Thursday, August 15, 2013


If you could explain things to me I would greatly appreciate it.  Here's what happened today.


     Job numbers were OK, and production numbers, while not setting any records, pointed towards an expansion of the economy.  There were claims all over that the recession Over There is over based on GDP growth in Germany and France of 2.4% and 1.8% respectively.  note to pundits:  Germany and France do not Europe make.  Things stink in the majority of the Union.  Most were happy except I suspect Little Paulie Krugman who is forced to watch as the continent biggest fiscal and monetary conservative posts the best performance.  How's that Keynesian thingy working for ya, Paulie?


     Quarterly performance at Cisco and WalMart came in well below what the street was looking for.  The stock market sold off.  Then somebody got the bright idea that the macro numbers were good enough to insure the Fed's next step would surely be to taper and the stock market really sold off when the 10 year exploded to 2.80 yield (it closed at 2.75%).   Somewhere on the floor a small child asked, "Daddy, did the Fed make a bubble?"  Unpleasant little brat.


     So, sports fans, what's the deal?  Are we coming out of this thing or is the positive news just a head feint?  Something to consider: fully 75% of the jobs created in the past 3 months have been in the lowest pay classes and in many cases for less than 40 hours.  Now I'm a grave digger by disposition but this is hardly what I would call encouraging news.  Interest rates have risen by a full 115 b.p. in a year and are poised to move far higher if tapering does indeed begin (the anticipation is certainly already there as the numbers suggest).  Another 50-100 kills housing and the consumer.  Doesn't do a hell of a lot of good for the debt market either with a focus on Munis.  The National Debt picture looks a lot different from this time last year with the cost of new issuance having doubled which make weird guys like me look at who is buying this stuff if it isn't the Fed itself and low and behold, the Japanese and the Chinese have shown a net reduction over the past month of U.S. Government obligations of over $65 billion.  So I ask.  Anybody got a bid?  Anybody know?

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