Discounting a significant recession seems way overblown.
WORST CASE SCENARIO
One has to really believe that the U.S. consumer is going to not just stop spending more, but actually retrench, in order to get to negative growth for the full year next year.
Plugging in a calculation for an oil-related retrenchment and a continued, harsh, steep fall in residential construction, one gets to flatish growth (including even a significantly negative contribution from inventory investment).
On my figures, one would have to see year-to-year negative growth in (real) consumer spending in excess of 2%. Such numbers didn't occur in the last two slowdowns, even in the early 1991, when things were looking more bleak, in many ways. (PCE, personal consumption expenditures, haven't been negative since 1980, when it dropped just slightly for the whole year...).
THE WILD CARD - OIL
Oil is acting like a "financial variable", these days, divorced from supply and demand. Speculation here continues to be a significant downside risk.
WHEN WILL CALM RE-EMERGE?
Guesses: For financials, it may be when the first quarter prints without "special charges", probably as soon as 1Q08.
For the market as a whole, probably sometime in the same period, as more data comes in that the consumer is not retrenching, fast and furious.
At that time, one might guess that the value of stocks, as measured by the broad S&P500, might move from a "lower" range of, say, 1370-1460 to an "upper" range of 1460-1562 (or higher, depending ...).
REALITY CHECK
David Wyss, who has been tracking this stuff as long as anyone, these days, looks at the "wealth effect" on consumer spending and comes up with numbers not to far from my own:Overall, we expect real consumer spending to slow to 2.2% in 2008, down from 3.0% in 2007. The saving rate will tick up to 1.5% from this year's 0.8%. Consumers aren't likely to stop, but they will tap the brakes.
Also: We expect a total drop in existing home prices of 11% (they're already down 4.4%).
Finally:How much housing wealth translates to consumer spending remains unclear. Even correcting for the direct effect on consumption caused by the imputation of spending and income on owner-occupied housing, estimates range from near-zero to 5% of increases in home prices will be spent each year. At the high end, the impact would be a two-percentage-point rise in the saving rate, and an equivalent slowdown in spending.
On my figures, a sharp 2% rise in the savings rate alongside a sustained oil impact would lead to negative growth ... a gradual rise, not so much.
Interesting Chart from S&P
Tuesday, November 27, 2007
Non-"Recession" Economy Selling at "Recession" Prices
Irrationality in the Financial Stocks?
Amidst the uncertainty, there are glimmers of rationality.
For Citibank, for instance, throw in a known amount of capital raising and a likely restructuring charge, and one can come up with a price that fits, rather tightly.
We now know that dilution due to capital raising is going to be $7.5B rather than the $6B in my estimate, or about 30-cents a share more.
We can guess at a $1.5 billion dollar "restructuring charge" in Q4, which is about 20-cents after-tax. (It's doubtful it will all be realized, I'd guess...).
Credit is more expensive, now, and this will cause a mark-to-market loss of some kind. This is really hard to estimate, because there may be offsetting amounts gains. What's more, if the price of credit is near its high, now, then some amount of these charges will reverse next year or so.
Baking all those in, one comes down to a book value of $21.12, which might equate to a stock price of $29.57, fairly conservatively put. Citibank closed at $29.76 yesterday ...
Monday, November 26, 2007
2008 - The Economic Slow Lane or the Off Ramp?
Do you do an economic forecast of your own? If not, consider that it is easy and worth it.
Martin Wolf puts up a great piece on the economic outlook - in three points:
1.
The latter is “the great unwinding”: the re-import by the US of the stimulus it imparted to the rest of the world between 1996 and 2004, when its domestic purchases grew faster than GDP and the current account deficit exploded upwards.
2.
Yet the [retracement] is still modest: US households still ran a financial deficit of 2.3 per cent of GDP in the second quarter of 2007. Moreover, household savings rates remain very low, at 2.5 per cent of GDP in the second quarter of 2007. Further correction in both is probable.
3.
But exports are only some 12 per cent of GDP. They must grow by considerably more than 10 per cent a year, in real terms, if the contribution of net trade to the rate of growth is to be as much as 1 percentage point. It is likely to be much less.
So, how strong is 'domestic demand' in the U.S.'s key trading partners, China, Canada, Mexico, and the EU and how much do they want what the U.S. is exporting? humm....
Sunday, November 25, 2007
Housing Bubble Snapshot
Notes:
-1990 episode was fairly concentrated, with some markets 'stalling' while others dipped.
-2007 episode, so far, has been both more uniform and mixed. More markets have dipped, but some have also leveled out this year.
Table 1. Peak-to-Trough comparison, 1990 Real Estate "Bust" to 2007 Real Estate "Adjustment". (markets that started a decline prior to December 1994).
| Episode: | 1990s | 2007 | ||||||
|---|---|---|---|---|---|---|---|---|
| City | Peak | Trough | Dur- ation | % | Peak2 | Trough2 | Dur- ation | % |
| Los Angeles | Jun-90 | Mar-96 | 69 | -27% | Sep-06 | Aug-07 | 11 | -6% |
| San Diego | Jul-90 | Mar-96 | 68 | -17% | Nov-05 | Aug-07 | 21 | -9% |
| Boston | Jul-88 | Feb-92 | 43 | -17% | Sep-05 | Feb-07 | 17 | -8% |
| New York | Sep-88 | Apr-91 | 31 | -15% | Jun-06 | Aug-07 | 14 | -4% |
| San Francisco | Jun-90 | Feb-94 | 44 | -12% | May-06 | Aug-07 | 15 | -5% |
| Dallas - TX | Oct-89 | Feb-94 | 52 | -8% | Jun-07 | Jul-07 | 1 | 0% |
| Washington | Apr-90 | Apr-91 | 12 | -6% | May-06 | Aug-07 | 15 | -8% |
| Seattle - WA | Jul-94 | Dec-94 | 5 | -1% | Jul-07 | Aug-07 | 1 | 0% |
| Minneapolis - MN | Nov-94 | Dec-94 | 1 | -1% | Sep-06 | Aug-07 | 11 | -4% |
| Tampa - FL | Sep-94 | Nov-94 | 2 | 0% | Jul-06 | Aug-07 | 13 | -11% |
| Chicago | Oct-94 | Dec-94 | 2 | 0% | Sep-06 | May-07 | 8 | -2% |
| Cleveland - OH | Nov-94 | Dec-94 | 1 | 0% | Jul-06 | Apr-07 | 9 | -5% |
| Portland - OR | Nov-94 | Dec-94 | 1 | 0% | Jul-07 | Aug-07 | 1 | 0% |
| Miami | no drop | - | - | Dec-06 | Aug-07 | 8 | -9% | |
| Phoenix - AZ | no drop | - | - | Jun-06 | Aug-07 | 14 | -8% | |
| Las Vegas | no drop | - | - | Aug-06 | Aug-07 | 12 | -8% | |
| Denver | no drop | - | - | Aug-06 | Mar-07 | 7 | -4% | |
| Detroit - MI | no drop | - | - | Dec-05 | Jun-07 | 18 | -13% | |
| Atlanta - GA | no drop | - | - | Jul-07 | Aug-07 | 1 | 0% | |
| Charlotte - NC | no drop | - | - | Aug-07 | Aug-07 | 0 | 0% | |
| Composite | Oct-89 | Feb-94 | 52 | -8% | Jun-06 | Aug-07 | 14 | -5% |
| Composite-20 | n.a. | n.a. | n.a. | n.a. | Jul-06 | Aug-07 | 13 | -5% |
*items shaded lightly indicate markets in which a downward trend started, but has stopped, either as a permanent trend reversal or as a hiccup.
Seven markets really entered into price declines in the 1990 episode. Housing starts bottomed in January, 1991 (below 1 million units). The Fed raised rates in 1994, when the other markets listed slowed.
Only the three California markets had long, slow declines. The New York and Boston markets peaked first and actually started up circa 1991.
Prices did "bounce" a bit after the falloff that started in the early 1990s, mostly. Not surprisingly, the market with the steepest per-period run-up, Los Angeles, also had the largest decline. An 18-month, post-correction bounce trims the peak-to-trough loss to 22%, however. Four of the other markets came around 12%, with the last two closer to 5%.
Annualized, all of the price declines come out to 4-6% (see next table).
Table 2. Peak-to-Peak comparisons and rise at annual rates
| Episode: | 1990s | 2007 | |||||
|---|---|---|---|---|---|---|---|
| City | Dur- ation | %Ann | Peak2 | Dur- ation | %-Ann | Peak-to -Peak | Prior peak to now |
| Miami | - | - | Dec-06 | 144 | 10% | 12% | 10% |
| Phoenix - AZ | - | - | Jun-06 | 138 | 9% | 11% | 9% |
| Tampa - FL | 2 | 0% | Jul-06 | 140 | 9% | 11% | 9% |
| Las Vegas | - | - | Aug-06 | 140 | 9% | 10% | 8% |
| Seattle - WA | 5 | -1% | Jul-07 | 151 | 8% | 9% | 9% |
| Minneapolis - MN | 1 | -1% | Sep-06 | 141 | 7% | 8% | 7% |
| San Diego | 68 | -3% | Nov-05 | 116 | 14% | 7% | 6% |
| Chicago | 2 | 0% | Sep-06 | 141 | 6% | 7% | 6% |
| Portland - OR | 1 | 0% | Jul-07 | 151 | 6% | 7% | 7% |
| San Francisco | 44 | -4% | May-06 | 147 | 10% | 7% | 6% |
| Denver | - | - | Aug-06 | 140 | 6% | 7% | 6% |
| Los Angeles | 69 | -5% | Sep-06 | 126 | 13% | 6% | 6% |
| Washington | 12 | -6% | May-06 | 181 | 7% | 6% | 5% |
| New York | 31 | -6% | Jun-06 | 182 | 7% | 5% | 5% |
| Detroit - MI | - | - | Dec-05 | 132 | 4% | 5% | 3% |
| Boston | 43 | -5% | Sep-05 | 163 | 8% | 5% | 4% |
| Atlanta - GA | - | - | Jul-07 | 151 | 4% | 5% | 5% |
| Charlotte - NC | - | - | Aug-07 | 152 | 3% | 4% | 4% |
| Cleveland - OH | 1 | 0% | Jul-06 | 139 | 3% | 4% | 3% |
| Dallas - TX | 52 | -2% | Jun-07 | 160 | 4% | 2% | 2% |
| Composite | 52 | -2% | Jun-06 | 148 | 9% | 6% | 6% |
| Composite-20 | n.a. | n.a. | Jul-06 | n.a. | n.a. | n.a. | n.a. |
The current episode, on closer inspection, also has some concentrations, if one considers the peak-to-peak growth in prices: Miami, Pheonix, Tampa, Las Vegas. Assuming that a "normal" growth in prices might be in the range of 3-7% for most regional employment and income dynamics, the price drop need to bring returns back to the averages. Over the next three years, Miami and Tampa, for instance, might need further price drops in the 15-20% range to get back to "normal" returns. Three of the other markets are in the 10-15% range. The remainder could stay flat and returns would be be "normalized" either right now or in the next 2 years.
Altogether, without a rising rate environment and based solely on "normal" levels of return, it doesn't look like a housing crisis is in the works, except in some markets that will correct further.
Of course, a recession (weak income dynamics) could force price falls to be less gradual and have greater amplitude, but those would be compounding cyclical factors, not "bubble" factors. However, many of these factors were also present in the 1990s slump.
In fact, a similar fall in prices, peak-to-trough, comes up with a duration of the episode about equal to the prior one, passing from peak-to-trendline-growth in just about 3 years, or sometime in 2009.
Chart1. House prices on a log-level scale. The current downturn could very much look like the prior one - down somewhat, but not sharply, followed by a period of flat, if there is an underlying uptrend in prices, as shown.
The only way to really scare yourself is to imagine that the trendline re-based at the end of the 1990s, say, as a result of the end of the large decline in mortgage rates to a new, lower level. Such a re-basing suggests that most of the "gains" in the 2000s might have been not driven by the fundamentals.
Re-basing, however, is not supported by an economic model of the fundamentals driving the housing market, outside local supply and demand and cost-of-construction increases.
A basic, consumption-based model, without sophistication, suggests that the trend series growth analysis has some underpinnings.
Chart 2. A consumption-based model for growth in house prices
src: all data from Census Bureau surveys
Both the model and the trend series suggest an overall price decline of maybe 8-11%.
Most of the stress will therefore come on the payments side, the credit part of the market, as part of rate-resets or income uncertainties (cyclical unemployment). A 10% decline will wipe out the equity of those with loan-to-value less than 90%, and drag out the time it will take the markets to clear and tighter credit standards will keep such people from moving on to new housing.
data: Case-Shiller indexes, through August 2007. There are other indexes for housing prices than these and other methodologies. Some market participants, like FannieMae, do not have exposure to all segments of the markets, because they are limited by the dollar amount of so-called "conforming loans".
Saturday, November 24, 2007
Just the Numbers: Week 47
THE NUMBERS
Clinton falls a bit, but her numbers remain solid.
Huckabee has moved up, both in Iowa and nationally, while Ron Paul has leveled off. McCain continues to show no movement.
As the races start to look increasingly binary, these numbers start to get ... boring.
The Senate races haven't shown much movement. Collins (ME) dipped slightly, to lowest point yet, but maybe not 'statistically significant'. Coleman continues to be well bid in Minnesota. Sununu is in a dead heat, so far. For all the talk, McConnell's numbers don't change.
Giuliani is on the move in the FL and NV primaries.
Romney contracts tick up noticeably in South Carolina and New Hampsire. He is now even with Thompson in those states, so the Thompson candidacy, which this blog mused might well hobble Romney in the South, appears to not be having that impact (or any impact).
THE STRATEGIES
One could make some money (circa 15%) betting against Edwards to win in Iowa.
If you think that Obama will bring it home, there is a huge payoff in the parleys for betting both Obama-Giuliani and Obama-Romney (85%). Buying the Obama-for-President contract still pays just over 90% ... !
Everyone assumes that Obama can win the General, if chosen, but that chicken seems counted too soon (to me).
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IMPORTANT DISCLAIMER: this is just an informational note and not a solicitation or recommendation to buy or sell securities and there is no guarantee implied and people can lose all money on all investments. Numbers are believed to be correct, but do your own math and make your own conclusions or consult with an advisor before making any decisions.
| Caucus/Candidate | Pr (%) | Chg Wk. | bid-ask |
|---|---|---|---|
| Iowa Caucus | |||
| Democratic | |||
| CLINTON | 50.1 | -11.8 | 20% |
| OBAMA | 29 | 11 | 176% |
| EDWARDS | 15 | 0 | 18% |
| FIELD | 0.1 | 0 | n.m. |
| GORE | 0 | -0.2 | n.m. |
| Republican | |||
| ROMNEY | 45.5 | -14.5 | 15% |
| GIULIANI | 3.3 | 0.3 | 91% |
| THOMPSON(F) | 1.4 | -0.6 | n.m. |
| FIELD | 7.2 | 6 | 38% |
| MCCAIN | 0.3 | -1.3 | n.m. |
| New Hampshire Primary | |||
| Democratic | |||
| CLINTON | 79.9 | -1.1 | 3% |
| OBAMA | 19 | 8.8 | 5% |
| EDWARDS | 1.2 | -0.8 | n.m. |
| FIELD | 0.1 | -0.1 | n.m. |
| GORE | 1.2 | -0.2 | n.m. |
| Republican | |||
| ROMNEY | 69.5 | 14.5 | 5% |
| GIULIANI | 12 | -3 | 25% |
| THOMPSON(F) | 1.5 | 0.5 | n.m. |
| FIELD | 9 | -3.6 | 11% |
| MCCAIN | 7 | -1.5 | 36% |
| South Carolina Primary | |||
| Democratic | |||
| CLINTON | 79.8 | 9.8 | 0% |
| OBAMA | 15 | -5 | 67% |
| EDWARDS | 3 | 0.9 | 163% |
| FIELD | 0.1 | -0.9 | n.m. |
| GORE | 0 | -0.1 | n.m. |
| Republican | |||
| ROMNEY | 25 | 10 | 44% |
| GIULIANI | 20 | -10 | 99% |
| THOMPSON(F) | 25 | -5 | 19% |
| FIELD | 12.6 | 1.1 | 56% |
| MCCAIN | 4.5 | 0.5 | 91% |
| Florida Primary | |||
| Democratic | |||
| CLINTON | 81 | 6 | 5% |
| OBAMA | 12.5 | 0 | 20% |
| EDWARDS | 2.1 | 0 | 67% |
| FIELD | 0.1 | 0 | n.m. |
| GORE | 1.1 | -3.9 | n.m. |
| Republican | |||
| ROMNEY | 6 | 2.9 | 100% |
| GIULIANI | 79.9 | 9.9 | 5% |
| THOMPSON(F) | 6 | -9 | 145% |
| FIELD | 6 | 1 | 145% |
| MCCAIN | 2.5 | 0.5 | 288% |
| Nevada Primary | |||
| Democratic | |||
| CLINTON | 79.9 | 3.9 | 6% |
| OBAMA | 8 | 1.9 | 88% |
| EDWARDS | 5.1 | 0 | 194% |
| FIELD | 0.1 | 0 | n.m. |
| GORE | 0.1 | -4.9 | n.m. |
| Republican | |||
| ROMNEY | 12.1 | -8.9 | 187% |
| GIULIANI | 59 | 14 | 2% |
| THOMPSON(F) | 5 | -10 | 194% |
| MCCAIN | 2 | 0.8 | 145% |
Tuesday, November 20, 2007
Striken Bond Portfolios Enter Earn-Out Period
I did a little looking at Freddie (FHLMC), who rocked the financial markets, today.
FINANCIALS ENTER EARN-OUT MODE FOR 2008
The big picture runs ... o.k.
- Big mortgage bond holders, like FHLMC, probably move into a period of "work out" in 2008. It's likely that there will be more credit losses to go. But these portfolios are still making money. Earnings will offset remaining credit losses, leaving flat income for the year.
- The return to sanity of the pricing of risk will lead to some market-based losses. However, if the Fed eases some more (huge amounts, not required), then these will be ... mostly manageable, a moderate net drag.
- If the peak of problems with foreclosures and workouts occurs in 2009 (or sooner), the markets will be looking beyond that, most likely, in late 2008 or early 2009, at the first signs of positive news.
From this point, the risk one is getting paid for is that the housing markets end up worse than than expected, because 'what is expected' got baked into the numbers today. Freddie, who are as good as any, I guess, are estimating that things end up worse than the last downturn (1991), so they are hardly being rosy. For them to turn out "wrong" from here on out would mean a fairly quick and radical worsening of the home markets.
Housing hasn't simply stopped nor has lending.
However, the high oil prices could put strain on the low-end of the market, for sure and dull economic growth enough to create a one-thing-leads-to-another problem. In short, bumpy is not out of the question.
REGULATORY MATTERS
Congress ought to remain vigilant, keeping on top of the regulators to make sure that all significant institutions have adequate capital plans.
Forcing almost everyone to shrink their balance-sheet all at once is not a great idea. (You'll notice that some of the thrifts appear to have skipped the problems and will benefit from that handsomely).
Some temporary relief of capital requirements is in order, coupled with other means, in a sort of 50-50 partnership to keep the credit market from 'standing still', rather than growing, if there is business to do.
I know that sounds weird, but it works. And it doesn't really let anyone off the hook for bad decisions. It just makes coping with them easier.
Hello? Congress! Wake UP
So, today FreddieMAC does the right thing.
Faced with a choice between drips and drabs, they massively provision for credit and mark-to-market now, in ways that are probably going to reverse.
This penalizes them because of a whopping capital adequacy requirement.
So, instead of Congress going on break and instead of stupid policies of expanding the GRE's into million dollar loans or more, temporarily lift the capital requirements, for pity's sake.
WAKE UP!
Monday, November 19, 2007
Grrr...missed this move in real rates
TIPS "win", apparently, among bond asset groups (not sure these are completely apples-to-apples, but it's what you can buy, so it doesn't matter, from that perspective). TIPS are the Treasury's inflation-protected bonds.
Chart 1. Exchange funds tracking the bond market:
Real rates have been falling faster than nominal rates ...
Chart 2. Real rates on the Treasury's 5-yr tips
1. If you missed this (like me), then there is not that much more to go, right now, I wouldn't guess, so no point piling on, it would seem, absent an ready-Fed (unless you think the world is going to continue melting into next year - and some do).
2. This is why the dollar has been under sustained pressure, lately.
Thursday, November 15, 2007
Why some financials are attractive now
IS IT TIME TO CONSIDER THEM FOR THE LONG TERM 401K, DESPITE EVERYTHING?
Take Citibank. Can we guess how low "low" is?
Without double-checking the data, here's a quick calculation:
It's worth $25/share, based on it's "book value".
There are about 5 billion shares issued.
Suppose they take even $15 billion more in write-downs (20% of a $70 billion exposure, say). That would be $3 per share, which would bring "book value" down to $22/share. Bear in mind also that they have already done about $10 billion ... (I don't know if that is in the $25/share figure, however).
If you don't believe that their business is changing dramatically because of all this, you can slap a 1.5 multiple on that, which isn't too aggressive for a big bank. That would equate to a $33/share stock.
Last year, the company made over $5 billion a quarter.
Even if they used all of that to pay for write-downs, handled a significant growth slowdown (trim even up to 25% of earnings or $5 billion), and covered the dividend (just under $10 billion per annum), it would seem they have earnings power to avoid going into massive negative quarters, while you hold their stock.
You end up with a flat-ish stock, based around $33/share that pays a whopping 6% in dividends, at current prices (about $34.-$35). At the end of that period, valuation could go up to old levels, giving a huge gain.
This may be why superior, value folks, like Bill Miller, are interested in the long-term potential of the major bank stocks.
The risks are that they have other big problems develop. Maybe some charge-offs in the credit-card business, in buyout-loans, or plain mortgaged-backed bonds. They also appear to be paying a price already in the borrowing markets, but that will just pinch their slightly and slowly earnings, which we've already accounted for, and could easily reverse with proper attention.
[BE SURE to do your own calculations, checks, and make your own decisions about what to own or not ... If you don't, just got to, say, Scottrade.com and just-do-it.]
Update: The bulk of the charges are not in the $25/share figure, as of this press release. The other important consideration is that these charges should be considered after-tax. Therefore, the net change is not much: subtract $7B for the charges already announced and add $5.5B for tax considerations, for a net of $1.5B, or about $0.31/share, which, in turns, lowers the $33 figure to $32.50, which is a point statistic, but probably near a lower bound.
Here's a quick summary:
7 Billion after-tax announced
9.5 Billion after-tax to go ($15 Billion pre-tax)
10 Billion in dividend payment for 2008
===
26.5 Billion needed
15 Billion in net earnings for 2008, assuming 25% slowdown
===
10.5 Billion hit to equity or about $2/share
$23/shr approx equal to $33 stock price, conservative calculation (but not super pessimistic).
You Can't Take It With You
One of the "economic faithful", Brian Reardon, comes out with this, in the NRO, on the estate tax:
To its very core, the death tax is bad public policy. You don’t know when you’ll pay the tax. You don’t know how much the tax will be. And you don’t know if your estate will have the liquidity necessary to pay it when it comes due.
Not to be glib about those who have an "estate" big enough to be subject to the taxes, but after you are dead, you don't care when you will pay, how much, or if the liquidity exists. Same goes for those who say that people should have the choice. I agree. Spend, donate, or "recycle" the money while you are alive. Lord knows, you can't take it with you.
As an aside, best quote from yesterday's session: "The meek shall inherit the earth. But, they must do so on a stepped up basis."
Wednesday, November 14, 2007
Can Robert Rubin Be Wrong?
BOTH ARE RIGHT AND WRONG?
Paul Krugman and Greg "No Comments" Mankiw don't like what Robert Rubin has to say about the relation between national savings and the trade balance.
I have my own un-orthodoxy:
Higher savings, should lead, eventually, to higher growth rates. That may well support higher real rates of interest. One way or another, this usually leads to improvements in the terms of trade, but not the trade balance. (Technically, high-yielding currencies should depreciate, but they don't always).
I'll take a stab at this:
A US functionary recently asked me if I knew any way that a lower government deficit could lead simultaneously to a stronger dollar and a lower trade deficit without causing a recession. When I said no, he was disappointed: his superiors were insisting that he produce a report asserting that it could.A small, labor-equalization tax might do the trick. It's sort of like forced savings that reduces the deficit and lowers consumption, without causing a recession...
So, for instance, if the labor-cost differential was 85% and a small tax cut that down to say, 50%, it would still be immensely profitable to invest capital alongside overseas labor ...
Rather bullish in a risky time
I'm not sure the economy is past its vulnerabilities, but it does seem that the financial markets have gotten ahead of themselves.
We'll see what happens, but if I had to bet, it would not be to be contrary right now, which is what has been working. It would be to look for a small, but meaningful, breakout, in the very short run.
There is a flow of good news going on alongside some of the worries in the financial stocks. I terribly mis-read the basing in those stocks as die-hards trying to protect their investments in technical ways.
The consumer is not dead yet, despite the wealth effects from the housing market and all else.
Tuesday, November 13, 2007
All eyes on the dollar
The short, sharp reversal in the fate of the U.S. Dollar the day before yesterday was an indication that the U.S. may not have pulled off the biggest, stealth competitive "devaluation" in recent memory.
Once it becomes clear whether the US is headed for a significant slowdown or recession, expect the trends to reverse [meaning, that reversal may be the shape of things to come]. Until then, probably more of the same, although waking up everyday to the USD down another 0.25% is probably not likely to continue without a period of consolidation.
Meanwhile, it appears, this morning, that the death of the US consumer has been much exaggerated.
These are good trading markets - it's hard to see a trendline emerge decisively in any short order. However, these good numbers coupled with 'manageable' inflation figures might be the excuse for a "Santa Claus" rally that the markets so desperately want.
The Euro block, with rates on hold:
EUR-JPY
Saturday, November 10, 2007
Just the Numbers: Week 45
THE NUMBERS
The race tightened among the top four contenders.
Ron Paul has a fantastic fund-raising set, and moves up in the numbers, to his highest level yet.
Thompson continues to skid.
In an apparent mimic of "The West Wing", Huckabee improves his lead as the VP who can 'talk the language' of the Conservative Right.
Giuliani doing amazingly well in Florida.
THE STRATEGIES
Nothing new this week.
| 2007 Week 45: Contentiousness heats up as Dem Candidates use debate forum to bust out from behind Hilliary. Kucinich slammed with UFO question. Huckabee becomes media darling, sort of. AG Mukasey is in the news on torture and sworn in. Obama revels tax plan for the middle class. Congressman Rangle's tax plan gets play from GOP trying to re-brand itself. Giuliani wins endorsement of Pat Robertson, shoring up support against Romney, who has Bob Jones III, president of the fundamentalist Bob Jones University, Robert R. Taylor, dean of the university’s college of arts and sciences, Dr. John Willke, who helped found the National Right to Life Committee. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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IMPORTANT DISCLAIMER: this is just an informational note and not a solicitation or recommendation to buy or sell securities and there is no guarantee implied and people can lose all money on all investments. Numbers are believed to be correct, but do your own math and make your own conclusions or consult with an advisor before making any decisions.
| Caucus/Candidate | Pr (%) | Chg Wk. | bid-ask |
|---|---|---|---|
| Iowa Caucus | |||
| Democratic | |||
| CLINTON | 61.9 | -4.2 | 4% |
| OBAMA | 18 | -2 | 31% |
| EDWARDS | 15 | 10 | 67% |
| FIELD | 0.1 | 0.1 | n.m. |
| GORE | 0.2 | -0.8 | n.m. |
| Republican | |||
| ROMNEY | 60 | -7 | 15% |
| GIULIANI | 3 | 1.5 | 150% |
| THOMPSON(F) | 2 | -3.1 | 400% |
| FIELD | 1.2 | -1.8 | n.m. |
| MCCAIN | 1.6 | 0.1 | n.m. |
| New Hampshire Primary | |||
| Democratic | |||
| CLINTON | 81 | -1 | 10% |
| OBAMA | 10.2 | 0.2 | 96% |
| EDWARDS | 2 | 1 | 150% |
| FIELD | 0.2 | 0 | n.m. |
| GORE | 1.4 | -4.6 | n.m. |
| Republican | |||
| ROMNEY | 55 | 4.7 | 18% |
| GIULIANI | 15 | -18 | 67% |
| THOMPSON(F) | 1 | 0.8 | n.m. |
| FIELD | 12.6 | 7.1 | 27% |
| MCCAIN | 8.5 | 1 | 4% |
| South Carolina Primary | |||
| Democratic | |||
| CLINTON | 70 | -1 | 14% |
| OBAMA | 20 | 0 | 25% |
| EDWARDS | 2.1 | 1.6 | 276% |
| FIELD | 1 | 0.9 | n.m. |
| GORE | 0.1 | -1.9 | n.m. |
| Republican | |||
| ROMNEY | 15 | 4.7 | 67% |
| GIULIANI | 30 | -5.3 | 33% |
| THOMPSON(F) | 30 | -10 | 33% |
| FIELD | 11.5 | 6.9 | 30% |
| MCCAIN | 4 | 2 | 123% |
| Florida Primary | |||
| Democratic | |||
| CLINTON | 75 | -5 | 13% |
| OBAMA | 12.5 | 2.5 | 20% |
| EDWARDS | 2.1 | 1.9 | 138% |
| FIELD | 0.1 | 0.1 | n.m. |
| GORE | 5 | 4.9 | 200% |
| Republican | |||
| ROMNEY | 3.1 | 0.6 | 155% |
| GIULIANI | 70 | 3 | 14% |
| THOMPSON(F) | 15 | -5.1 | 67% |
| FIELD | 5 | 1.1 | 200% |
| MCCAIN | 2 | 1 | 150% |
| Nevada Primary | |||
| Democratic | |||
| CLINTON | 76 | 0 | 5% |
| OBAMA | 6.1 | 1.1 | 146% |
| EDWARDS | 5.1 | 0.1 | 194% |
| FIELD | 0.1 | 0 | n.m. |
| GORE | 5 | 0 | 200% |
| Republican | |||
| ROMNEY | 21 | 0.7 | 43% |
| GIULIANI | 45 | -0.3 | 22% |
| THOMPSON(F) | 15 | -5 | 63% |
| MCCAIN | 1.2 | 0.2 | n.m. |
