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  • Q1 2015 U.S. GDP Estimate: +2.1% [View article]
    Nattering, thanks for the explanation. If I understand right, that seems to explain some of the discrepancy.
    Mar 25, 2015. 03:25 PM | Likes Like |Link to Comment
  • Q1 2015 U.S. GDP Estimate: +2.1% [View article]
    This seems overly optimistic. Even the Atlanta Fed only forecasts 0.3% growth - and that was last updated before the latest durable goods report.
    Mar 25, 2015. 10:10 AM | Likes Like |Link to Comment
  • A Sniff Of Inflation Spooked Stocks [View article]
    Its hard to see where the fuel is coming from for further asset inflation. Where's the upside: If economic indicators continue to degrade, the Fed holds off on interest rate hikes while equity markets deal with peak earnings at peak leverage. If economic indicators improve, the Fed hikes rate sending a shock to equities as this is essence a margin call.
    Mar 24, 2015. 10:09 PM | Likes Like |Link to Comment
  • Expect More Uncertainty Related To Fed [View article]
    I realize that an index topping for 9 months is not a definitive technical indicator without confirmation. However from a macro perspective this lack of momentum in light of slowing global growth in the midst of super-accommodating economic policy shouts that the economic train is grinding to a halt.
    Mar 24, 2015. 10:00 PM | Likes Like |Link to Comment
  • Interest Rates Have Bottomed [View article]
    The consensus is generally unable to identify the end of a cycle or the outcomes; I believe them to be wrong. Even though we may be nearing the end of the equity asset inflation cycle, that does not mean the end of the bond cycle. In fact, it probably means even lower rates until the long over due credit deflation completes. I expect yield curve inversion with 10 and 30 year rates into the low 1s along with the short duration rates as recession hits.
    Mar 24, 2015. 09:53 PM | 4 Likes Like |Link to Comment
  • Kill Debt To Make Debt [View article]
    I think many think that the elongation such as in Japan can continue, but as in Japan QE without growth ends up just being a slow death - i.e. Japan equity prices are still 40% lower than 25 years ago. With virtually all of the central banks of the declining economies playing this game at some point there is nothing more left to mortgage from the present into the future. Will be interesting to see how all this unwinds.
    Mar 24, 2015. 09:37 PM | Likes Like |Link to Comment
  • A Eurodollar Impression On The Corporate Side Of The Bubble Economy [View article]
    Thank you for this article. Very innovative and useful analysis for understanding mechanics behind asset bubbles including the one in which we find ourselves now.
    Mar 24, 2015. 09:31 PM | Likes Like |Link to Comment
  • Existing Home Sales Miss Street Estimates - Underlying Data Still Bearish [View article]
    "BBVA Compass has just started a new 100% financed mortgage... No money or credit required from borrower"

    I wonder what the default rates will turn out to be on those loans?
    Is it 2007 again?
    Mar 24, 2015. 09:19 PM | 2 Likes Like |Link to Comment
  • A Temporary Slowdown Or A Prolonged Downturn? [View article]
    Regarding the impact of oil price declines, the magnitude of the decline makes me believe the downside at least for the next several months is worse than the upside. A significant percentage of those consumers that much of the analysis assumes will be able to spend more are now facing layoffs in that industry. The energy industry is also intricately linked to leverage through junk bonds and continued crude declines will lead to defaults and higher junk bond rates.

    Momentum is slowing in stock price acceleration while leverage, household exposure to equities and fund manager exposure to equities are at peaks. Revenue estimates are turning overall negative and inventory disproportionate to sales with global growth slowing, decade-low labor participation numbers, stagnant wage growth, and rising USD cutting into multinational profits. Its pretty hard for me to believe this is a temporary slowdown that will reverse anytime soon regardless of whether rate hikes are deferred.
    Mar 24, 2015. 09:11 PM | Likes Like |Link to Comment
  • Bear Market Risk - A Realistic Assessment [View article]
    GDP Nowcast is at 0.3% for Q1. Q4 was 2.2%. That would be GDP average growth of 1.3% over last 6 months. 2015 revenue estimates have now dropped below 2014.

    EPS is being manufactured from record levels of buy-backs and margin debt. This amounts to mortgaging the future for short-term benefit. This is a bubble that will pop eventually regardless of what the FED does or doesn't do.
    Mar 24, 2015. 10:39 AM | Likes Like |Link to Comment
  • Sorry But This Is Not 1997 For The Market [View article]
    Q1 GDP estimate down to 0.3 now. Fed wants to put up a Mission Accomplished sign, so I think will hike despite everything. I believe they realize that a real recovery isn't going to happen until equity asset markets can crash down to fair values. They only have a few months before the house of card falls apart regardless of what they do so need to hike now so they can have something to work with later. I realize the consensus is overwhelmingly that they can't hike rates but I think they are trapped by their own policy and their own self-importance. They would rather crash the markets and retain power to move them. If that means using the wrong tools at the wrong time to exert power (i.e. leaving interest rates low when they should have been hiking 3 years ago and now raising interest rates on the cusp of a recession), they will do it.
    Mar 17, 2015. 09:53 PM | Likes Like |Link to Comment
  • Q1 2015 U.S. GDP Estimate: +2.8% [View article]
    GDP from Atlanta Fed now at 0.3 and falling - looks like Q1 will end up being negative again this year. The question is why we should expect much strength in Q1 with inventories still way out of kilter with scale. Could a recession already be in process of starting with rising USD eating into multinational profits, yield curve inverting as Fed increases the short rates, China slowing, and the glut-driven crude price seeming to cause at least as much negative fallout (shutting down US oil exploration industry and gas-price savings going more to paying down debt rather than consumption)?
    Mar 17, 2015. 09:41 PM | Likes Like |Link to Comment
  • Sorry But This Is Not 1997 For The Market [View article]
    I think the Fed will raise rates in June, no matter what. We are ending the boom cycle, they have to start now to have the weapon of lowering rates when the recession starts. They waited too long and now there is an asset bubble while global economies are slowing.
    I expect this time they will raise rates all the way until a recession is recognized as starting and deny that one has started until it is indisputable - just like Bernanke in 2008. If US enters recession at the end of this year, that would give them about 18 months of rate hiking before a recession will be officially recognized. They must realize we are on the verge of recession, but want to keep their credibility as long as possible even if that means they are proven to be grossly wrong later. Yellen will likely follow the same playbook as Bernanke - rinse and repeat.
    Mar 14, 2015. 05:01 PM | 2 Likes Like |Link to Comment
  • The United States Economy Is Not Really Doing That Well [View article]
    The question then becomes how much longer can stock market valuations grow at 20% per year while the underlying economy is only growing at 2 - 3%? And how much have the valuations overshot already?
    Mar 14, 2015. 04:50 PM | 1 Like Like |Link to Comment
  • Be Patient, An Oil-Driven Spending Boom Is Coming [View article]
    So far the expected consumer-spending splurge as a result of crashing oil prices has not happened - instead capex is reduced significantly in oil exploration, and higher paid employees in the energy sector are being laid off at an increasing rate. US energy exploration has been one of the main contributors to the economy - and while oil prices are declining and health care costs affecting those most inclined to be discretionary spenders are skyrocketing. Most consumers are only spending what is needed for bare necessities with student loan and sub-prime car loan defaults going through the roof. Lower crude prices don't necessarily imply the economy will boom, there are underlying reasons associated with supply and demand as well as the multiplier effect associated with prices that are too low to support the energy exploration business. That needs to be part of any framework for prognosticating economic impacts of lower crude prices.
    Mar 4, 2015. 08:41 PM | 4 Likes Like |Link to Comment