How The Economy Quietly Entered A Recession On Friday, And Why The GDP Predicts A Sub-Zero Nonfarm Payroll Number
While the key market moving event from last Friday may have been Bernanke's Jackson Hole speech which merely left the door open to future QE episodes, the most important event from an economic standpoint was the first GDP revision Q2, which dropped from preliminary 1.3% to a sub stall speed, in real terms, 1.0%. What is just as important is that as the following chart from Bloomberg demonstrates, the YoY change in real GDP, which is now at 1.5%, is a slam dunk indicator of recession: "Since 1948, every time the four-quarter change has fallen below 2 percent, the economy has entered a recession. It’s hard to argue against an indicator with such a long history of accuracy." Bernanke agreed that "growth has for the most part been at rates insufficient to achieve sustained reductions in unemployment." And while Bernanke is shifting dangerously into Greenspan territory with the open-ended interpretation of his statement, another thing that is more actionable is the observation that virtually every time real YoY GDP has dropped below 1.5%, this has led to a negative nonfarm payroll number. Granted, the result may not be as shocking as what the Philly Fed implied vis-a-vis this Friday's NFP, but we believe a subzero print in the August labor report will convince the three Fed holdouts that the time for yet another monetary intervention is here (Arab Spring part deux consequences be damned).
2010's Post-Jackson Hole No Volume Levitation Has Begun: ES Volume 50%+ Below Average
One simple flowchart describes today's action: If Low Volume => Levitation,
the same we had seen repeated over and over and over between August
2010 and March 2011. And to think that the combination of two insolvent
Greek banks into one insolvent Greek bank was sufficient to catalyze
this move, despite yet another day of bad economic news confirming that
the economy is now in a recession. Fear not: the worse it gets, the
likelier Bernanke is to announce QE3 on September 21. And if not then,
there is November 2. And if not then, there is December 13, and so on.
Bernanke may never have to announced QE3 - he just has to keep dangling
the carrot before the market that one day, soon, he just may follow
through on his promise/threat. In other news, expect CNBC to trot out
David Tepper soon to explain the logic of it all yet again.Goodbye Bank Of America Settlement
Oops:
- FDIC OBJECTS TO BANK OF AMERICA MORTGAGE-BOND ACCORD
- THE REASON FOR THE OBJECTION IS THAT THE FDIC DOES NOT HAVE ENOUGH INFORMATION TO EVALUATE THE SETTLEMENT
Harvey Organ, Monday, August 29, 2011
Minor Raid on silver and Gold/Huge problems with French bank Societe Generale
Harvey Organ's - The Daily Gold and Silver Report - 33 minutes ago
Good evening Ladies and Gentlemen: It has been the custom of the bankers, these past several months, to whack gold and silver following expiration of options of the gold and silver contracts. The reason of course is to try and discourage the owners of these options from putting up the 100% of the contract price and taking delivery. It never ceases to amaze me the childish games these doorknobs
The Advent Of Beijing Lebensraum: Chinese Tycoon Plans To Buy 0.3% Of Iceland
Over the past decade China has been stuck in an inventory stockpiling and mercantilist process tolling mode, even as it has been posturing about expanding its middle class. Well, the Chinese empire may be finally hinting at what the "next steps" may be. FT reports that Chinese real estate tycoon and former Chinese Central Propaganda Department official Huang Nubo, has struck a deal to acquire 300 square kilometers of "wilderness in north-east Iceland where he plans to build an eco-tourism resort and golf course." That, at least, is the party line. Nobody however is buying it: "Opponents have questioned why such a large amount of land – equal to about 0.3 per cent of Iceland’s total area – is needed to build a hotel. They warned that the project could provide cover for China’s geopolitical interests in the Atlantic island nation and Nato member." And after securing a landing area equidistant from Europe and the US, China will next proceed to purchase bits and pieces of Greece, Spain, Ireland, Portugal, etc. After all, the nouveau-IMF piper ultimately always demands his price for keeping the western world ponzi alive and running for a few more months.Warren Buffett's Philosophy On Investing In Banks
In light of last week's surprise announcement of Buffett's bailout redux of Bank of America (the first one being Goldman back in 2008), and following today's even more surprising objection by the FDIC which threatens to scuttle the Bank of Ameria settlement and force Bank of Countrywide Lynch to raise far more capital, pushing Warren to double down on his investment throwin more good money after bad, especially if the legal case moves from an Article 77-friendly NY state court to Federal, here are the philosophical thoughts from the Berkshire's oracles contained, in his "Collected Writings", on his desire to put money into banks.The Average Layman Wonders What So Special About Banks That Pros Want To Buy Their Stock?
08/29/2011 - 16:22
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