The American economy: keeping track of US economic developments.
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Re: The American economy
Yet U.S. stocks are booming and the Dow is within spitting distance of its all-time high - 11,750pts on Jan. 14, 2000.
What a strange place the markets are.
Yet U.S. stocks are booming and the Dow is within spitting distance of its all-time high - 11,750pts on Jan. 14, 2000.
What a strange place the markets are.
Re: The American economy
Many Dow components are defensive stocks which would gain attention in a flight to quality. Dow companies also trade internationally so a weaker dollar will help their earnings. Income from higher valued foreign currency shows up well in earnings against dollar expenditure. I'm over and back to the US quite a bit and apart from housing, I see little sign of a consumer slowdown....yet.
Many Dow components are defensive stocks which would gain attention in a flight to quality. Dow companies also trade internationally so a weaker dollar will help their earnings. Income from higher valued foreign currency shows up well in earnings against dollar expenditure. I'm over and back to the US quite a bit and apart from housing, I see little sign of a consumer slowdown....yet.
Re: The American economy
The air is thick with aeronautical analogies today, what with soft landings etc.
Growth in U.S. Slows to `Stall Speed,' Raising Recession Risk
By Rich Miller
http://www.bloomberg.com/apps/news?pid=20601087&sid=ahY7_Y5RkMVk&refer=home
The air is thick with aeronautical analogies today, what with soft landings etc.
Growth in U.S. Slows to `Stall Speed,' Raising Recession Risk
By Rich Miller
http://www.bloomberg.com/apps/news?pid=20601087&sid=ahY7_Y5RkMVk&refer=home
S
StoppedClock
Guest
Re: The American economy
Just picked this up over on HPC (C) Realistbear
http://uk.biz.yahoo.com/061003/323/gntzj.html
Tuesday October 3, 11:40 PM
When the Great Depression began on Wall Street on that dreadful day in 1929 they were saying "it won't happen here" or "it's different this time." Spain is wobbling, Ireland have just had their third month in a row of slowing prices, OZ is in trouble.......................
Just picked this up over on HPC (C) Realistbear
http://uk.biz.yahoo.com/061003/323/gntzj.html
Tuesday October 3, 11:40 PM
Forecast sees housing prices falling
WASHINGTON (AFX) - Housing prices, slumping after a five-year boom, are projected to decline in more than 100 of the nation's metropolitan areas, with the Northeast, Florida and California among the areas hardest hit.
The forecast by Moody's Economy.com, a private research firm, presents one of the starkest views yet of the housing slowdown that has been gathering force in recent months......./
The West Chester, Pa., forecasting firm projects that the median sales price for an existing home will decline in 2007 by 3.6 percent, which would be the first decline for an entire year in home prices since the Great Depression of the 1930s.
The forecast is included in a 195-page report, 'Housing at the Tipping Point,' which The Associated Press obtained before its general release on Wednesday.
When the Great Depression began on Wall Street on that dreadful day in 1929 they were saying "it won't happen here" or "it's different this time." Spain is wobbling, Ireland have just had their third month in a row of slowing prices, OZ is in trouble.......................
Re: The American economy
this mornings guardian
The property downturn in the states is now nationwide - no areas will be spared - folks getting very worried over there
http://www.guardian.co.uk/usa/story/0,,1887851,00.html
this mornings guardian
The property downturn in the states is now nationwide - no areas will be spared - folks getting very worried over there
http://www.guardian.co.uk/usa/story/0,,1887851,00.html
Re: The American economy
I can't make up my mind on a US recession, data has been conflicting in recent weeks. Consumers are still spending:
http://www.marketwatch.com/News/Sto...443E-4C28-93B6-55964CF3C42F}&siteid=mktw&dist=
I can't make up my mind on a US recession, data has been conflicting in recent weeks. Consumers are still spending:
http://www.marketwatch.com/News/Sto...443E-4C28-93B6-55964CF3C42F}&siteid=mktw&dist=
Re: The American economy
I was pretty certain that The Fed would start cutting rates next year in response to a slowing economy. But it seems that the inflationary cat is out of the bag.
http://www.theage.com.au/news/Busin...-interest-rates/2006/10/07/1159641559916.html
OPEC look like they will cut back production to defend the price of oil so the prospects of sub $50 a barrel are remote. The price of US 5 and 10 year T bills have fallen, so the money markets may be absorbing the fact that the inflation monster is far from slain.
I was pretty certain that The Fed would start cutting rates next year in response to a slowing economy. But it seems that the inflationary cat is out of the bag.
http://www.theage.com.au/news/Busin...-interest-rates/2006/10/07/1159641559916.html
OPEC look like they will cut back production to defend the price of oil so the prospects of sub $50 a barrel are remote. The price of US 5 and 10 year T bills have fallen, so the money markets may be absorbing the fact that the inflation monster is far from slain.
W
walk2dewater
Guest
Re: The American economy
At the core of my view [stagflation, then disinflation/selected deflation] is the fact that you cannot hold interest rates real negative, as Fed and ECB did and for as long as they did, without payback. And that payback is inflation. And I mean serious inflation, the sort that dissolves wealth and that requires v high real rates in order to tame [a la Volcker late 70s]. When I filter through the noise, some of which fits my thesis, some doesnt, I still see this as an inescapable outcome. Higher real rates everywhere and consequences of, colours all my investment decisions.
In the US all that liquidity is still in the system, sloshing around. The hot money is leaving real estate and pushing up the dow IMO. My pharma/health stocks are going nuts all of sudden, wonder why?
At the core of my view [stagflation, then disinflation/selected deflation] is the fact that you cannot hold interest rates real negative, as Fed and ECB did and for as long as they did, without payback. And that payback is inflation. And I mean serious inflation, the sort that dissolves wealth and that requires v high real rates in order to tame [a la Volcker late 70s]. When I filter through the noise, some of which fits my thesis, some doesnt, I still see this as an inescapable outcome. Higher real rates everywhere and consequences of, colours all my investment decisions.
In the US all that liquidity is still in the system, sloshing around. The hot money is leaving real estate and pushing up the dow IMO. My pharma/health stocks are going nuts all of sudden, wonder why?
Re: The American economy
Its astonishing that the liquidity splurge in the west has not caused rampant double digit inflation already. Sure China and India have had a deflationary effect, capping wage growth, but money supply running above target in the US, EU and UK, you would expect inflation to pick up at some stage (house bubbles excepted).
Its astonishing that the liquidity splurge in the west has not caused rampant double digit inflation already. Sure China and India have had a deflationary effect, capping wage growth, but money supply running above target in the US, EU and UK, you would expect inflation to pick up at some stage (house bubbles excepted).
Re: The American economy
I think you're right, the stock market and large caps in particular are the in-thing now that property is becoming a dirty word.
I think you're right, the stock market and large caps in particular are the in-thing now that property is becoming a dirty word.
Re: The American economy
With the Dow breaking its nominal all-time high, the next bubble could be large caps.
How long before banks start offering leveraged investment in the stock market?
With real negative interest rates and capital guaranteed funds it is easy to imagine Paddy investor ploughing his easy property money into large caps.
What a truly horrible time this is for someone wishing to invest, everywhere you turn another bubble is forming. As W2DW points out, there has to be a payback for this global liquidity splurge. Either the CBs move rates to above the "actual" rate of inflation to curb the madness or they let things continue on towards hyper-inflation and eventual deflation.
With the Dow breaking its nominal all-time high, the next bubble could be large caps.
How long before banks start offering leveraged investment in the stock market?
With real negative interest rates and capital guaranteed funds it is easy to imagine Paddy investor ploughing his easy property money into large caps.
What a truly horrible time this is for someone wishing to invest, everywhere you turn another bubble is forming. As W2DW points out, there has to be a payback for this global liquidity splurge. Either the CBs move rates to above the "actual" rate of inflation to curb the madness or they let things continue on towards hyper-inflation and eventual deflation.
Re: The American economy
If you ignore the Dow headlines and search for individual companies, there are opportunities to buy shares at reasonable value, even one or two in the Irish market IMO.
Bad news about the US economy doesn't stop me buying undervalued companies
If you ignore the Dow headlines and search for individual companies, there are opportunities to buy shares at reasonable value, even one or two in the Irish market IMO.
Bad news about the US economy doesn't stop me buying undervalued companies
Re: The American economy
The US bond market is pricing in a cut in US rates next year as the bursting housing bubble and debt saturation hit the American consumer (I was going to say economy but consumer is more accurate) but the DOW is at at 52 week high? I'll find the link but the correlation between Dow highs and interest rate cuts is interesting. Its happened before in 1981, 1989 could be a precursor?
The US bond market is pricing in a cut in US rates next year as the bursting housing bubble and debt saturation hit the American consumer (I was going to say economy but consumer is more accurate) but the DOW is at at 52 week high? I'll find the link but the correlation between Dow highs and interest rate cuts is interesting. Its happened before in 1981, 1989 could be a precursor?
Re: The American economy
The Dow is at an all-time (non-inflation adjusted) high.
I would say that stocks are pricing in that rate cut as well. That said, the bond market seemed to get ahead of itself and pared back recently. The rate cut seems less nailed on now.
The stock market doesn't seem to be listening though.
The Dow is at an all-time (non-inflation adjusted) high.
I would say that stocks are pricing in that rate cut as well. That said, the bond market seemed to get ahead of itself and pared back recently. The rate cut seems less nailed on now.
The stock market doesn't seem to be listening though.
Re: The American economy
Well here's that chart any ways. Whatever happens (my bet is a US recession) its goin to happen.
http://bigpicture.typepad.com/comments/2006/10/when_does_the_f.html#comments
Well here's that chart any ways. Whatever happens (my bet is a US recession) its goin to happen.
http://bigpicture.typepad.com/comments/2006/10/when_does_the_f.html#comments
Re: The American economy
A quick aside on charts...
Just adding this here in case the chart above gives people the impression that the Dow is at a cliff edge. That chart is on a linear scale so it's not representative of long-term proportional growth. Linear charts are fine for short term comparison but logarithmic charts work better for longer term assessment.
Dow Jones Industrial Average (logarithmic) from 1970:
[broken link removed]=
So to make it look scary ... just use linear starting from a period of stagnation (1970)
Dow Jones Industrial Average (linear) from 1970:
[broken link removed]=
Here's the graph from 1928 to 2006 in logarithmic scale - which isn't nearly as scary looking and more representative IMO:
[broken link removed]=
Well here's that chart any ways. Whatever happens (my bet is a US recession) its goin to happen.
http://bigpicture.typepad.com/comments/2006/10/when_does_the_f.html#comments
A quick aside on charts...
Just adding this here in case the chart above gives people the impression that the Dow is at a cliff edge. That chart is on a linear scale so it's not representative of long-term proportional growth. Linear charts are fine for short term comparison but logarithmic charts work better for longer term assessment.
Dow Jones Industrial Average (logarithmic) from 1970:
[broken link removed]=
So to make it look scary ... just use linear starting from a period of stagnation (1970)
Dow Jones Industrial Average (linear) from 1970:
[broken link removed]=
Here's the graph from 1928 to 2006 in logarithmic scale - which isn't nearly as scary looking and more representative IMO:
[broken link removed]=
Re: The American economy
extracts from Davys daily report
Shows that soft landing will still hit the US construction sector, this company is also writing down its land bank by $50m
"Centex, the number-four US homebuilder, reported Q2 results after the bell last night (October 12th). Net orders fell 28% year-on-year, reflecting a record level of home sales contract cancellations."
"The company cites buyers inability to sell their existing homes as a key issue driving cancellations. Management now expects Q2 earnings in the range 65 to75c a share. In July, the company forecast Q2 earnings per share of $1.40."
extracts from Davys daily report
Shows that soft landing will still hit the US construction sector, this company is also writing down its land bank by $50m
"Centex, the number-four US homebuilder, reported Q2 results after the bell last night (October 12th). Net orders fell 28% year-on-year, reflecting a record level of home sales contract cancellations."
"The company cites buyers inability to sell their existing homes as a key issue driving cancellations. Management now expects Q2 earnings in the range 65 to75c a share. In July, the company forecast Q2 earnings per share of $1.40."
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