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Michael Parmar

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  • Why QE2 Failed: The Money Went Offshore [View article]
    Gabe - I would be interested in your views on analysis i did with seasonally adjsusted US employment data.

    I agree with you that we are not in double dip territory but one step closer.
    Jul 12 03:44 AM | 1 Like Like |Link to Comment
  • Why QE2 Failed: The Money Went Offshore [View article]
    Thats it in a nutshell :)
    Jul 12 03:40 AM | 1 Like Like |Link to Comment
  • Why QE2 Failed: The Money Went Offshore [View article]
    Gabe you say the US economy is fine.

    I am not so sure about that, since those in employment fell by 445K in June and real incomes fell as well. That drop wiped out job growth leaving accroding to the BLS only +11K more people employed than in January.
    Jul 11 12:28 PM | 1 Like Like |Link to Comment
  • World's Biggest Engine of Growth Stalls [View article]
    Thanks for your comment!
    I agree there are tax effects arising from govt schemes, hence I looked at pre-tax income x number in full time emmployment as the power ofthe engine of growth. To save space I didn't want to go through all the implications of differences between disposable incomes, tax implications on employment prospects and so on, which, as you point out are very important
    Jul 11 12:18 PM | 1 Like Like |Link to Comment
  • No Mr. Bond, I Expect You to Die! [View article]

    Fair comment and I agree.
    Jul 11 07:43 AM | 1 Like Like |Link to Comment
  • Weighing the Week Ahead: All Eyes on Earnings [View article]
    The reason many analysts focus on temporary employment as a leading indicator is that it turns DOWN leading into recession while other indicators continue to trend up.

    Whereas transport employment is often trending UP while other indicators show recession.

    The two graphs you point to at

    clearly show this trend. in the 2001-02 recession, temp employment turned down before recession started while transport increased into the recession, and certainly the same thing happened with the data shown for 2007-09.
    Jul 10 07:26 AM | 1 Like Like |Link to Comment
  • Did Copper Just Give the 'All Clear' Sign? [View article]
    Copper fundamentals are positive over the next year with demand expected to outstrip supply.

    However, I would warn against thinking the price of copper is necessarily going to keep going up from here.

    The recent hike according to various reports is related to three factors:

    1. strikes in major mines and bad weather in Chile. Both are expected to end in the next week.

    2. reduction in stocks in China.

    Chinese buyers are not always buying for final demand, but also buying as collateral and to speculate. At these prices there are reports that final demand buyers are staying out of the market or thinking of selling surplus stock back into the market.

    On the final demand side, there has been an increase in copper supply from China itself, plus power cuts affecting final smelters. Japanese smelters are also offline longer than expected.

    Also, China just raised interest rates and its inflation numbers over the weekend came in higher than expected, which points to tighter monetary policy than has been priced in so far.

    3. speculation that economic demand for the next few months has been underestimated: copper jumped with the ADP report but has dropped back a tad since then, and we haven't priced in the China inflation figures or the end of strikes or bad weather.

    The macro view was just challenged in US with the latest jobs report. In China the last indicator of manufacturing PMI was 50.1, just on the border between contraction and expansion suggesting the summer lull and power cuts may lead to a potential dip in output. Japan is certain to grow, but in the other main economy, Eurozone, the market is slowing - Italy went into recession, Spain, intorecession, France lowered its forecast and UK is registering zero growth at the moment. Germany is growing but driven by exports to mainly US and China.

    The growing demand from Russia and the Central European countries is very fast but they represent a small portion of the copper market.

    So given the above I am of the view that copper might be overpriced in the short run and could dip before it trending upwards again.
    Jul 9 07:53 PM | 1 Like Like |Link to Comment
  • Unemployment Claims, Jobs Numbers Don't Jibe [View article]
    Taking into consideration the changes in the labour force, the statistics show that those in employment FELL by 445K. That is a hefty number.

    Those dropping out of the labour force also increased by 449K

    That reverses the trends from the April-May trend where employed persons rose by 125K
    Jul 8 09:32 AM | 1 Like Like |Link to Comment
  • Unemployment Claims, Jobs Numbers Don't Jibe [View article]
    A possible explanation is that there seems to be a lot of people coming back into the labour force. A proportion of those could be registering as claimants ahead of moving into a job.

    A feature of the recession was a high number of people dropping out of the labour market or discouraged from looking for work, that seems to be reversing steadily.
    Jul 7 02:08 PM | 1 Like Like |Link to Comment
  • The Balance Sheet Recession Continues [View article]
    While consumer spending is the key driver to economic growth, debt fuelled spending is not.

    Hence your central point: that consumer falling debts are bad for the economy is, IMHO not accurate. What is important is net consumer wealth, and that has been rising for 10 consecutve quarters:

    And interestingly, the main driver for falling household debt in the US is not paying down mortgages, but defaulting on them. This haircut imposed on banks by consumers would destabilise the system if it were not for the support provided by the Fed.

    The net result is a transfer of wealth out of the banking system to households, while consumers rebalance their spending away from debt.
    Jun 12 08:11 AM | 1 Like Like |Link to Comment
  • Richard Koo says the WH understood the U.S. balance sheet recession, but preferred Paul Krugman's easy money cure instead of more spending. Nearly one year on, all QEII has done is shift money out of Treasurys and into stocks, with higher commodities hampering economic activity. Thanks for the inside baseball account, but when has Krugman ever shied from more government spending?  [View news story]
    Having thought about this and read alternative views, end of QE2 and at this stage no QE3, implies less demand for treasury issues, since some of that govt debt has been flipped back to the Fed via the QE2 programme and its mopping up of excess liquidity.

    Post QE2, the treasury auctions will return to "normal" lending conditions, and a small steady increase in rates in line with economic growth. Also, "normal growth" in money supply related to economic growth. To this end, today's growth in credit looks encouraging.
    Jun 7 06:22 PM | 1 Like Like |Link to Comment
  • Will Labor Costs Return to Trend? [View article]
    Unit labour costs lie at the heart of future prospects.
    You ask "Under what circumstances might we expect unit labor costs to revert to trend?"

    My understanding of the point of the current recovery and macro-policy is to not revert to the trend you plot( red line), but establish a lower upward trend from where we are, and hence the talk of "rebalancing" the US economy.

    With a permanent decrease in labour costs, the US is achieving what is expected of Greece: a boost in competitive world markets, improvement of current account balance and growth that will take pressure off a large government deficit.

    In this light, the danger is to return to the red line itself.
    May 29 10:07 AM | 1 Like Like |Link to Comment
  • Why the U.S. and China Want a Cheap Dollar [View article]
    Thank you for the informative article.

    China's investment abroad has three motives:

    1. in the short run it supplies funds to its export customers supporting growth in their economies and hence demand for its products. China is looking at the bigger picture on this one and recognises that a global recession is in no-ones interests. An elevated yuan does not help China in this aim.

    2. It helps to stabilise their currencies which relieves pressure on its own and relieves the importing of inflation into China. China has to consider its domestic policy which is driven by one overriding concern: to improve the living standards of its rural population. In this respect China does not want to elevate the Yuan at a rapid pace but do want to do that in line with its import buying.

    3. It is trying to improve its image abroad where people fear its intentions, distrust its motives and disrespect its efforts and standing.

    China does not need the US to acheive these objectives: there is no conspiracy.

    Its efforts in this regard with the US government match those of its efforts in Europe (its main trading partners) and Russia and the ASEAN bloc.
    May 14 05:56 AM | 1 Like Like |Link to Comment
  • BP to See 30% Upside [View article]
    Bret, a nice assessment, I'm long on BP but bought at a higher range than it is currently trading.

    My understanding is that the oil reserves in Russia are at least the size of the north sea reserves. For only 3 companies over the next 2-3 decades, to get at at production costs well below average oil extraction costs now.

    Of course AAR behind TNK doesnt want to be excluded and will do anything to stay on the deal.

    Over 2-3 decades, a few months of squabbling is a drop in the proverbial ocean.

    Cheeryble, unfortunately a globally diversified company is not an automatic hedge against $ depreciation but it does go some way.

    In BP's case my reading of its operating margin accounts is that its E & P is from petrodollar countries whose fortunes and relative value are linked with the $ and its its refining and distribution income is more diversified but dominated by US/EU economic prospects.

    I hope others more familiar and expert on the matter comment
    May 10 02:58 AM | 1 Like Like |Link to Comment
  • Debunking Speculation About an Imminent Restructuring of Greek Debt [View article]
    Thanks for this article, it summarises EU options nicely. I agree that a restructuring isnt on the cards, nor is a Greek exit from Euro, the fallout is too great.

    Ultimately, the EU will come up with some measure to provide further support for Greece, and in turn the Greek govt will have to make more commitments to further change.

    Within that broad scenario, Greece will get breathing space to payback its debt and some form of "adjustment" that is not a default or does not involve haircustsand your coverage of options explains this well so thank you for that.
    May 9 07:01 AM | 1 Like Like |Link to Comment