NFIB Continues in Recessionary Mode, as the U.S.-Japan Analogy Plays Out

The National Federation of Independent Business is now out with its December survey results.  Given all the politics going on, the optimism/pessimism part of the survey is not worth commenting upon.  The actual earnings trends, however, are.  Here is the relevant graph (LINK):

For some reason, these companies have a baseline earnings trend of [...]


Germany’s Incomplete Economic Recovery Supports the Bond Bull Market

Germany’s national economic statistical repository provides an interesting set of graphs that correlate with the collapsing interest rate structure in that country.  Two-year bunds now yield a negative 0.08% per year.  The 10-year bund yields 1.27%, down from over 2.1% only one year ago.   No wonder that with the U.S. interest rate structure so [...]


Keynesians Chortle in Their Joy

Now that Ben Bernanke continues to have a friend in the White House, all’s going to be well in the world- at least economically.  At least, that’s the impression large segments of the media is promoting.  

When any segment of the media and market participants are feeling so good about things that they appear [...]


The Japan Syndrome

Before taking a multi-week break with family in which I intend to post only for major market action, it’s time for some review.  The macro theme in the U.S. economy and financial markets strikes me as just what I stated in one of my first blogs.  This is what I wrote on January 9, 2009 [...]


Bernanke’s Options To ‘Get Out of the Mud’

The major issue, [Mr. Bernanke] said, is “whether or not there is in fact a sustained recovery going on in the labor market, or are we stuck in the mud?” Mr. Bernanke added a wrinkle, saying the central bank “would certainly want to react against any increase in deflation risk.”

This was from Chairman Bernanke’s testimony [...]


Falling Interest Rates Destroy Capital

I have written other pieces on the topic of fractional reserve banking  duration mismatch, which is when someone borrows short-term money to lend long-term and how falling interest rates actually encourages duration mismatch. Falling interest rates are a feature of our current monetary regime, so central that any look at a graph of 10-year Treasury [...]


JPM’s Whale of a Problem and Futures Market Scandals May Help Lead to Negative Rates on Bank Deposits

The Telegraph (U.K.) had a terse description of JPM’s Chief Investment Office that helped crystallize my thinking:

The bank stunned Wall Street when it disclosed that a series of bets made by the CIO on the health of major companies had triggered the . The CIO’s job is to invest deposits that the bank has yet [...]


The Economy Is Floating On Air

Much of what we see in recent economic growth is caused by one thing: cheap money and credit. This is obvious as we look at two important economic drivers: autos and homes. Both are significant in that they represent the two biggest purchases that most Americans will make in their lifetimes, so their dollar volume [...]


Looking Forward to the FOMC Meeting and Beyond: Speculations

Here’s a guess about what the Fed will say Wednesday following the FOMC meeting.  There is no justification for another formal QE program, so I would be very surprised if one were announced (rather than hinted about).  The two main reasons for this view is that the major crisis is in Europe, and the U.S. Federal [...]


Downside Market Action Continues as Malinvestments Get Revealed; Equities Bounce Would Be Normal

I want to discuss some matters using links to charts.  Sometimes showing trends on a five-year basis is helpful, because the computer’s smoothing dispenses with some of the short-term data (“noise) to reveal larger trends better.  First, the U.S. 10-year Treasury has already mapped out a low below last year’s panic low– but now there [...]


My Usual Market and Economic Indicators Are Looking Worse

I want to present four links.

1. Commercial real estate is looking weak again.  This has been a leading indicator of the stock market and interest rates in both directions for the several years I have been following it.  I look most often at AAA.5 and AA.4.  LINK

2.  The SPY (ETF for the S&P [...]