2009-03-27 USER


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Personal Income MoM (Feb)

Survey -0.1%
Actual -0.2%
Prior 0.4%
Revised 0.2%

 
Karim writes:

  • Personal income down 0.2%, down 4 of last 5mths, and up 1% y/y
  • Wage and salary income down 0.4%, down 4mths in a row, and -0.2% y/y
  • Personal spending up 0.2%, and down 0.2% in real terms
  • Based on Jan-Feb data, real Q1 spending may be flat from -4.3% in Q4
  • But because of weakening trend thru Q1, sets up for another negative in Q2
  • Saw one forecaster change Q1 estimate from -7.2% to -6.5% and leave Q2 estimate unch at -4.8%

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Personal Income YoY (Feb)

Survey n/a
Actual 1.0%
Prior 1.4%
Revised n/a

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Personal Income ALLX (Feb)

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Personal Spending (Feb)

Survey 0.2%
Actual 0.2%
Prior 0.6%
Revised 1.0%

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PCE Deflator YoY (Feb)

Survey 0.8%
Actual 1.0%
Prior 0.7%
Revised 0.8%

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PCE Core MoM (Feb)

Survey 0.2%
Actual 0.2%
Prior 0.1%
Revised 0.2%

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PCE Core YoY (Feb)

Survey 1.6%
Actual 1.8%
Prior 1.6%
Revised 1.7%

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U of Michigan Confidence (Mar F)

Survey 56.8
Actual 57.3
Prior 56.6
Revised n/a

 
Karim writes:

  • Final Michigan survey for March showed small upward revision in confidence: 56.6 to 57.3 (Feb was 56.3)
  • 5-10yr inflation expectations revised lower: 2.8 to 2.6 (Feb was 3.1)
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    U of Michigan Confidence TABLE Inflation Expectations (Feb)


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UK’s Brown and King re: failed auction


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Brown ‘Terribly Fragile’ After Bond Auction Flops

by Robert Hutton and Mark Dean

Mar 26 (Bloomberg) — The first failed British bond auction in more than seven years leaves Prime Minister Gordon Brown’s reputation for economic competence even more tarnished as he battles recession and a rising tide of voter anger.

Brown, who had the backing of 30 percent of the electorate in a ComRes Ltd. poll last week, must now cope with what amounts to a vote of no confidence by investors in his ability to end the recession. Bank of England Governor Mervyn King, his ally for much of the past decade, warned a day earlier that there’s no more money for further spending.

Wrong! Spending is not inherently constrained by revenues.

King must not understand how the monetary system works.

“The notion that Brown is leading us to the promised land is laughable,” said Ruth Lea, economic adviser to the Arbuthnot Banking Group Plc in Solihull, England. “He cannot get to grips with how other people see this country now, as the sick man of Europe.”

Yes, that’s how most see it, but they don’t understand how the monetary system works.

The Treasury yesterday tried to sell 1.75 billion pounds ($2.6 billion) of 40-year gilts and got 1.63 billion pounds of bids, a sign that investors are reluctant to finance his record borrowing.

No, a sign at that point in time that investors didn’t want to buy that many bonds of that maturity.

This does not constrain government spending.

“Brown’s strategy now looks terribly fragile,” said Mark Wickham-Jones, a professor of politics at Bristol University. “His situation is economically extremely uncertain, politically risky and this auction again highlights how we are now in un-chartered territory.”

He doesn’t seem to understand the monetary system either.

G-20 Tour

The auction failure couldn’t have come at a worse time for Brown, who set off on a five-day tour this week to win support for his economic-reform plans before a summit of leaders from the Group of 20 nations he’s hosting in London on April 2. He’s in Brasilia today and due to visit Chile after speaking in New York yesterday.

He does understand that he does not need their support for anything regarding the UK economy.

German Chancellor Angela Merkel has resisted Brown’s push for a new fiscal stimulus, saying her country already has committed to a boost worth 4.7 percent of gross domestic product.

Germany does have funding constraints the UK doesn’t have as per the eurozone institutional arrangements.

Brown’s Agenda

The government says the G-20 will focus on stabilizing financial markets, reforming global financial institutions and helping people get through the recession. Brown wants them to agree on a fiscal stimulus to support growth, something King warned might not be affordable.

More evidence King doesn’t understand the monetary system. ‘Affordable’ is not an applicable concept regarding nominal spending with a non convertible currency.

“Given how big these deficits are, I think it would be sensible to be cautious about going further in using discretionary measures to expand the size of those deficits,” King said in Parliament on March 24.

Brown’s spokesman Tom Hoskin said yesterday the prime minister wasn’t troubled by the auction failure. “There have been other auctions that have been uncovered in other countries,” he told reporters in London. “The underlying strength of the market in gilts is there.”

More to the point, it’s not a necessary condition for deficit spending. The economics of deficit spending are the same whether or not guilts are sold. The difference is long term rates are higher if the Treasury issues long term securities. They should listen to Goodhart and not issue or sell them at all.


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EU President slams US policy


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Looks like the EU leaders don’t know much about how monetary systems work, either.

EU Presidency: Obama Plans ‘a Way to Hell’

by Raf Casert

Mar 25 (AP) — A top European Union politician on Wednesday slammed U.S. plans to spend its way out of recession as “a way to hell.”

Czech Prime Minister Mirek Topolanek, whose country currently holds the EU presidency, told the European Parliament that President Barack Obama’s massive stimulus package and banking bailout “will undermine the stability of the global financial market.”


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2009-03-26 USER


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GDP QoQ Annualized (4Q F)

Survey -6.6%
Actual -6.3%
Prior -6.2%
Revised n/a

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GDP YoY Annualized Real (4Q F)

Survey n/a
Actual -0.8%
Prior 0.7%
Revised n/a

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GDP YoY Annualized Nominal (4Q F)

Survey n/a
Actual 1.2%
Prior 3.3%
Revised n/a

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GDP Price Index (4Q)

Survey 0.5%
Actual 0.5%
Prior 0.5%
Revised n/a

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Core PCE QoQ (4Q)

Survey 0.8%
Actual 0.9%
Prior 0.8%
Revised n/a

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Personal Consumption (4Q)

Survey -4.4%
Actual -4.3%
Prior -4.3%
Revised n/a

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Initial Jobless Claims (Mar 21)

Survey 650K
Actual 652K
Prior 646K
Revised 644K

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Continuing Claims (Mar 14)

Survey 5475K
Actual 5560K
Prior 5473K
Revised 5438K

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Jobless Claims ALLX (Mar 21)


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Geithner Plan


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This is what happens with a government that doesn’t know how the monetary system works and thinks it needs private capital participation:

Geithner Tempts Investors with Loans, 25% Returns

by James Sterngold

Mar 24 (Bloomberg) — The U.S. government’s plan to rid banks of toxic assets may attract investors with financing that helps generate returns as high as 25 percent. The Public-Private Investment Program would encourage the purchase from banks of certain securities backed by mortgages and other assets, as well as whole loans. Loans from the Federal Reserve and Federal Deposit Insurance Corp. debt guarantees will bring out the bidders.


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WSJ reports housing wrong


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Thanks, the negatively biased reporting continues as the evidence grows that the Obamaboom is underway.

The driving force is clear- the federal deficit seems to have gotten large (albeit the ugly way- falling revenues and rising transfer payments as output falls and unemployment rises) to again support incomes and spending.

This is how it most often happens with leadership that doesn’t understand how the monetary system works.

And analysts who don’t understand how the monetary system works will be late to anticipate the recovery as well, just as they initially failed to recognize that ‘monetary policy’ would be ineffective.

But no doubt the will cast whatever happens in terms of the monetary policy actions taken by the Fed and Treasury, rather than a result of the fiscal forces from the ‘automatic stabilizers.’

>   
>   On Wed, Mar 25, wrote:
>   
>   See excerpt from todays WSJ. See they say that average prices declined
>   month over month. Then look at the actual data. The mean or average
>   price actually went UP from 239K to 251K but they say “and prices
>   month over month fell too.
>   
>   They don’t even read the release. These numbers are confirmed on BB.
>   

New-Home Sales Rise as Prices Fall

by Jeff Bater

Mar 25 (WSJ) — The median price of a new home tumbled 18.1% to $200,900 in February from $245,300 in February 2008. The average price decreased 16.7% to $251,000 from $301,200 a year earlier. And prices month over month fell, too; in January 2009, the median price was $206,800 and the average was $239,100.


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Obama on a new world currency


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This is what you get from a president who doesn’t understand the monetary system. The strength of the dollar is off point:

Obama Defends Spending Plan, Tempers Criticism of Wall Street

by Julianna Goldman and Kim Chipman

Mar 25 (Bloomberg) — “I don’t believe that there’s a need for a global currency,” Obama, 47, said. “As far as confidence in the U.S. economy or the dollar, I would just point out that the dollar is extraordinarily strong right now.”

The main difficulty with a world currency is how the budget deficit (the only source of net savings of financial assets for that new currency) in that currency is managed. And with a world of leaders who don’t understand how currencies work, the odds of getting that anywhere near right are very long.


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2009-03-25 USER


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MBA Mortgage Applications (Mar 20)

Survey n/a
Actual 32.2%
Prior 21.2%
Revised n/a

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MBA Purchasing Applications (Mar 20)

Survey n/a
Actual 267.80
Prior 257.10
Revised n/a

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MBA Refinancing Applications (Mar 20)

Survey n/a
Actual 6363.20
Prior 4497.60
Revised n/a

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Durable Goods Orders (Feb)

Survey -2.5%
Actual 3.4%
Prior -5.2%
Revised -7.3%

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Durable Goods Orders YoY (Feb)

Survey n/a
Actual -28.9%
Prior -27.9%
Revised n/a

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Durables Ex Defense MoM (Feb)

Survey n/a
Actual 1.7%
Prior -4.0%
Revised n/a

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Durables Ex Transportation MoM (Feb)

Survey -2.0%
Actual 3.9%
Prior -2.5%
Revised -5.9%

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Durable Goods ALLX (Feb)

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New Home Sales (Feb)

Survey 300K
Actual 337K
Prior 309K
Revised 322K

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New Home Sales Total for Sale (Feb)

Survey n/a
Actual 330.00
Prior 340.00
Revised n/a

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New Home Sales MoM (Feb)

Survey -2.9%
Actual 4.7%
Prior -10.2%
Revised -13.2%

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New Home Sales YoY (Feb)

Survey n/a
Actual -41.1%
Prior -46.1%
Revised n/a

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New Home Sales Median Price (Feb)

Survey n/a
Actual 200.90
Prior 206.80
Revised n/a

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New Home Sales TABLE 1 (Feb)

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New Home Sales TABLE 2 (Feb)


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A bottom in home prices?


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A bottom in home prices?

And with the low created by forced and massive foreclosure liquidation auction sales a V shaped bottom is to be expected.

House Price Index MoM (Jan)

Survey -0.9%
Actual 1.7%
Prior 0.1%
Revised -0.2%

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House Price Index YoY (Jan)

Survey n/a
Actual -6.3%
Prior -8.9%
Revised n/a

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House Price Index ALLX (Jan)

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