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GaltMachine

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  • Nov. Industrial Production: +1.1% vs. +0.3% expected, -0.4% prior. Capacity utilization 78.4% vs. 77.8% prior. [View news story]
    Nice rebound on the capacity utilization!
    Dec 14, 2012. 09:27 AM | Likes Like |Link to Comment
  • Nov. Consumer Price Index: -0.3% vs. -0.2% expected, +0.1% prior. Core CPI +0.1% vs. +0.2% expected, +0.2% prior. [View news story]
    bbro,

    What's the trendline for the last 3 mths?

    What do you think of as more informative the y/y or the recent qtr?

    Thanks
    Dec 14, 2012. 08:52 AM | Likes Like |Link to Comment
  • U.S. Recession Risk Jumps 20 Percent In November [View article]
    Tack,

    I think his conclusion pretty much makes the same point you are making:

    "There is no question that the risk of an impending U.S. recession increased significantly in November, but the model forecasts are still below the 30%-40% warning thresholds. In addition, the data was affected by hurricane Sandy, which means the slowdown could be temporary. Fear of the fiscal cliff could also have influenced the data."
    Dec 14, 2012. 08:51 AM | Likes Like |Link to Comment
  • Nov. Consumer Price Index: -0.3% vs. -0.2% expected, +0.1% prior. Core CPI +0.1% vs. +0.2% expected, +0.2% prior. [View news story]
    bbro,

    Getting there by deflationary pressures is not a positive.

    However, the real positive is more disposable income so this does bode well for the future. This should help lead a growth pick up from the current snail's pace.
    Dec 14, 2012. 08:47 AM | Likes Like |Link to Comment
  • Chinese shares surge 4.3% after the flash HSBC PMI rises to a 14-month high of 50.9 in December from 50.5 in November, adding to recent other data showing that the economic turnaround is gaining momentum. HSBC says the growth is mainly driven by domestic demand, and cautions that "the drop of new export orders and the downside surprise of November exports growth suggest persisting external headwinds." (PR[View news story]
    This is the second amazing broad market call (buy Spain early in the year, short AAPL, buy NatGas) Jeff Gundlach has made in the last 6 mths. The guy looks like a genius.
    Dec 14, 2012. 08:31 AM | Likes Like |Link to Comment
  • Fiscal Cliff: How Bad Would It Be? [View article]
    Puck,

    I'm not sure if proof is necessary as it is rather clear but nonetheless, Christina Romer, Obama's Economic chair, concluded the following:

    http://bit.ly/TVN7mJ
    Tax Increases Reduce GDP
    "Tax changes have very large effects: an exogenous tax increase of 1 percent of GDP lowers real GDP by roughly 2 to 3 percent."

    How do changes in the level of taxation affect the level of economic activity? The simple correlation between taxation and economic activity shows that, on average, when economic activity rises more rapidly, tax revenues also are rising more rapidly. But this correlation almost surely does not reflect a positive effect of tax increases on output. Rather, under our tax system, any positive shock to output raises tax revenues by increasing income.
    Dec 12, 2012. 09:53 PM | Likes Like |Link to Comment
  • Bernanke: I think it's fair to say we have overestimated the level of growth during the recovery, he says in response to a question on the Fed's forecasting track record (wasn't the original end date of ZIRP supposed to be 2013). Nevertheless, the Fed will continue to use the same models to justify continued ZIRP, and the now $85B/month in asset purchases. [View news story]
    Must be the same models they use to forecast man-made global warming ;)
    Dec 12, 2012. 04:35 PM | 1 Like Like |Link to Comment
  • More from the Fed: The FOMC has adopted economic thresholds for when it would commence tighter policy. The fed funds rate will remain at exceptionally low levels as long as unemployment remains above 6.5% and inflation is expected to be no more than 50 basis points above the 2% target rate. [View news story]
    Tell it to stop :)
    Dec 12, 2012. 12:55 PM | 5 Likes Like |Link to Comment
  • It's more QE∞ as the Fed launches an open-ended $45B/month Treasury purchase program to replace the expiring Operation Twist. This will be more expansionary than The Twist as that program included the sale of short-term Treasurys to go along with the purchase of longer-dated paper. The other QE∞ - the Fed's open-ended purchases of $40B/month of MBS - continues. [View news story]
    Great quote, especially the last sentence, from James Montier of GMO courtesy of Pragcap:

    "Essentially, Bernanke’s first commandment to investors goes something like this: Go forth and speculate. I don’t care what you do as long as you do something irresponsible.

    Not all of Bernanke’s predecessors would have necessarily shared his enthusiasm for recklessness. William McChesney Martin was the longest-serving Federal Reserve Governor of all time. He seriously considered training as a Presbyterian minister before deciding that his vocation lay elsewhere, a trait that earned him the beautifully oxymoronic moniker of “the happy puritan.” He is probably most famous for his observation that the central bank’s role was to “take away the punch bowl just when the party is getting started.” In contrast, Bernanke’s Fed is acting like teenage boys on prom night: spiking the punch, handing out free drinks, hoping to get lucky, and encouraging everyone to view the market through beer goggles."
    Dec 12, 2012. 12:47 PM | 1 Like Like |Link to Comment
  • It's more QE∞ as the Fed launches an open-ended $45B/month Treasury purchase program to replace the expiring Operation Twist. This will be more expansionary than The Twist as that program included the sale of short-term Treasurys to go along with the purchase of longer-dated paper. The other QE∞ - the Fed's open-ended purchases of $40B/month of MBS - continues. [View news story]
    So no more "sterilization"?

    Our money will multiply like bunny rabbits in the wild.
    Dec 12, 2012. 12:41 PM | Likes Like |Link to Comment
  • Probably not great news for global trade, the Baltic Dry Index plunges 8.2% to 826 this morning, the biggest drop since 2008. Shippers already struggling to hang on include: EGLE, ESEA, DAC, DHT, TNP[View news story]
    Interestingly this could suggest that inflation will be tamed by excess capacity.
    Dec 12, 2012. 09:14 AM | Likes Like |Link to Comment
  • Redbook Chain Store Sales: +2.2% Y/Y vs. +2.1% last week. Consumers are putting off there purchases currently, hinting at better sales leading up to Christmas. [View news story]
    "Consumers are putting off there purchases currently, hinting at better sales leading up to Christmas."

    How do you reach that conclusion?
    Dec 11, 2012. 09:21 AM | Likes Like |Link to Comment
  • A group of Democratic Senators have signed a letter urging for a delay in implementing a tax on the medical device industry that is scheduled to go into effect January 1, saying the industry has received little guidance about how to comply with the tax, and is causing significant uncertainty and confusion. The Senators are requesting that a delay be included in the fiscal cliff bill Congress is currently negotiating. [View news story]
    "We have to pass it to know what's in it."

    Apparently even that's not true anymore :)
    Dec 10, 2012. 04:09 PM | Likes Like |Link to Comment
  • Weighing The Week Ahead: Something New From The Fed? [View article]
    Jeff,

    I don't think I ever read anywhere that any FED chief has ever openly spoken about targeting equity prices as a tool of FED policy or as a method of increasing employment which is why this was such a notable pronouncement. The Dual Mandate is just that and normally the FED isn't in the business of worrying about asset prices - just look at how nonchalant Ben Bernanke was about the impact of the Subprime bubble on the economy back in 2005-08.

    Ben was openly saying: "Don't Fight the FED" when it comes to stock prices so you are correct that it was the right strategy to buy equities. If the FED has been buying bonds openly who knows what else they have been doing with Open Market Operations.

    I used to think the PPT (Plunge Protection Team) was a tinfoil hat conspiracy theory but based upon the above it would be a useful adjunct to the FED's monetary policy.

    If they believe rising stock prices lead to higher employment and lower inflation why wouldn't they be propping up the stock market?

    Greenspans' "Irrational Exuberance" has been replaced by Ben's "Buy! Buy! Buy!"

    After 5 years of ZIRP and the policy continuing for as far as the eye can see nothing would suprise me anymore. "Don't Fight The FED" is more than just a cliche :)
    Dec 9, 2012. 02:40 PM | 1 Like Like |Link to Comment
  • November Nonfarm Payrolls: +146K vs. consensus +93K, October revised to +138K from +171K. Unemployment rate 7.7% vs. consensus 7.9%, 7.9% previous. [View news story]
    Glenn Beck has the best take on the "Environment" that I have heard or read :)

    http://bit.ly/YR6Z0u
    "GLENN: I’ve got to tell you something. I said on the program a couple of weeks ago, you know, that nobody hates the environment. I’ve been thinking about that. I think we should hate the environment. I’m changing my stance on hating the environment. I mean, I think it’s a cop — "I don’t hate the environment, nobody hates the…" that’s a copout. I know it’s the popular viewpoint. I’ve been doing a lot of thinking about this. Don’t worry about what happens to the environment. It doesn’t worry about what happens to you, does it? Think about it. Hurricanes? Part of the environment. They roll in. What’s the environment’s role? It creates the hurricanes! Does it give somebody, you know, some place to hide? No. Only human-made buildings, strong buildings protect us from the environment’s brutal attempted murder. There, I said it. I’m not for environmental murders. In fact, nature only provides us with trees which basically lure humans to stand under them and then it provides lightning to kill us underneath the tree. Now that humans can do a good job, you know, predicting hurricanes, what does the cute little warm and fuzzy squeezably soft environment do? It unleashes 200 mile an hour winds in the form of tornadoes instead. So focused and so instant that you can’t even predict them. Oh, yeah, that sounds like something I want to predict. Oh, yeah, the ones that just suck up my whole family in Nebraska last year, that was great. I just love that environment. It lures us to our coastlines. "Come, come to the coastline." We build our most important and expensive buildings only so the environment can cause flooding and beach erosion, stealing millions of dollars from honest citizens like you. "Come to the coastline." The environment could provide temperatures that are mild and consistent. Oh, no, no, no, but that’s not the style, oh, no. The environment isn’t all that way. Why not instead give us three months where it’s zero and six months later make it 90 or 110 with 100% humidity, that way we waste money on insulation and two sets of clothing that we have to cart upstairs and then back downstairs twice a year! I hate the environment.

    Do you like to visit the forest? "Yeah, I love the forest, Glenn. Who doesn’t love forests? Oh, they’re great." Yeah, that’s when I used to think until I saw… who hides in forests? Bears, killer bears. Bears, part of the environment. More than happy to rip your torso from your extremities without a second thought. "Gee, I don’t know, maybe we should have a cap in trade on these humans there, Bill. You’ve already ripped four apart." No, they don’t do that! The innocent little environment. Giving us snakes, hairy rats, crunchy cockroaches. These are the facts on the environment.

    Environmentalists will tell us, "The most important thing we can do is stop using oil." Well, really? If these true, I propose immediate sanctions on the environment for creating oil in the first place. I didn’t create it. I just pumped it out of the ground! It’s the environment’s effects on dinosaurs, former members of the environment murdered by the environment which create oil in the first place. Leave Exxon alone. Find mother nature until she’s broke. You know what? Someday they will be pumping us out of the ground if mother nature has her way. And then giant thinking cockroaches, some professor cockroach will say, "I don’t know. We shouldn’t pump those ex-people out of the ground. It’s bad for the environment." And then nature will come and kill the cockroaches! Wildfires. They’re wild to you and me. Part of the status quo to that oh, so innocent environment. Does the environment care if it burns down your house? Nope. Burns whatever it wants. How about volume contain owes? Does the environment care when it soaks an entire community in molten rock? Nope, uh-uh. Doesn’t go to bed at night going, gee, I don’t know, I think that might have been a mistake."

    Plus, when a volcano blows, it dumps gigantic amounts of greenhouse gases into the atmosphere. Does it have a cap in trade on its eruptions? No! Totally unregulated! Was it man who created all the diseases that have wiped out millions? The plague. No, it was natural. I guess we could just accept the whole wiping out 1/3 of the human race thing. Sorry, don’t need another Holocaust but thanks for chiming in, nature. And while I’m at it, thanks for making Antarctica completely uninhabitable. It’s not like we need more land or more resources. Don’t worry about all the people starving up here. You know, don’t worry about. Just cover the whole continent in ice. Why don’t you do that. Who needs it? Just ice. And penguins, birds that don’t fly and you can eat! Thank you. No, I appreciate it.

    Let me tell you something. Thank God for us people who are supposedly melting that pointless piece of ice so someone can put the land to good news. No thanks to you, Mr. Environment."
    Dec 9, 2012. 12:33 PM | 3 Likes Like |Link to Comment
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