Archive - Jan 28, 2011

• Baltic Dry Index falls 4.1% to 1137 points
• Moody's Says Time Running Out for U.S. as S&P Cuts Japan (Bloomberg)
• Governments Stockpile Food Staples (FT)
• Consumer spending seen helping quarterly growth (Reuters)
• Internet in Egypt offline (BGPMon)
• IMF's Zhu Warns Global Imbalances May Worsen on Chinese Exports (Bloomberg)
• Chinese Firms Set Sights on U.S. Investments (WSJ)
• Ratings Agency Cites Political Chaos (WSJ)
• ECB’s Tumpel-Gugerell Says Governments Must Do More for Euro (Bloomberg)
• Sarkozy Tells G20 ‘Dare to Dream.’ (FT)
• BofA may pay higher share of bonus in cash: report (Reuters)
• Facebook Overvalued at $50 Billion in Global Poll of Investors (Bloomberg)

Markets mostly positive this AM ahead of significant 4Q10 economic releases. GDP is widely believed to be very expansionary, but considering the disappointing numbers yesterday, a more muted number would not be a surprise. Jobless claims printed on a (sadly) more normal run rate yesterday and the Fed’s dovish stance revealed in Wednesday’s release seems to be well founded if one chooses to ignore commodity price inflation. Moody’s commentary on US ratings, states that the timeframe for review is shortening as the balance sheet expands.

Forget the irrelevant inventory accumulation... pardon... GDP number. The real news today is coming from Egypt, where history is currently being made and a regime is in the process of being overthrown despite the unprecedented country-wide internet shutdown. The fallout from today's riots will be momentous. Follow all the news in real time from Al Jazeera.

Even as the conference board reported that US consumer confidence recently surged to fresh multi-year highs, on who knows what: presumably the fact that ever more Americans are happy that Ben Bernanke can manipulate the stock market higher, it has continued to plunge in the UK, a country which is identical to ours, except for all the pervasive data manipulation. As Bloomberg reports, "Polling firm GfK NOP Friday said its headline measure of consumer confidence fell to -29 in January from -21 in December to reach its lowest level in 22 months." And more: "According to GfK's survey, consumers became significantly more pessimistic about the outlook for the economy in the coming 12 months, much more downbeat about their personal financial prospects, and much more reluctant to make major purchases. "January's eight point drop represents an astonishing collapse in consumer confidence," said Nick Moon, managing director of GfK NOP Social Research. "In the 35 years since the index began, confidence has only slumped this much on six occasions, the last being in the midst of the 1992 recession." And all this happened even before snow caused the UK economy to enter official stagflation. This is simply an advance indication of what will happen in the US once the Fed stops monetizing in June (which it won't), and when the last remnants of the latest bout of fiscal stimulus finally disappear. Unfortunately the government's recent attempt to break the oil price surge, which is the biggest black eye in its attempt to reflate, will fail spectacularly once Egypt formally revolts at some point over the next 6-12 hours.

The preliminary take on fourth-quarter growth, employment costs, and consumer confidence….And just in case greater inventory accumulation for the GDP report is not sufficient to get stocks higher, there will be a $7-9 billion monetization of 02/15/2018 – 11/15/2020 bonds.

RANsquawk European Morning Briefing - Stocks, Bonds, FX etc. – 28/01/11

Despite new claims for unemployment putting up the largest weekly increase since September 2005...

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It is apparent to me that the factors that underlie the causes of our boom-bust cycle still exist. Nothing has changed on the policy front that would do anything to revive the economy. If we could spend our way to prosperity, then countries like Zimbabwe would be rich.