Contributing Editors' Blog Entries

Marc To Market's picture

The divergence of a stronger euro and weaker yen has continued and the latest news stream has pushed it further. There are several sub-themes at work as well and they also have been underscored today. These include: 1) German recovery from Q4 contraction, 2) the divergence between German and French economic performance (suggesting a divergence of national interest too?), 3) the decoupling of sterling from the euro orbit, but we suggest here that while the UK economy is without a growth impulse, the market may be exaggerating the weakness, 4) the ECB is less likely to push against the passive tightening of financial conditions when it meets next week, and 5) the Chinese economic data is sufficiently mixed as not to lend the heavy Australian dollar much support. Following the FOMC, the US economic data needs to be well off the consensus to resist the current forces.

Phoenix Capital Research's picture


As we noted in yesterday’s article, the Fed is already splintering on the benefits of QE. For the US to print such an ugly GDP number right after QE 3 and QE 4 were announced doesn’t bode well for more aggressive policy from the Fed. But then again, we are talking about the Fed here, so they could very easily claim that the bad GDP print is because QE 3 and QE 4 are not big enough.

clokey's picture

As I noted in an article published Thursday morning, the government bought three quarters of a percentage point worth of growth in the third quarter leading several hapless commentators to opine on national television that the U.S. economy was not only on solid footing but was in fact experiencing "above trend" growth. Of course if you're the mainstream financial media what is good for the Q3 goose is not necessarily good for the Q4 gander and so when fourth quarter GDP printed in contraction territory Wednesday, viewers were encouraged (much to the chagrin of a predictably irate Rick Santelli) to discount "volatile" government consumption expenditures and focus only on the components that made a positive contribution.