Archive for March 2011
Misery Loves Company
Newspaper advertising in the US has sunk to a 25 year low as readership migrates to the web where advertising is far cheaper. Advertisers spent $25.8 billion on newspaper and digital editions in 2010; the lowest since 1985. And, after adjusting for inflation advertising now stands at the same level at 1962! Kind of reminds…
Read MoreImpact of Disaster in Japan
Impact of disaster in Japan on US is tiny: Oil prices drop by $1.50 as Japan shuts down 6 refineries; 31% of its capacity. Yen rises slightly as insurers convert foreign holdings into Yen to pay for rebuilding. Japanese gov’t may sell some of their T-bill holdings to help pay for reconstruction. This may cause…
Read MoreIrish GDP
The ratio of Irish debt/GDP is now 100% and approaching an unsustainable 120%. Now each 1% point reduction in the interest rate the Irish pay the European Central Bank for their bailout loan cuts their long term debt load by 0.4% of GDP. But, every 10% reduction in unsecured, unguaranteed bank debt equals 1.3% of…
Read MoreWI Musings…
Unions are a way for suppliers of a particular service (firemen, policemen, teachers) to legally collude with respect to wages, vacations, holidays, pensions, healthcare and so on. It would be akin to cell phone companies agreeing to fix prices, service quality and band width. The worst service comes when there is no competition! Cable guy,…
Read MoreBorrowing and Bail
Borrowing costs for Portugal, Ireland and Greece have hit highs amid concern that Europe will not take action to dispel fears of sovereign defaults. Long term rates for Spain came close to setting a record and Italy’s cost rose above 5% for the first time since 11/08. Portugal was forced to pay a much higher…
Read MoreBifurcation
The key reason investors believe the economy is improving is because the surveys; the ISMs, consumer confidence and regional Fed polls of manufacturing sentiment have been strong. Auto and chain store sales were also decent. But other data reports like industrial production, single-family starts, real consumer spending, core capex orders and shipments and construction spending…
Read MoreJobs Half-Grow
192K jobs in Feb! But wait. Due to storms in Jan let’s avg out job growth in Jan and Feb. That gets us about 125K per month; not much better than in Q4 ’10. So we have positive job growth but no acceleration! This suggests GDP growth of 3% maybe 3.5%; half of what’s needed!…
Read MoreMyth Busting 101
Is deflation all that bad? It’s considered bad in part because consumers postpone purchases today to get a better deal tomorrow, weakening demand. Is this true for food, gas, haircuts and electricity? NOT! And how about consumer electronics? The laptop/ipod/hard drive/flatscreen TV you just bought will be worthless in 2 years! Did that stop you…
Read MoreAuto Sales
We saw auto sales shoot up 6.7% to 13.4 million units (at an annual rate), the best level since August ‘09, and we also saw the ISM inch higher to 61.4 from 60.8 with the “internals” of the report just as solid as the headline But even with incentives running wild, auto sales are still…
Read MoreManufacturing Maximizes
Manufacturing data in the U.S. continues to improve. The Chicago Purchasing Managers’ Index (PMI) jumped from 68.8 in Jan to 71.2 in Feb — best since July ‘88. Production, orders, inventories, backlogs all rose — the exception; employment. The New York PMI index also rose in Feb to 77.5 from 71.2, and the Milwaukee manufacturing…
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