Category: US & Canada

Posted on

The Next Selling Wave Is About to Begin | Toby Connor | Safehaven.com

As the stock market moves down into the next daily cycle low and the selling pressure intensifies, this should drive the dollar index much higher. It remains to be seen if gold can reverse this pattern of weakness in the face of dollar strength, especially since the dollar will almost certainly be rallying violently during the intense selling pressure that is coming in the stock market.

via The Next Selling Wave Is About to Begin | Toby Connor | Safehaven.com.

 

When the dollar strengthens, gold normally falls. Except in times of high uncertainty (like the present), when demand for gold as a safe haven overcomes downward pressure from a stronger dollar. Buying gold at current prices is a bet that either Greece will default — a pretty safe bet — or that the Fed is again forced to use its printing press (not quite as certain).

Posted on

FRB: Press Release–Federal Reserve issues FOMC statement–September 21, 2011

The Committee continues to expect some pickup in the pace of recovery over coming quarters but anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate. Moreover, there are significant downside risks to the economic outlook, including strains in global financial markets.

………The Committee discussed the range of policy tools available to promote a stronger economic recovery in a context of price stability. It will continue to assess the economic outlook in light of incoming information and is prepared to employ its tools as appropriate.

via FRB: Press Release–Federal Reserve issues FOMC statement–September 21, 2011.

Posted on

Fed Shifts Bond Portfolio – WSJ.com

The Fed is trying to ease financial conditions without taking the more controversial step of increasing the amount of money that it’s pumping into the financial system, since it will be using money already generated from other programs. A bond buying program the Fed completed in June was widely criticized internally and externally because it pumped $600 billion of newly printed money into the financial system, sparking fears of inflation……..

The more potent step of launching a new round of bond purchases that would further expand the Fed’s $2.867 trillion balance sheet remains a possibility, but inflation likely would need to slow much further to spur Fed officials to take that step……..

Economists aren’t so sure that the Fed’s latest gambit will do much to spur growth.

“The odds are ‘Operation Twist’ won’t work,” Anthony Sanders, a real-estate finance professor at George Mason University, said before the Fed action. The housing market has shown no reaction to interest rates that are already at record-low levels, he said. Freddie Mac’s latest survey finds the average rate on 30-year, fixed-rate mortgages at 4.09%, the lowest level in more than 50 years.

via Fed Shifts Bond Portfolio – WSJ.com.

Posted on

Of course it’s right to ringfence rogue universals – Martin Wolf

Thank you, UBS. As a member of the UK’s Independent Commission on Banking, under Sir John Vickers, I could not have asked for a better illustration of the unregulatable risks to which investment banks are exposed than Thursday’s announcement of a loss of $2bn in “unauthorised trading”. No sane country can allow taxpayers to stand behind such risks.

That is the kernel of the case for ringfencing of retail banking from investment banking, recommended in the ICB’s final report.

via Of course it’s right to ringfence rogue universals – FT.com.

Posted on

Barack Obama, Home Alone – Rich Lowry

In his new book on the Obama economic team, Ron Suskind quotes former administration official Larry Summers complaining: “We’re home alone. There’s no adult in charge. Clinton would never have made these mistakes.”

via Barack Obama, Home Alone – Rich Lowry – National Review Online.

Larry Summers “We’re home alone” comment could damage Barack Obama’s already slim chances of re-election. Already slim because there is little he can do that will create jobs before November next year.

Posted on

Home building down 5% in August as slide continues – latimes.com

U.S. builders broke ground on fewer homes in August, more evidence that the housing market remains depressed.

The Commerce Department said Tuesday that builders began work on a seasonally adjusted annual rate of 571,000 homes last month, a 5% decline from July and a three-month low. That’s less than half the 1.2 million homes that economists say is consistent with healthy housing markets.

via Home building down 5% in August as slide continues – latimes.com.

Posted on

IMF Survey: Weak and Bumpy Global Recovery Ahead

The risks to the global economy are many, but three in particular demand strong action by policymakers:

• In the euro area, banks must be made stronger, not only to avoid deleveraging and maintain growth, but also, and more importantly, to reduce risks of vicious feedback loops between low growth, weak sovereigns, and weak banks. This requires additional capital buffers, from either private or public sources.

• The top priorities in the United States include devising a medium-term fiscal consolidation plan to put public debt on a sustainable path and to implement policies to sustain the recovery, including by easing the adjustment in the housing and labor markets. The new American Jobs Act would provide needed short-term support to the economy, but it must be flanked with a strong medium-term fiscal plan that raises revenues and contains the growth of entitlement spending.

• In Japan, the government should pursue more ambitious measures to deal with the very high level of public debt while attending to the immediate need for reconstruction and development in the areas hit by the earthquake and tsunami.

via IMF Survey: Weak and Bumpy Global Recovery Ahead.

Posted on

Short-Term Stimulus Won’t Help U.S. in Long Run: Glenn Hubbard – Bloomberg

The president’s announced jobs plan centers on the need for additional short-term stimulus designed to boost aggregate demand and jump-start economic growth. In some recession scenarios, such action, if timely, can indeed raise output and employment.

In our current state, however, calling for additional spending and temporary tax relief without addressing longer-term economic challenges may exacerbate the likelihood of another recession in the coming year.

This is because the U.S. economy suffers from structural problems predating the financial crisis, particularly an excessive reliance on household consumption and government spending, and insufficient attention paid to business investment and exports. The financial system and the economy need to adjust in the face of this structural shift.

This observation points out two problems with the case for stimulus being made by Obama. The first is that near-term and temporary support for household incomes does little to counterbalance the chilling effect of announced future policies. Uncertainty becomes the enemy.

via Short-Term Stimulus Won’t Help U.S. in Long Run: Glenn Hubbard – Bloomberg.

Posted on

Housing Is to the U.S. What Greece Is to the Euro Zone – Real Time Economics – WSJ

The beleaguered housing sector is looking like the Greece of the U.S. economy. Just as the euro zone won’t prosper until Greece gets its act together, the U.S. recovery won’t gain traction until the housing sector deals with the excesses of its past……..

Housing and related mortgage problems remain a large drag on economic growth. In August, housing starts stood at a annual rate of 571,000–just one-third of its pace during the boom. And the weak September reading on home builders sentiment suggest builders see more declines ahead.

via Housing Is to the U.S. What Greece Is to the Euro Zone – Real Time Economics – WSJ.

Powered by WordPress / WordPress Maintenance Service By Website Helper