Initial Jobless Claims

Positive data from US as Initial Jobless Claim continues its downward trend.

The lost decade for US

American economy is exhibiting similar trends which were present in Japanese Economy during the Japanese Lost Decade. Barry Riholtz has an interesting observation as he compares MSCI US and MSCI japanese index and comes out with startling results.

though its too early to make such prediction. there are also difference between US and jaoanes economy as Fed is pumping money into the system which Japanese never did. Moreover the demographic were very different as Japan was ageing much faster than US

Purchasing Power of Dollar

The Great Fed Dilemma

The Fed has taken criticism over the recession and Wall Street bailouts, but in the financial overhaul this year, it helped defeat proposals to strip away its power to regulate and supervise banks.

Mr. Bernanke, who had thought the worst was behind him, was unsettled by the suddenness of the recent attacks. He has said that the Fed was in a no-win situation; if it had not acted, it would have been criticized for ignoring the painfully slow pace of the recovery.

The situation forms an odd corollary to the early 1980s, when Mr. Greenspan’s predecessor, Paul A. Volcker, sharply raised interest rates, setting off back-to-back recessions in a painful but effective war on inflation.

Liberals attacked Mr. Volcker, a Democrat, as an inflation-fighting zealot who disregarded the plight of the unemployed. Now conservatives are portraying Mr. Bernanke, a Republican, as trying too hard to stimulate growth and underestimating the risk of inflation.

Read More http://www.nytimes.com/2010/11/23/business/economy/23fed.html?_r=1

Weakness in Housing prices

A disappointing report. Home prices broadly declined in August. Seventeen of the 20 cities and both Composites saw a weakening in year-over-year figures, as compared to July, indicating that the housing market continues to bounce along the recent lows. Over the last four months both the 10- and 20-City Composites show slowing growth, after sustaining consistent gains since their April 2009 troughs.

Overbought Markets

PMI - China and US

US PMI

Situation is grim as market is specualting that what will be in store when Stimulus fizzles out




China PMI - economy continues to recover and looks promising

A clear sign of decoupling, i believe

Dollar Vs Equity

i think QE 2 will push dollar down and Equity up. Markets are waiting for an event to break out.QE 2 might be tht event

Gold Price in bull market

With QE 2 around and major resistance level of 1270 broken on the upside..i believe Gold has a way leg up.

NAHB Builder Confidence

The National Association of Home Builders (NAHB) reports the housing market index (HMI) was at 13 in September. This is the same low level as in August and below expectations. The record low was 8 set in January 2009, and 13 is very low


"Builder confidence in the market for newly built, single-family homes held unchanged in September from the previous month's low level of 13, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today.

"In general, builders haven't seen any reason for improved optimism in market conditions over the past month," noted NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich. "If anything, consumer uncertainty has increased, and builders feel their hands are tied until potential home buyers feel more secure about the job market and economy."

"The stall in the nation's housing market continues," agreed NAHB Chief Economist David Crowe. "Builders report that the two leading obstacles to new-home sales right now are consumer reluctance in the face of the poor job market and the large number of foreclosed properties for sale.""

Tax Cuts

(Click to enlarge the pic)

read more

http://www.nytimes.com/interactive/2010/09/19/weekinreview/19marsh.html

Frequent Recession

While our recent experience has been that recessions happen about once every decade, the U.S. used to experience recessions far more frequently.

The U.S. had a recession every 56 months on average going back to 1854 according to the Economist, but since 1982 the U.S. has only had a recession every 106 months on average. During the last three decades recessions have been have as frequent as during much of U.S. history.

Why?

Economist:

This seems to be down to credit availability; in the absence of a gold standard, the authorities could ease policy and stave off recessions.

But if we have reached the end-game of the debt super-cycle, then recessions will be more frequent. The last recession started in December 2007; if the cycle is 56 months, the next one is thus due in August 2012, less than two years away. Such short, sharp shocks make high-yield bonds look a very bad investment. The asset category changed in character during the great moderation; junk bonds used to be investment grade bonds gone bad, but after the mid-1980s, companies issued primary debt at junk yields. An economic cycle that lasts almost nine years gives investors a chance to earn their yield and get out before the bust; a cycle that lasts less than five years makes that much more difficult. The same principle applies to private equity.

However, even if we're in for a period of more frequent recessions, it doesn't mean growth stops. Even when the U.S. economy was experiencing recessions more frequently, it was still growing over the medium and long-term.


Read more: http://www.businessinsider.com/recessions-will-now-be-far-more-frequent-than-were-used-to-since-we-just-ended-a-debt-super-cycle-2008-8#ixzz102m9FeWJ

Recession and Rebounds

16 major recessions and recoveries

Bank Failures in US

Banks failing at a worrisome rate. What does it foretell for US economy

US Budget Deficit

Schizophrenic Consumers

"The new abnormal has given rise to a nation of schizophrenic consumers. They splurge on high-end discretionary items and cut back on brand-name toothpaste and shampoo. Companies such as Cupertino, California-based Apple, whose net income jumped 94 percent in its last quarter, and Starbucks Corp., which saw a 61 percent increase in operating income over the same time frame, are thriving.

Mercedes-Benz is having a record sales year; deliveries of new vehicles in the U.S. rose 25 percent in the first six months of 2010. Lexus and BMW were also up. Though luxury-goods manufacturers such as Hermes International SCA and Burberry Group Plc are looking primarily to Asia for growth, their recent earnings reports suggest stabilization and even modest improvement in the U.S. "

-Bloomberg