http://www.bloomberg.com/apps/news?p...d=aAv..4PAavSw
U.S. Stock Pessimism Drops to Lowest Since 2007, Survey Finds
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By Whitney Kisling
Aug. 26 (Bloomberg) --
Pessimism about U.S. stocks fell to the lowest level since the Standard & Poor’s 500 Index peaked in October 2007, as economic reports and policy makers indicate the recession in the world’s largest economy is easing.
The proportion of bearish newsletter writers dropped to 19.8 percent in the week ended yesterday from 23.1 percent in the period that ended Aug. 18, a survey by Investors Intelligence showed today. Bullish stock advisors climbed to 51.6 percent from 48.3 percent, reaching the highest reading since December 2007, the New Rochelle, New York-based firm said.
...
Newsletter writers predicting a correction, or a 10 percent drop in benchmark indexes, were unchanged at 28.6 percent, according to the Investors Intelligence survey.
DATA SNAP: US Spending Up Third Straight Month In July
Last update: 8/28/2009 8:30:02 AM
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US Personal Income ! Consensus: !
Jul Jun ! Income: +0.1% !
Income Unch% -1.1%r ! Actual: !
Expenditures +0.2% +0.6%r ! Unch% !
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By Jeff Bater
Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)--Consumer spending rose mildly in July as Americans swapped their old cars for newer models in a program meant to help steer the economy out of recession.
Spending rose 0.2% compared to June, the third increase in as many months, the Commerce Department said Friday. Durable goods spending climbed 1.3%. Durables are goods designed to last at least three years, such as cars.
...
The Commerce data showed
personal income was unchanged in July compared with June. Income fell 1.1% in June, a revision down from an originally reported 1.3% drop. Income in May had gone up 1.4%. The volatility of the two months reflects the effects of economic stimulus rolled out by Washington last winter to combat the recession.
Economists surveyed by Dow Jones Newswires forecast a 0.1% increase in income during July and 0.3% rise in spending.
...
The price index for personal consumption expenditures excluding food and energy, year over year, rose 1.4%, after rising 1.5% in June. The Federal Reserve watches this core PCE index closely for signs of inflation pressures. Fed officials define their statutory goal of price stability as inflation of 1.5% to 2%.
The core PCE increased 0.1% in July compared to June, after climbing 0.2% in June.
->einkommen stagnieren. ausgaben steigen. preise steigen.
lesenswerter ausblick von Nouriel Roubini: wie kommen regierungen/zentralbanken aus der stimulus nummer, ohne die wirtschaft zu beschädigen? fast unmöglich, fast:
http://www.forbes.com/2009/08/26/sti...l-roubini.html
The Spend-And-Borrow Economy 
Nouriel Roubini, 08.27.09, 12:00 AM EDT
What's the exit strategy from the monetary and fiscal easing?
...All of this has worked, but at a cost. Governments have been spending and borrowing like never before. The question now is: how do they stop?
This is not a simple problem. Restore normality too soon and the risk is that a weak recovery will double dip into a second and deeper recession. Restore it too late and inflation will already be ingrained.
...
Necessary as the stimulus has been, it cannot go on indefinitely. Governments cannot run deficits of 10% or more of GDP, and they cannot go on doubling the monetary base, without eventually stoking inflation expectations, pushing up long-term interest rates and eventually eroding their very viability as sovereign borrowers. Not even the U.S. can do that.
...
Even using the very optimistic forecasts of the Congressional Budget Office, which
anticipate growth of around 4% over the next few years, the net debt burden will rise from 40% of GDP to 80%--that's an increase in the debt stock of about $9 trillion. The interest charge alone on that increased debt will be in the region of $300 billion to $400 billion a year, which in turn may mean more borrowing to pay the interest if primary deficits are not reduced. When governments reach the point where they are borrowing to pay the interest on their borrowing they are coming dangerously close to running a sovereign Ponzi scheme.
Ponzi schemes have a way of ending unhappily.
To get out of the Ponzi trap, governments will have to raise taxes, or cut spending, or monetize the debt--or most likely do some combination of all three.
Monetization is already happening. This is where a government effectively prints money by allowing the central bank to create base money that is used to buy government debt, thereby increasing liquidity and holding down long-term interest rates (because the additional demand for these securities pushes up bond prices, thereby lowering the real interest rate the securities pay, as well as putting money into the pockets of the investors who have sold the securities).
Over time, monetization is inflationary, but the inflationary effect is insidious because it is not immediately visible. In the short run deflation will outplay inflation. In most developed countries today there is so much slack in economies, with weak demand and high unemployment, that prices cannot rise. The velocity of money is also weak, as financial institutions are receiving liquidity from central banks and hoarding it to rebuild their balance sheets, instead of lending it out.
But as the economy recovers, these effects will abate, and the growth of the monetary base caused by monetization will eventually drive expected and actual inflation. And once markets start to anticipate that scenario, it may already be too late to avert an inflationary surge.
Simply issuing debt in the form of Treasury bonds offers no escape.
The more debt a government issues, the higher the risk it will eventually face refinancing problems and/or default on that debt. Accordingly, investors will demand a higher return for investing in that debt, and that in turn will push up rates. Independent rating agencies have already downgraded the sovereign risk rating of countries like Greece and Ireland, and it cannot be ruled out that core economies of the OECD, including the U.S., could eventually be downgraded.
As it happens, there is little sign today of investors demanding a significantly higher risk premium on U.S. government debt. That is partly because private savings are increasing: Those savings have to be invested somewhere and investors are cautious about alternative investments. Foreign demand for U.S. bonds also remains robust so far.
But this demand is unlikely to survive another big round of government-financed stimulus and bailout spending. And unfortunately, such a spending round is rather likely.
Consider that
by the end of 2010 most of the tax cuts legislated by the Bush administration in 2001 and 2003 are due to expire. This means that there will be
a sharp tax hike, including income taxes, capital gains taxes and taxes on dividends and estates. This hike--equivalent to around 1.5% to 2% of GDP--is already factored in to future calculations of government indebtedness. So
if by next year the recovery proves as anemic as I expect, and if unemployment is around 10.5%-11%, as I also expect,
then the pressure for another stimulus round early in 2010 will be strong.
A rough calculation goes like this: Stimulus money to keep the lid on rising unemployment is likely to be around $200 billion. Add to that the likely temporary partial extension of the Bush tax cuts and funding of the current administration's plans for universal health care (an additional bill of around $1.5 trillion over 10 years) and you get deficits close to12% of GDP.
This amounts to a
fiscal train wreck. For the U.S., it means deficits could remain over 10% of GDP for years. Bond issuance will remain enormous, and it will mean that the Fed will almost certainly have to monetize a proportion of the debt by buying even more government or government-backed securities.
A combination of higher official indebtedness and monetization has the potential to yield the worst of all worlds, pushing up long-term rates and generating increased inflation expectations before a convincing return to growth takes hold. An early return to higher long-term rates will crowd out private demand, as lending rates on mortgages and personal and corporate loans rise too. It is unlikely that actual inflation will emerge this year or even next, but inflation expectations as reflected in long-term interest rates could well be rising later in 2010. This would represent a serious threat to economic recovery, which is predicated on the idea that the actual borrowing rates that individuals and businesses pay will remain low for an extended period.
Yet
the alternative--the early withdrawal of the stimulus drug that governments have been dispensing so freely--is even more serious. The present administration believes that deflation is a worse threat than inflation. They are right to think that.
Trying to rebuild public finances at a deflationary moment--a time when unemployment is rising, and private demand is still contracting--could be catastrophic, turning recovery into renewed recession.
History offers more than one example of this error. It happened in Japan in the late 1990s when the Japanese government feared the effects of fiscal deficits and of an increase in inflation as the economy was beginning to recover after almost a decade of deflation. Consumption taxes were raised too soon and the "zero interest rate policy" was abandoned. Within a year the economy was back in recession.
It also happened in the U.S. in the 1930s. President Roosevelt instituted a massive stimulus package when he came to office in 1933, to push the U.S. economy out of the depression, but by 1937 the administration was worrying that inflation was returning and that deficits were too large; so it cut spending and raised rates and the Fed tightened monetary policy. By 1938 the economy was heading back into near-depression.
So policymakers are between a rock and a hard place. Stop spending now and risk renewed recession and deeper deflation (stag-deflation). Keep spending now and risk renewed recession amid rising inflation expectations (stagflation).
Yet there is a space between the rock and the hard place. It is not a big space, but it is there.
Governments will have to manage perceptions. Today investors remain willing to bankroll federal spending without any clear or firm indication of how the fiscal crisis--and it is a crisis of extraordinary proportions--is going to be dealt with. That won't last.
Clear indications will soon be needed as to how and when public finances will be repaired. That doesn't have to be accomplished soon--but it does have to be communicated soon.
Monetary policy can most likely remain looser for longer (in the developed economies at least)--as long as there is a clear commitment to fiscal consolidation. But a credible fiscal commitment to medium-term fiscal sustainability is vital, because that is what will open up the very narrow window that is the exit route from our current and unsustainable spend-and-borrow economy.
http://www.businessinsider.com/tradi...on-nyse-2009-8
Trading In Trash Financials Made Up Almost One-Third Of August Volume On NYSE
...Since Aug. 5 — when we saw names like Fannie, Freddie and AIG reawaken — trading in those three stocks, plus Bank of America and Citi, has averaged about 31.5% of the NYSE consolidated volume.
At their peak on Monday, these five stocks accounted for nearly 43% of the NYSE consolidated volume...
http://www.businessinsider.com/will-...-dollar-2009-8
Could Oil Speculators Kill The US Dollar?
We present an interesting paper out of the James A. Baker institute at Rice University. Its authors, Kenneth B. Medlock III and Amy Meyers Jaffe contend that the presence of speculators in the oil market has exploded since the Commodities Futures Modernization Act of 2000.
This particular chart caught our eye. It shows the
correlation between the US dollar and the price of West-Texas Intermediate crude before and after the regulation was passed. What it suggests is that previously the dollar and the price of crude weren't particularly linked, but that they've become very much so (when crude is up, the dollar is down) post-deregulation. Thus, the authors warn of a dangerous spiral whereby the dollar continues to weaken, oil continues to rise, our trade deficit continues to widen, weakening the dollar further, etc.
AW: The Big Picture: Dow Jones
Linear-Darstellung
