May Auto Numbers
The May numbers have come in from the automakers (source, 2, 3, 4, 5, 6, 7):
Ford up 21.9%
GM up 16.6%
Toyota up 6.7%
Honda up 19.1%
Nissan up 24.1%
Hyundai up 33%
Chrysler/Fiat up 33%
Subaru up 35.2%
Porsche down 5%
Kia up 20.6%
Volkswagen up 20.3%
In other news, Ford killed Mercury.
Overall, that was an SAAR of 11.6 million cars and trucks. That’s up from 9.2 million a year ago,...
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ISM: Six in a Row?
The May 2010 Manufacturing ISM Report On Business was released today. The report was strong, making 6 bullish months in a row. The ISM PMI (Purchasing Managers’ Index) came in at 59.7, down from 60.4. The Bloomberg consensus range was 57.5 to 61.3, so this was well received. Anything greater than 50 indicates expansion. I have one concern, which is that we’ve stopped accelerating in...