Readers may notice today that we are a bit heavy on Financial Times stories. In part, that’s because the FT has a healthy respect for the fixed income markets. Political consultant and pretty scary guy James Carville once remarked, “I used to think if there was reincarnation, I wanted to come back as the President […]
Read more...Edward Charles Ponzi Jr. occasionally comments at Angry Bear, and a recent submission became a post of its own. Ponzi makes several observations: what we have counted as growth (as in GDP growth) may be largely inflation (that statement is more accurate than you might think after you back out hedonic adjustments); that a lot […]
Read more...We are late to this excellent post by Barry Ritholtz (which also reminds us of the consistency of Business Week covers as a counterindicator; this example is from February 2007). And I’ve wanted to say something about rates creeping up, but I got beaten to the punch (although we have made the currency-realted observations, #5 […]
Read more...Mark Thoma quotes a Washington Post op-ed piece by Daniel Gross that gets worried about the current and prospective level of foreign ownership of US businesses: …In countries that are resource-rich or export powerhouses, governments and government-controlled entities have amassed huge pools of capital. A report issued last month by Morgan Stanley economist Stephen Jen […]
Read more...The government that told us that there were WMD in Iraq has also told us that payrolls increased by 157,000 in May. We’ve pointed out before that the Bureau of Labor Statistic’s monthly job report has a well established history of being unreliable and overstated. The Business Employment Dynamics report, which is far more detailed […]
Read more...The most puzzling element in the recent set of economic releases and revisions on GDP growth is the disconnect between overall growth and consumer spending. The initial release for the first quarter showed GDP growth of 1.3% despite a rise in consumer spending of 3.8%; the revisions released last week reduced GDP growth to a […]
Read more...We had anticipated that the ho-hum initial GDP growth figure for the first quarter of 1.3% might be revised downward. Thursday, the Commerce Department changed its GDP estimate to 0.6% and altered many of the components. In particular, it increased its estimate of consumer spending growth from 3.8 to 4.4%. Not only was the 4Q […]
Read more...For those who don’t know about him, Jim Grant of Grant’s Interest Rate Observer has been a long standing and highly regarded advocate of probity, common sense, and historical memory. Of course, that means he is completely out of fashion. But Grant has a loyal following and even those who differ with his skeptical outlook […]
Read more...A colorfully written and informative post by Toro at Seeking Alpha on the overheated state of the commercial real estate market. We’ve commented before that it has somehow gone unnoticed that lending standards in the commercial real estate sector have become as permissive (one might say non-existent) as in the residential sector before the subprime […]
Read more...Since our immediately preceding post reminded readers of the not-so-great quality of many government statistics, what measures can the public use to gauge the health of the economy? John Dizard, in a Financial Times article, “Useful thinking from inside the box,” reminds us of a metric that was once used by some savvy investors (the […]
Read more...Barry Ritholtz via Seeking Alpha gives yet another example of a disheartening trend, namely, that government-issued statistics that investors, economists, and businesses for analytical and planning purposes are increasingly dubious. The case in point is the employment statistics. While the widely cited Bureau of Labor Statistics monthly employment report has showed tepid to reasonable employment […]
Read more...Nouriel Roubini looked at the various stats released last week – the 16% increase in new home sales versus the 1.4% fall in home prices averaged across 32 metropolitan areas (Federal Housing Finance Board survey) and the 2.6% fall in existing home sales from March to April (National Association of Realtors) and focused on the […]
Read more...This Financial Times story, “Growing biofuels demand raises food prices,” highlights increasing prices of grains and other soft commodities. The grain price rise merits particular attention, since it appears to be a structural rather than a cyclical increase. And higher grain prices in turn mean higher meat, milk, and egg prices. What this story does […]
Read more...Thanks to Felix Salmon for pointing this tidbit out to us. Due to leveraged buyouts (notice how the press has started to use that 1980s term once again?), there has been a surge in junk issuance. But since below-investment-grade issuers pay only about 180 basis points more than investment grade issuers, there is virtually no […]
Read more...Unlike its US counterparts, the Financial Times has consistently been on top of the various unsavory elements of the credit market bubble: the near disappearance of risk premia, the growth of leverage on leverage, the lack of investor sophistication. A piece by John Plender does a very good job of connecting some of the dots […]
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