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Tag Archives: FED

Debt, Deficits & Economic Warnings

While the world has been focused on the Federal Reserve, the markets, and the upcoming election, few have noticed the expansion of the deficit in recent months which is now in excess of $667 billion up from a recent low of $530 billion. The chart below shows the history of U.S. surplus/deficit: During the financial crisis, the deficit ballooned to a record of $1.35 trillion as tax revenue declined as Government spending swelled. Importantly, the Federal Deficit was approaching 10% in 2009,...

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Jackalope Janet: Bond Traders Sick With Fedspeak (As Commercial & Industrial Loan Delinquencies Increase)

I think most of us are sick of Fedspeak, but every bond trader will likely be listening to Fed Chair Janet Yellen’s Friday morning speech in Jackson Hole, Wyoming. And hoping it will be more Jackson Hole than a Black Hole. According to Bloomberg, the world’s biggest bond traders are getting fed up with Fedspeak. Weeks of conflicting economic reports have whipsawed investors seeking to handicap the path of interest rates, and money managers overseeing about $6 trillion, including Pacific...

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This Cycle Will End—–And Then T.I.N.A. Will Go Poof!

It is not surprising that after one of the longest cyclical bull markets in history that individuals are ebullient about the long-term prospects of investing. The ongoing interventions by global Cental Banks have led to T.I.N.A. (There Is No Alternative) which has become a pervasive, and “Pavlovian,” investor mindset. But therein lies the real story. The chart below shows every economic expansion going back to 1871 and the subsequent market decline. This chart should make one point very...

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Actually, The US LOST 1,030 Million Jobs in July (Teachers’ Summer Break)

To better understand the July Jobs report, one has to understand the seasonal adjustments that the Bureau of Labor Statistics employs. Nonfarm payroll jobs added in July on a seasonally adjusted basis were +255,000 in July. But the raw or NON seasonally adjusted numbers were -1,030,000 jobs. Or 1.03 million jobs lost. Notice in the above chart that you get big downward dips in the nonfarm payroll numbers in January and July. And it repeats every year. For January, this is the release of...

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Reagan Vs. Obama Recovery: 5.9% Annual Household Income Growth Versus 1.1%

The ADP jobs report is out this morning and we saw an additional 179K jobs added in July. But is this a strong recovery as some think? A natural comparison of the Obama/Fed recovery is to compare it to the Reagan recovery. Much like Mickey Mantle versus Willie Mays and Cassius Clay versus Sonny Liston. Probably more like Clay (aka. Ali) versus Liston. First, let’s take a look an unemployment and median household income. Both Reagan and Obama inherited deteriorating economies and rising...

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Q2 GDP: A Big Swing And A Miss

The Democrat National Convention finally wrapped up in Philadelphia, and fortunately for the incumbent Democrats the Q2 GDP numbers were released AFTER the convention wrapped up. And the Q2 economic numbers were abysmal. Q2 GDP clocked in at a measly 1.2%, after a downward revision of Q1 GDP from 1.1% to 0.9%. Core PCE growth fell a revised 2.1% in Q1 to a sub-2% print of 1.7% in Q2. The culprit? A decline in Gross Private Domestic Investment of -9.7% in Q2. Residential investment was down...

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Why MainStreet Isn’t Buying Obama’s Economic Recovery Fantasy

Last night, President Obama took the stage at the Democratic National Convention to throw his support to Hillary Clinton in her bid for the Presidency. He also took the opportunity to take a victory lap for his economic achievements while in office. With the 2016 Presidential Election fast approaching, this was one of the final chances the President will have to try and divert attention away from Hillary’s “trustworthiness” problem following continued revelations surrounding Benghazi, email...

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New Home Sales Are Back……..To When The Housing Bubble Began In 1995!

New home sales for June represent a milestone, so to speak, for the economy. New home sales are finally back to 1995 levels, the beginning of the US housing bubble. But most housing pundits ignore the bubble these days and focus on how swell the housing market has been in recent years. Wow, that DOES look good! It almost makes us forget about the Clinton Administration’s National Homeownership Strategy from 1995, nhsdream2 Almost. New homes sales were highest way out west. And in the...

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US Housing Starts Rise………..To January 1991 Levels!

The US Census Bureau released the housing starts numbers today. In a nutshell, housing starts rose in June by 1,189 million annual rate. Both 1 unit and 5+ unit starts rose. But most of the starts were in the Northeast (+46.25%) and the West (+17.41%). The Midwest and South declined. What the Census Bureau and no one in the media will tell you is … housing starts are back to January 1991 levels. In other words, nothing has been the same since the housing bubble and resulting financial...

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Deutsche Bank’s CoCo Bonds Hit 11.50% Yield As DB’s Chief Economist Calls For A Bailout

No, a Coco bond is not a new Chanel perfume or a Hersheys product. Rather, CoCo stands for contingent convertible capital instrument (CoCo) are is a hybrid capital security that absorbs losses when the capital of the issuing bank (such as Deutsche Bank) falls below a certain level. Italy’s Unicredit and Spain’s Banco Santander have higher CoCo bond yields. Deutsche Bank raised nearly €20 billion in 2010 and 2014, by selling shares, which diluted existing shareholders, and by issuing CoCo...

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