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Old 04-05-2010, 10:27 AM   #41
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Oil and interest rates creeping up...

Bonds are taking a beating today...

TIPS auction today, they are taking a beating right now.

Maybe buy a little

Gotta wonder if they have a plan B to keep those yields down?

Nothing like a little international turmoil to create a flight to "safety"...
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Old 04-05-2010, 10:40 AM   #42
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With 10-year treasuries hitting 3.99% and likely to cross 4% soon, I think the bond market (which has been skeptical about economic recovery thus far) is now voting that the economy is strengthening and NO DOUBLE DIP.

Extra Fed meeting today - they will probably raise the discount rate again.

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Old 04-05-2010, 10:53 AM   #43
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The high oil prices!

Hard to believe that oil is above $86.5!

High oil prices actually act like a Fed rate hike - they tend to slow the economy down.

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Old 04-05-2010, 12:09 PM   #44
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Doesn't a high oil price lead an economic downturn?
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Old 04-05-2010, 12:15 PM   #45
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At some point, sure. But what is 'high'?
What really endangers our economy is being to reliant on any critical part. Be that energy, transportation, or other resources.
Imagine the country has zero fresh water. We import 100% of it from one country.
That, in my mind would be a HUGE danger to our economy. Now, if we imported water from 30 countries, our risk would not be so bad.
(please note, this is not an analogy of our situation with oil, just a way to show risks).
At some point, high oil prices will lead to downward pressure on the economy. If the growth doesn't have enough upward pressure, downturn, here we come. The more diversified we are (pumping our own oil, using less, using alternatives) the less downward pressure.
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Old 04-05-2010, 12:46 PM   #46
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Doesn't a high oil price lead an economic downturn?
The conventional wisdom of this talks itself into circles.

1) Strong economy = strong demand for oil.
2) Strong demand for oil = higher oil price
3) Higher oil price = weaker economy
4) Weaker economy = lower demand for oil
5) Lower demand for oil = lower oil price
6) Lower oil price = stronger economy?

This doesn't make any sense whatsoever. Demand led pricing strength is a sign of a good economy.
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Old 04-05-2010, 02:48 PM   #47
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How can you look at this chart and conclude the employment picture isn't far, far better than it was?
I agree it IS far better than it was. I just don't think it's anything to cheer about. In another post I wrote we apparently need 100,000 jobs just to stay even. During the bubbles we were making 200,000 jobs or so. If we have a robust recovery bordering on a bubble we net positive 100,000 jobs a month. 84 months needed to get back were we were before we lost 8.4 million jobs.

Earlier I questioned the disparity between ADP and BLS job data. Timely article today.
David Rosenberg: Here's 7 Economic Stats You Shouldn't Believe - Yahoo! Finance
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Old 04-05-2010, 02:58 PM   #48
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I agree it IS far better than it was. I just don't think it's anything to cheer about...
I am certainly cheering that we are not loosing 700,000 jobs a month anymore.
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Old 04-05-2010, 03:16 PM   #49
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Ambiguous data usually leads people to the conclusion they are looking for. There’s no evidence or reason to think the US economy is going to get much better that it is right now, but there’s also none to think it’s going to get any worse. I don’t care much for John Mauldin’s writing but I do like the term he coined to describe our economy going forward – the muddle through economy.

There’s an interview with Peter Bernstein on Consuelo Mack Wealthtrack on 10/21/05 that comes to mind.
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And that's dangerous. But it's very hard to make the case that returns will be, say, after inflation, more than 6% to 7%. That's the most optimistic expectation. We start from a point where we've had a very -- a huge bull market in the 1990s, only part of which has been given back. Equities are still valued at historically high prices. Interest rates, I don't have to tell you, are historically low. And so you start from there, and there you are. I think something very important to think about this, that a period of low returns, you think, well, every year maybe we'll have 4%, 5%. It doesn't work that way. Low returns result from high volatility. You have a big year, and then a bad year, and the pattern of low return periods is high volatility, not low volatility. It's a scary time.
./.
I look at it that I think the number one rule of asset allocation is the returns on capital are highest where capital is scarce. In other words, you want to be the provider of scarce capital, where nobody else will lend, you want to be the lender. And I think courtesy of partly the Federal Reserve’s generosity over the past six, seven, eight years there is no asset class starved for capital. Hedge funds, commodity funds, venture capital, private equity -- you name it -- everybody is flush with cash. I think what that says is asset returns across the board are going to be muted relative to people's expectations. In other words, low returns not only for equities but for everything. And I think what that means is it's a great time to be very broadly diversified. The opportunity cost of missing out on the asset class is extremely low because there is no "the asset class."
Seems to me that the most important thing right now is to avoid making big mistakes and expect a great deal of volatility.
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Old 04-05-2010, 03:18 PM   #50
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I am certainly cheering that we are not loosing 700,000 jobs a month anymore.
When we were losing 700K a month, you should've been cheering we weren't losing 900K.
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Old 04-05-2010, 04:11 PM   #51
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I agree it IS far better than it was. I just don't think it's anything to cheer about. In another post I wrote we apparently need 100,000 jobs just to stay even. During the bubbles we were making 200,000 jobs or so. If we have a robust recovery bordering on a bubble we net positive 100,00
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I am certainly cheering that we are not loosing 700,000 jobs a month anymore.
Exactly what Zathras said.

Originally when stocks turned up the pessimists said "look around, things are horrible. Stock PE's are through the roof and we don't know where "E" is going." When earnings came in better than expected the pessimists said "It's all cost cutting, you can't cut your way to prosperity". Then revenues started to grow. And we heard the pessimists say "But where are the jobs. We can't have a recovery without jobs". Now we have some job growth and the pessimists say "But we're not adding enough jobs"

Not everything is perfect. But once everything is perfect, about 75% of the expansion will be over.

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During the bubbles we were making 200,000 jobs or so. If we have a robust recovery bordering on a bubble we net positive 100,000 jobs a month. 84 months needed to get back were we were before we lost 8.4 million jobs.
I don't agree with this at all. There is a huge difference between trying to add jobs when the economy is already at full employment and when there is tremendous slack in the labor force.
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Old 04-05-2010, 04:28 PM   #52
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When we were losing 700K a month, you should've been cheering we weren't losing 900K.
I would have, if we had been loosing 900k previously.
Likewise, will you not be cheering when we add 3 Million jobs because it isn't 5 Million?
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Old 04-05-2010, 05:25 PM   #53
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Doesn't a high oil price lead an economic downturn?
Yes, that's what I meant. High oil prices tend to act as a drag on the economy - slowing it down. Negative feedback loop, ya know.

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Old 04-28-2010, 05:07 AM   #54
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Kind of ironic every time there's a big Treasury auction they break out the Grease

Im looking for the FED to say their gonna keep rates low today...

Earnings will keep coming in good...

Hopefully employment will pick up soon...

If it doesn't they might need a war to keep this Ponzi going
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Old 05-10-2010, 08:14 AM   #55
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Yucky-poo!


From
Calculated Risk: Fannie Mae: $11.5 billion loss, sees no profits for "indefinite future"
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Old 05-10-2010, 09:58 AM   #56
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I wonder where this graph will end up. It might be prematurely made to go horizontal when the FDIC runs out of money? But then what will happen to the banks needing help?
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Old 05-11-2010, 01:19 PM   #57
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Two waya to look at this graph:

1)Pessimist: 5 times MORE people are defaulting on their mortgages than two years ago!

2)Optimist: Delinquencies have increased form 1% to 5.5%, but that still means 94.5% of homeowners are NOT delinquent on their mortgages......

See how statistics are misleading?
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Old 05-11-2010, 01:57 PM   #58
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Two waya to look at this graph:

1)Pessimist: 5 times MORE people are defaulting on their mortgages than two years ago!

2)Optimist: Delinquencies have increased form 1% to 5.5%, but that still means 94.5% of homeowners are NOT delinquent on their mortgages......

See how statistics are misleading?
or 3) another optimist's view: it looks like delinquencies have increased at a slightly slower rate since the beginning of the year which could signal that we are reaching a top. It makes sense since the job market seems to have reached a bottom.
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Old 05-11-2010, 01:59 PM   #59
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Two waya to look at this graph:

1)Pessimist: 5 times MORE people are defaulting on their mortgages than two years ago!

2)Optimist: Delinquencies have increased form 1% to 5.5%, but that still means 94.5% of homeowners are NOT delinquent on their mortgages......

See how statistics are misleading?

Not to be snarky, but this is more than just statistics.

If Fannie Mae figured their interest rates and profit margin based on the historic delinquency rate (and I am convinced they did), and that rate quintuples (and it did) then they are going to go broke (and they are).
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Old 05-11-2010, 02:03 PM   #60
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Not to be snarky, but this is more than just statistics.

If Fannie Mae figured their interest rates and profit margin based on the historic delinquency rate (and I am convinced they did), and that rate quintuples (and it did) then they are going to go broke (and they are).
Don't you find the coincidence of Fannie Mae asking for more bailout funds and this "troubling graph" a little handy?

Bottom line, Fannie and Freddie have been held to zero accountability, ZERO!! Compared to what GM and Chrysler had to go through, they have suffered NO pain in getting mucho govt slush funding.............
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