by Mr Tickle on August 11, 2010
Despite my bullishness this year, it seems the economy has other ideas.
Yesterday the Fed said it expects the US economy to grow more slowly than expected. Today the Bank of England in the UK is expected to say something similar.
Note that both are saying ’slow growth’ rather than ‘no growth’ let alone ‘negative growth’. But it would be churlish not to stress than the economies of Europe and the US haven’t caught fire as fast as some (me) had hoped and thought they would, even if global growth still looks likely to be closer to 4% than 3% for the next couple of years.
In response to what I believe is at worst a speed bump, the US Federal Reserve announced it would recycle some of its $2.3 trillion asset pool into purchasing US Treasuries to keep yields low and to avoid draining liquidity out of the system.
What is astonishing anew is just how big the Fed is in this market now:
Click to see how big the Fed is in the market
Half the time I’m inclined to think this idea that the bond market is signalling a slowdown while equities are expecting (some) growth is absolute nonsense, given the distortion in the market. The Bank of England said that QE here had depressed yields by 1%, but you wonder about multiplier effects.
(Source: FT Alphaville)
by Mr Tickle on August 10, 2010
Goldman Sachs’ traders lost money on a whole ten days last quarter, after posting no losing days the quarter before:
Not exactly mean reversion
Something tells me their summerhouses are safe for now, though.
(Source: Business Insider)
by Mr Tickle on August 8, 2010
Peace comes at a price – about $661 billion in the case of the US, which is also paying for a couple of wars:
Click to be bombarded with the stats
(Source: GlobalSecurity.org)
by Mr Tickle on August 5, 2010
Well it certainly looks like a bubble:
Would love to see this guy's read on the UK
Pop?
(Source: Business Insider)
by Mr Tickle on August 4, 2010
Hard to believe today, but if the economic recovery continues then I believe it won’t be too long before we start to hear calls for Lloyds to be broken up due to the obscene profits it’s raking in.
It’s already started, ahead of schedule, with today’s half-yearly results:
Taxpayer-backed Lloyds Banking Group (LSE: LLOY.L – news) has kept up the momentum of the British banking recovery, unveiling first-half profits of £1.6bn.
The sum was twice the £800m figure predicted by analysts and represents a sharp bounce-back from the £4bn losses seen a year earlier.
The improvement was partly down to vastly reduced writedowns, with loan impairments coming in at under £6.6bn – less than half the £13.4bn it suffered in the same period last year.
Lloyds said it had seen strong trading against the backdrop of a stabilising economy – and it expects to deliver a strong medium-term performance as the recovery continues.
It said it has passed a “significant milestone”, with the toxic-loan legacy of its HBOS takeover beginning to fade and the bank “on track” to achieve its target of £2bn in synergies from the deal by 2011.
Disclosure: As detailed on Monevator (follow the links) I hold both Lloyds shares and Lloyds preference shares. Both have performed strongly recently, but the latter in particular have leapt ahead as credit concerns have faded.
(Source: Yahoo Finance)
by Mr Tickle on August 2, 2010
Interesting list from Kiplinger via Yahoo of the cheapest and most expensive places to live in the US.
The five cheapest US cities are:
- Fort Worth, Texas
- Pueblo, Colorado
- Harlingen, Texas
- McAllen, Texas
- Johnson City, Tennessee
The three most expensive are:
- New York, New York
- Honolulu, Hawaii
- San Francisco, California
- Santa Ana, California
- Stamford, Connecticut
Here’s an interesting tidbit showing how a high income isn’t everything:
Housing costs [in New York] four times the national average are a big reason that the overall cost of living is so high. But everything from grocery items to utilities are much pricier in Manhattan than in the rest of the nation. A New Yorker would have to make $127,935 a year to have the same standard of living as someone earning $50,000 in Fort Smith, Ark., the least expensive city.
As a mug who has lived in London for 15 years, I feel your pain New Yorkers.
Click through the link below for full details.
(Source: Yahoo)
by Mr Tickle on August 2, 2010
Wot no double dip? Not yet, as the FT reports:
British manufacturing output continued to grow strongly in July, according to the latest purchasing managers’ index, even though sentiment dipped marginally from June.
The measure of activity edged down to 57.3 from 57.6, still a very high reading that beat City forecasts of a drop to 57.0.
As manufacturing recovers from the deep slump of the recession, these readings are naturally high. The July figure was still not far from the 15-year high of 58.1 reached in May.
The signs are strong then that the third-quarter GDP figures for the UK will continue to surprise to the upside. However it has to be said the UK export renaissance has been disappointing:
But further signs that the export sector is lagging came from another drop in the export orders element of the PMI index, which fell to its lowest level since August 2009. Compensating for the drop in export orders was a rise in domestic new orders, suggesting that momentum in the UK economy remained strong.
Given that everyone else has spent six months saying the UK economy has fallen off a cliff, I’ll take the compromise.
(Source: FT)
by Mr Tickle on July 30, 2010
Why bother investing for the long-term, eh?
Honey, I over-cooked the Earth.
(Source: The Economist)
by Mr Tickle on July 30, 2010
According to the Federal Reserve’s Beige Book, the US economy is still growing but the pace has definitely eased up:
The Beige Book is published two weeks before policy makers meet on interest rates.
The survey underscored the Fed’s view that the recovery, while still moving forward, is progressing at a slower pace than earlier in the year. Fed Chairman Ben S. Bernanke said July 21 “the economic outlook remains unusually uncertain.”
U.S. gross domestic product growth slowed to 2.5 percent in the second quarter, versus 2.7 percent in the previous three months, according to the median estimate in a Bloomberg survey before the government reports the figure on July 30.
Orders for durable goods declined 1 percent last month, after a revised 0.8 percent slide in May, a Commerce Department report showed today. The median forecast in a Bloomberg survey was for a 1 percent increase.
Pretty much every recovery ever includes a moderating phase after the initial bounceback, but this one has come sooner than many had hoped for.
But with inflation still so low, I see now reason to panic – interest rates aren’t going anywhere, and the rest of the world is still growing, too.
(Source: Business Week)
by Mr Tickle on July 30, 2010
Well, they would wouldn’t they? The way companies have cut back on staff to return to profitability has surprised hordes of US pundits. They should read some Karl Marx:
Profits at a price
Profits may be above recessionary levels, but sales turnover isn’t. What companies have done is squeezed more out of their remaining workers, by increasing hours worked and overtime, as well as by using technology and other methods to boost productivity.
It’s why US productivity has been seeing record gains. Firms will only begin hiring as a last resort – even in hyper-flexible US economy – when they fear they are losing sales and/or market share by being understaffed.
(Source: Business Insider)
