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MOSLER'S LAW: There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.

Archive for the 'Uncategorized' Category

Jack Lew to press Germany on domestic demand

Posted by WARREN MOSLER on 6th January 2014

Wrong, Jack, press for domestic demand HERE(tax cut and/or spending increase)

It’s called optimizing real terms of trade. What you are doing is subversive!

Jack Lew to press Germany to boost domestic demand

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Car sales missing

Posted by WARREN MOSLER on 4th January 2014

Averaging October’s govt shutdown reduced report with November’s bounce back approx = today’s Dec releases. So levelish sales for the quarter, and a leveling off in general post Jan tax hikes vs a prior multi year upward slope.

* GM, Ford, Toyota, Chrysler December U.S. sales all miss

* Ford sales up 2 percent

* GM sales down 6 percent

* Toyota sales down 1.7 percent

* Chrysler sales up 6 percent

By Bernie Woodall and Ben Klayman

DETROIT, Jan 3 (Reuters) – The top four automakers in the U.S. market missed December sales expectations, but 2013 will still easily be the best year for the industry since before the recession.

General Motors Co said that the U.S. auto industry will have December U.S. auto sales at a 15.6 million-vehicle annualized selling rate, well below the 16 million vehicles expected by 27 economists surveyed by Thomson Reuters.

The late December holiday season is generally one of the heaviest sales periods at U.S. auto dealerships.

Sales that may have occurred in December were pulled ahead to November because of a late-month, four-day Thanksgiving weekend, said John Felice, head of sales at Ford Motor Co.

December auto sales were also hampered by snowy and icy weather over parts of the country late in the month, said Chrysler spokesman Ralph Kisiel.

Each month, auto sales are seen as an early indicator of consumer spending.

For all of 2013, U.S. auto sales are expected to finish near 15.6 million vehicles, up about 8 percent.

That would be the best sales year since pre-recession 2007, when 16.1 million vehicles were sold in the U.S. market. At the height of the recession in 2009 sales fell to 10.4 million.

GM’s sales fell 6 percent, to 230,157 new vehicles, below analysts’ expectations of a slight sales gain.

Sales of GM’s Chevrolet Silverado pickup truck fell 16 percent in the month.

Ford’s sales rose 2 percent, to 218,058, also below analysts’ expectations. Its F-Series pickup truck, the best-selling model in North America, had an 8 percent sales gain in December.

Toyota’s U.S. December sales fell 1.7 percent to 190,843 vehicles, versus expectations of a slight gain.

Chrysler expects the industry to show a December annualized selling rate of 15.8 million vehicles.

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Full Interview, Econ Focus, John Cochrane – Federal Reserve Bank of Richmond

Posted by WARREN MOSLER on 4th January 2014

University of Chicago going MMT?

If you know him, point out that the micro foundation is the currency itself is a public monopoly, and all the implications thereof, particularly the idea that monopolists are inherently ‘price setters’ rather than ‘price takers’, and that unemployment as defined is necessarily the evidence that Federal spending isn’t sufficient to cover the need to pay taxes and desires to net save, etc. etc.

And direct him to my book and website, thanks!

Econ Focus

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Chicago PMI

Posted by WARREN MOSLER on 31st December 2013

Growth slowed this month in the Chicago economy but from unsustainably high rates of growth in November and October. The Chicago PMI slowed to 59.1 vs 63.0 and 65.9 in the two prior months. Aside from November and October, the December reading is the best since March last year.

Order growth is strong but did slow with new orders at 60.7, down from 68.8 and 74.3 in the two prior months but still above September’s 58.9. This are all very strong rates of monthly growth for new orders which have been on the plus 50 side to show growth every month since November last year. And backlog orders are piling up, at 58.3 for a 3rd straight monthly build.

Employment is a special weakness in the December report, at 51.6 and not much above 50 to signal only modest monthly growth. This is the softest reading for this index since April.

Other readings include a strong though slowing rate of production, steady and moderate price pressures for raw materials, and a sharp slowing in deliveries that may point to the emergence of capacity constraints in the supply chain. In a plus, inventories, where high levels are a concern for the 4th quarter, fell sharply in the month.

This report, which covers all areas of the Chicago economy, points to another month of solid mid-50s growth for the coming ISM reports on manufacturing and non-manufacturing. The Dow is moving off opening highs following today’s report.

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today’s releases- Happy Holidays to All!!!

Posted by WARREN MOSLER on 24th December 2013

This release along with the Chicago Fed report that November housing starts were down, and anecdotal evidence from home builder reports and various mortgage originators seems to indicate the reported 22% jump in November housing starts reported last week is at best subject to downward revision.

MBA Purchase Applications

The rise in mortgage rates, this time following the Fed’s decision to begin tapering stimulus, is increasingly reducing mortgage activity. The purchase index fell 4.0 percent in the December 20 week for a year-on-year decrease of 11.0 percent, tangible contraction that underscores the importance of all-cash buyers in the home market.

The rise in mortgage rates is also sharply reducing refinancing activity with the refinance index down 8.0 percent in the week to its lowest level of the recovery. The average rate for conforming mortgages ($417,500 or less) rose 2 basis points in the week to 4.64 percent.

MBA Purchase Applications, Y/Y and level:

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Durables were up nicely as per yesterday’s release as well, with a boost from November’s elevated vehicle sales rate of 16.4 million units. But December car sales are currently forecast to be down to about a 15.5-16 million pace, vs month’s 16.4 million and October’s govt shutdown limited 15.2 million. This also brings the year over year growth rate down to maybe 4% as things flattened out in 2013 from higher prior growth rates. Also, as you can see from the chart, durables don’t tell you much about what might happen next. For example, we had about the same increase in Q1 2008:

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And the Capital goods non defense ex aircraft year over year chart speaks for itself as well:

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New home sales also just out, with a whopping upward 120,000 revision to last month causing today’s initial November print to be down tic. Seems it’s going to take a few more months of releases and revisions to see what’s actually been happening.

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the resilient consumer

Posted by WARREN MOSLER on 17th December 2013

just saying…

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Headline retail sales with 3 mo moving average indicated, claims

Posted by WARREN MOSLER on 12th December 2013

Looks like the general drift to lower growth rates may still be in progress.

Headline retail sales year-over-year with 3 mo moving average:

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Longer term chart:

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And auto sales chart shows how they sagged during the October govt. shutdown with lost sales subsequently recovered, but on balance relatively flat for 2013:

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Lots of noise in claims data this time of year, but, again, claims are about separations, not new hires, though correlation has been pretty good:

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Posted by WARREN MOSLER on 9th December 2013

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pce autos continue flat yoy

Posted by WARREN MOSLER on 8th December 2013

Personal consumption expenditures: New autos

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Consumer credit

Posted by WARREN MOSLER on 8th December 2013

Consumer Credit

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Stats from the high seas

Posted by WARREN MOSLER on 2nd December 2013

fyi, this is only for containers:

Stats from the high seas: Stormy weather ahead

By Allen Wastler

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slow start to holiday sales

Posted by WARREN MOSLER on 2nd December 2013

And 2 fewer shopping days…

Holiday Sales Sag Despite Blitz of Deals

(WSJ) — Estimated total spending over Thanksgiving weekend fell to $57.4 billion, down 2.7% from a year ago, according to the National Retail Federation. It said it still expects total holiday sales through year-end to rise by 3.9% from a year ago. The retail trade group said the number of people who went shopping over the four-day weekend that kicked off with Thanksgiving rose slightly to 141 million, up from 139 million last year. Store traffic on Black Friday rose just 3.4% to 92 million shoppers. Preliminary results from ShopperTrak suggested that sales on Thursday and Friday combined rose 2.3% from a year earlier to $12.3 billion. The firm has forecast that this holiday-shopping season will be the worst since 2009, with retail sales in November and December rising by 2.4% from a year earlier, less than last year’s 3% increase and below gains of around 4% in 2011 and 2010.

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Chicago pmi looking good, consumer confidence up

Posted by WARREN MOSLER on 27th November 2013

Go rust belt!
Maybe I’ll finally get a good price for the condos I bought in the early 80′s when I lived there…

Chicago PMI

Monthly growth in composite activity in Chicago remains exceptionally strong, at 63.0 for this month’s reading vs an even stronger 65.9 in October. Strength is centered where it should be, in new orders which are at a robust 68.8. The prior reading, at 74.3, was a 9 year high. Production slowed in the month but remains very strong at 64.3 vs 71.1.

Employment is a special standout in today’s report, up 3.2 points to 60.9 which is the highest reading in more than 2 years. Inventories, at 61.1, show a sudden build as Chicago businesses prepare to fill orders. Backlog orders are growing strongly, deliveries are slowing, and price inputs are rising — all consistent with strong activity.

This report, which covers all areas of the Chicago economy, points to another month of solid growth for the coming ISM reports on manufacturing and non-manufacturing. The Dow is moving to opening highs following today’s report.

Consumer Sentiment

Market Consensus before announcement
The Reuter’s/University of Michigan’s consumer sentiment index slipped to 72.0 for the early November reading versus 73.2 for final October and versus 75.2 in the early October reading. The latest result was the 7th straight dip going through both early and final readings back to final July. The erosion continues to be centered in expectations which were at 62.3, down steadily from July’s peak at 76.5. Current conditions have also been coming down but less so, to 87.2 in the preliminary November reading versus a peak of 99.7 in early July.

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household debt

Posted by WARREN MOSLER on 22nd November 2013

Just noticed this. The question is whether it was proactive/desired and ongoing or one time/forced due to sequester and FICA hike income reductions.

“Household debt jumped US$127 billion in the third quarter, the biggest increase since the first quarter of 2008. The rise was across the board as Americans went into greater debt to buy everything from houses to cars to schooling. Household debt is now growing faster than both gross domestic product and disposable income, returning to the pattern that drove both economic growth and serial bubbles in the past decade.”

(Thanks Edward Harrison)

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John Carney: What I Read

Posted by WARREN MOSLER on 22nd November 2013

Thanks JC!

John Carney: What I Read

I’ll open my email to see what my colleagues at CNBC have been emailing me about, what sources have been emailing me. I’ll read through what I consider the big macro economics blogs, like Pragmatic Capitalism, or Mosler Economics, The Money Illusion, and occasionally Paul Krugman, to see what they’re talking about.

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philadelpha fed breakdown

Posted by WARREN MOSLER on 21st November 2013

I know, prices paid are up which is the most reliable indicator of a strong economy…
And higher inventory is the best indicator of future sales and deliveries…
And it’s better than the May numbers…

More seriously, the attached graph doesn’t look as bad as the breakdown.

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purch apps y/y

Posted by WARREN MOSLER on 20th November 2013

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Corporate Results Expose Lack of Confidence

Posted by WARREN MOSLER on 19th November 2013

Corporate Results Expose Lack of Confidence

November 18 (WSJ) — Though corporate profits were higher overall, companies slashed their spending on factories, equipment and other performance-enhancing investments by 16% from year-earlier levels, according to an analysis by REL Consultancy for The Wall Street Journal. Almost 90% of the companies that have given financial forecasts for the final quarter of the year have prompted Wall Street analysts to lower their numbers. Only a dozen companies have painted rosier pictures, according to data tracker FactSet. With more than 90% of companies in the S&P 500 index having posted results for the quarter, blended earnings were up 3.5% from a year earlier, and profit remained in record territory, according to FactSet. Profit margins, at 9.6%, were near records, thanks to cost cutting, automation and lower commodity prices. But revenue growth was a tepid 2.9% from a year earlier.

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qe letter reprinted

Posted by WARREN MOSLER on 18th November 2013


And I’m sure Barry remembers who was on the other side of that trade!

2010 Reminder: QE = Currency Debasement and Inflation

By Barry Ritholtz

November 15 — One of my biggest complaints about the media is the lack of accountability. People say things on TV in print an on radio, and then . . . Poof! No consequences. They influence public perception of issues, affect policy debates, drive legislation.

This is a perfect example of a stern warning of currency debasement and inflation due to QE. Let me point out this was made 3 years ago today hence, it has been terribly wrong.

I wont give you advice but I keep track of who is consistently wrong, whose histrionic forecasts are both silly and wrong. Their future comments are valued accordingly.

e21 Team | 11/15/2010

To: Chairman Ben Bernanke
Federal Reserve
Washington, DC

Dear Mr. Chairman:

We believe the Federal Reserves large-scale asset purchase plan (so-called quantitative easing) should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Feds objective of promoting employment.

We subscribe to your statement in The Washington Post on November 4 that the Federal Reserve cannot solve all the economys problems on its own. In this case, we think improvements in tax, spending and regulatory policies must take precedence in a national growth program, not further monetary stimulus.

We disagree with the view that inflation needs to be pushed higher, and worry that another round of asset purchases, with interest rates still near zero over a year into the recovery, will distort financial markets and greatly complicate future Fed efforts to normalize monetary policy.

The Feds purchase program has also met broad opposition from other central banks and we share their concerns that quantitative easing by the Fed is neither warranted nor helpful in addressing either U.S. or global economic problems.


Cliff Asness
AQR Capital

Michael J. Boskin
Hoover Institution, Stanford University
Former Chairman, Presidents Council of Economic Advisors

Richard X. Bove
Rochdale Securities

Charles W. Calomiris
Columbia University Graduate School of Business

Jim Chanos
Kynikos Associates

John F. Cogan
Hoover Institution, Stanford University
Former Associate Director, U.S. Office of Management and Budget

Niall Ferguson
Harvard University
Author, The Ascent of Money: A Financial History of the World

Nicole Gelinas
Manhattan Institute & e21
Author, After the Fall: Saving Capitalism from Wall Streetand Washington

James Grant
Grants Interest Rate Observer

Kevin A. Hassett
American Enterprise Institute
Former Senior Economist, Board of Governors of the Federal Reserve

Roger Hertog
Hertog Foundation

Gregory Hess
Claremont McKenna College

Douglas Holtz-Eakin
Former Director, Congressional Budget Office

Seth Klarman
Baupost Group

William Kristol
Editor, The Weekly Standard

David Malpass
GrowPac, Encima Global
Former Deputy Assistant Treasury Secretary

Ronald I. McKinnon
Stanford University

Joshua Rosner
Graham Fisher & Co., Inc.

Dan Senor
Council on Foreign Relations
Co-Author, Start-Up Nation: The Story of Israels Economic Miracle

Amity Shlaes
Council on Foreign Relations
Author, The Forgotten Man: A New History of the Great Depression

Paul E. Singer
Elliott Management Corporation

John B. Taylor
Hoover Institution, Stanford University
Former Undersecretary of Treasury for International Affairs

Peter J. Wallison
American Enterprise Institute
Former Treasury and White House Counsel

Geoffrey Wood
Cass Business School at City University London

(Institutional Affiliations are for Information Only)

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NY Fed: Empire State Manufacturing Activity declines in November

Posted by WARREN MOSLER on 16th November 2013

First Nov regional.

Stocks all bulled up on Yellen rates low for longer thing which of course just stepping on the brake harder ;)

IP cap util also down a tad as well. Weak yen can’t be helping US exports any as yesterday’s trade data hinted.

Claims as high as they are and 1.9 productivity growth could mean softer jobs ahead.

Mtg prch apps continue down yoy.

Good thing gas is down!

NY Fed: Empire State Manufacturing Activity declines in November

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