Monthly Archives: March 2013

Interest Rates Will Rise, And Bubbles Will Burst, by Martin Feldstein

553286-50317-31 Long-term interest rates are now unsustainably low, implying bubbles in the prices of bonds and other securities. When interest rates rise, as they surely will, the bubbles will burst, the prices of those securities will fall, and anyone holding them will be hurt. To the extent that banks and other highly leveraged financial institutions hold them, the bursting bubbles could cause bankruptcies and financial-market breakdown. The very low interest rate on long-term United States Treasury

The Euro Area Economy is in Trouble, By Walter Kurtz, Sober Look

France-ouput-PMI I found this interesting article on www.pragcap.com The French economy continues to struggle. The nation’s consumer recession is now thought to be worse than Italy’s. Markit (Trevor Balchin): – “France has overtaken Italy as having the worst performing retail sector of the three largest euro area economies. Sales fell at a survey-record pace, as did employment. Italy registered another steep drop in sales, while German retailers witnessed a flat trend in March.” French economic output

Visualizing GDP: A Small Improvement Over the Second Estimate, by Doug Dhort

GDP-components-since-2007 The chart below is my way to visualize real GDP change since 2007. I've used a stacked column chart to segment the four major components of GDP with a dashed line overlay to show the sum of the four, which is real GDP itself. That noticeable change in today's 0.4 percent Third Estimate from the 0.1 percent in the Second Estimate was the positive revision to Gross Private Domestic Investment and continued improvement in Net Exports of Goods and Services. The biggest component of GDP, however, Personal

The Week That Was: March 23-29th 2013, from Zerohedge

Stock-market-bull-bear_0 Succinctly summarizing the positive and negative news, data, and market events of the week... Positives Cyprus tried to calm market jitters, as it agreed to a last minute deal with the Troika. The deal secures a $13 billion dollar lifeline, as well as ensuring continued access to the ECB's emergency lending program. The plan falls under a “bank restructuring”, as to avoid a vote, and claims that all deposits under 100 thousand Euros are safe (for now).  Post Mortem here… Kuroda said

US Savings Rate Near Record Low, Per Capita Disposable Income Almost Back To December 2006 Level, from Zerohedge

Real Disposable Per Capita_1 There was some good news for headline scanning algos this morning, when both personal incomes and spending came in modestly higher than expected, with incomes rising 1.1% compared to an estimated 0.8% increase, while spending was up 0.7%, also higher than the 0.6% expected. But while the superficial headline grab did indicate a modestly better climate for both spending and incomes, it was a look under the cover once again that revealed the full extent of the pain that US consumers continue to find

Economic Data Shows Underlying Weakness, by Lance Roberts

Durable-Goods-Core-Capex-032613 As the markets have rallied over the last couple of months one of the primary "hopes" by mainstream analysts, economists, and even the Fed, has been the hope that the economy will begin to show real signs of life.  While the continued injections of monetary liquidity have inflated asset prices to previous peaks; unfortunately the same cannot be said for the underlying economy.  After four years, and trillions of dollars of financial support, the economy is still mired at sub-par growth rates,

Weekly update 27/03/2013, by A.D

4 To all,   As Uma Thurman said in the Schweppes commercial, "hey, What did you expect?". Hey, what did you expect Cyprus?! With banks exposures close to 8 times your GDP, loaded with Greek bonds; with those banks laundering money from the Russian mafia ... This couldn't end well and it didn't, so no reason to be too surprised there. What is surprising though is the EU answer to that problem. I will go in more details in today's note and also show a few alarming charts of the French situation,

The completely chaotic Eurozone conference call on Cyprus situation by Luke Baker (Reuters)

eye hurriance BRUSSELS (Reuters) - Euro zone finance officials acknowledged being "in a mess" over Cyprus during a conference call on Wednesday and discussed imposing capital controls to insulate the region from a possible collapse of the Cypriot economy. In detailed notes of the call seen by Reuters, one official described emotions as running "very high", making it difficult to come up with rational solutions, and referred to "open talk in regards of (Cyprus) leaving the euro zone". The call was among members

Here’s Where The Ugly Consequences Of Easy Monetary Policy Will First Appear, from www.businessinsider.com

gerard-minack-4 Easy monetary policy from the world's central banks is likely to be around for a while.  Central bankers have been adopting a "whatever it takes" mentality to keep economic growth going. But Morgan Stanley's Gerard Minack warns that this is not sustainable. For now, he's closely watching areas where central banks have little influence. "I think that the problems caused by excessively loose monetary policy may first appear in areas where ‘whatever it takes’ central bankers have limited or

Weekly update 18/03/2013, by A.D

20130317_cyprus_0 Dear all,   It had been a while we hadn't seen the Eurozone crisis making headlines! After Greece, Ireland, Portugal, it is now Cyprus' turn to get a bailout. This bailout is quite difference from the previous ones though as this time bank depositors will be hit. Part of my weekly note will be dedicated to this Cyprus bailout and I will also review the main events from last week. 1. The Cyprus deal: don't mess too much with Angela! Before going into the details of the deal, let's list