USA Archive

macro update

The US economy seems to be muddling through at modestly positive GDP growth, supported by a still sort of high enough 8% or so govt fiscal deficit. The year and fiscal cliff is a looming disaster but it’s too soon for markets to discount a high chance of it actually happening. Lower ...Read More

61% Believe Europe Needs to Cut Government Spending to Save Economy

In case you thought US voters were any different than their euro counterparts: 61% Believe Europe Needs to Cut Government Spending to Save Economy May 9 (Bloomberg) — Newly elected leaders in France and Greece have signaled that austerity efforts in their countries may be coming to an end, but as far ...Read More

Reuter’s Ed Rombach on US vs Japan

Ed researched this issue after discussing with Warren August 2011. Ed Rombach on US vs Japan ...Read More

Global themes

Austerity everywhere keeps domestic demand in check and export channels muted Non govt credit expansion pretty much stone cold dead in the US and Europe Rising oil energy prices subduing global aggregate demand US federal deficit just about enough to muddle through with modest GDP growth Rest of world public deficits also ...Read More

News recap comments

The news flow from last week was so voluminous it was nearly impossible to process. For good measure I want to start today’s commentary with a simple recap of what happened. On the negative side – · Greece called a referendum and threw bailout plans up in the air taking Greek 2yrs ...Read More

Credit spillovers from Eur banks to EM

Makes sense. I always wondered how that loan demand was accommodated. Never looked like the kind of lending US regulators would sanction. Karim writes: Interesting table from JPM. Much larger dependence on credit from Eur banks for LATAM economies than from U.S. banks. Poland/Russia not as surprising but still large! Overall, domestic ...Read More

Payrolls and a Fed rant

Utter failure of policy. The Fed was certain it knew what Japan had done wrong and wasn’t going to make THOSE mistakes. So it Cut rates much more aggressively. Said it would do whatever it takes. Figured out how to do its job as liquidity provider after only 6 months of alphabet ...Read More

Greek Vote Threatens Bailout

The obvious hasn’t been making the headlines: A no vote means a lot more immediate austerity than a yes vote. A no vote means Greece can’t borrow at all, and therefore govt. checks will only clear if Greece immediately cuts back to where it is only spending tax revenue. A yes vote ...Read More

Early Holiday Cheer…

As discussed last week, the latest euro package just announced is unravelling quickly as markets again realize there is no actual substance, and no operational path with regards to carrying any of it out. So things will deteriorate as described until markets again force further ‘action.’ At the same time, the austerity ...Read More

Crude Oil Update

Still seems to me that the idea that WTI appreciates to Brent as the Strategic Petroleum Reserve release winds down over the next few weeks is playing out as previously discussed. The WTI discount depends on a serious glut condition persisting, and the wind down of the approx 3.8 million barrels a ...Read More