Although I digress, ...if I remember correctly, the Census Bureau reported that the gap with China widened yet again. It could be that they are not as related as we thought.
slightly OT but wanted to remind everyone that tomorrow is the 15th and the 15th is the cut off date for investors to notify hedge funds of redemption requests under standard terms of 45 days notice per quarter. After the 15th the hedge funds know who is pulling the plug and how much they have to liquidate to meet investor redemptions. If they liquidate, that forces prices down. Alternatively, the hedge funds will have to suspend redemptions - further spooking the markets with the implication that their holdings are illiquid and unmarketable. Either way it could be the start of a bad down cycle that is self-perpetuating. Instead of runs on banks this time around, we'll see runs on the 9,800 hedge funds - many of which could only survive (like American homeowners) with increasing levels of leverage and liquidity.
Although I digress, ...if I remember correctly, the Census Bureau reported that the gap with China widened yet again. It could be that they are not as related as we thought.
Imports are growing at a slower pace, but from what I've read the major reason for the improvement in the trade deficit is the increase in exports.
The recalls by Mattel will do a lot to hurt Wal*Mart and Target and other large resellers of toys.
It will also probably impact imports from China, so that's another link in the correlation.
With the cat food, toothpaste, and lead-in-toys stories recently, there will be a reaction. I exepct parents are likely to get very picky about where toys are made, and where food is made.
All those people Peter Schiff told to buy gold aren't so happy with him:
It's a mystery,'' said Peter Schiff, chief executive officer of Darien, Connecticut-based brokerage Euro Pacific Capital, with $700 million in customer accounts.These are ideal conditions for gold. The fact that gold hasn't risen means there's a lot of complacency out there. People aren't panicked yet.''
If you believe that much of the inflation over the past several years has come from credit then there is no mystery here.
Ditto on the Mattel, etc. recalls affecting Walmarts and other consumption.
Is it just me, or does there seem to be a bit of glee about these recall articles re China? Some nationalism perhaps?
Telling the consumer to stop buying from China won't work. Casting doubt on toxicity coming in from China, well, that might just shrink the trade deficit right there.
The slight decline in the trade deficit is because we are returning - and receiving credit for - all the mislabeled fish, tainted toothpaste and toys sprayed with lead-based paint back to China.
Is it just me, or does there seem to be a bit of glee about these recall articles re China? Some nationalism perhaps?
Outsider
That is an interesting idea. I think an orchestrated media campaign is a very real possibility, there have been lots of those during this administration's reign, especially in the first term.
DBRS Says 17 Canadian Commercial Paper Issuers Tap Financing
By Mark Pittman
Aug. 14 (Bloomberg) -- Seventeen Canadian asset-backed commercial paper issuers, including Coventree Inc., are seeking back up financing from banks after failing to sell their short- term debt, ratings company DBRS said.
Although I digress, ...if I remember correctly, the Census Bureau reported that the gap with China widened yet again. It could be that they are not as related as we thought.
No conflict in the data... China is taking it out of their neighbor's hide... Korea, Taiwan and to some extent Japan.
Couple that with what Steve noted (increased US exports) and the weak dollar is starting to 'work'... if China floated we'd see a significant narrowing of overall deficit but not a 'zeroing' anytime soon... I'd expect oil to increase as OPEC has a lot of their debt denominated in euros & wouldn't be too happy about selling us oil at a mere $70/bbl.
Overall this was a hopeful report suggesting maybe things can rebalance at least somewhat orderly... on the currency/trade part of the problem anyway.
I agree that the recent China-import product quality issues seem a bit like a backdoor way to start some protectionist sentiment. China is playing the same game... they have rejected some of our imports (food items) over quality concerns.
First Fed (FED) buyback have been , so far, a toal failure.
I wonder how solvant is a bank that buys 25% of it;s own shares.
They took a loan some time - which funded about 2/3 of the previous buyback. (about 60M) They also have some Dividend that is paid from Fed to their holding comany - about 50M back in April (all this from memory).
Somehow all these tricks do not add up well in my book but I am not an accountent and do not know exactly how to read First Fed reports. I just wonder if at some point they are going to fail the regulatory requirement for cash since what they are doing sounds very risky and crazy to me. (it seems the market agrees)
See Steve's entry above... and the WSJ article he linked to. Q2 GDP at 4% or more... Q3 estimates raised too.
It wouldn't surprise me one bit - not from what I'm hearing from 'global' manufacturers in the last two months. Forecasts I am seeing are being bumped WAY up.
Kiss any hope (fear) of a rate cut goodbye for a long time.
So much focus on GDP. The big problem is that is like assessing a company by focusing only on sales and disregarding the balance sheet. Years ago it took $1 dollar of debt added to the balance sheet to get $1 dollar of sales. NOW, it takes $7 of debt to generate $1 of sales. The balance sheet has dramatically worsened but no one seems to give a damn as long as sales go up. Does anyone understand where this ends?? Fiscal solvency is a reflection of the balance sheet of the nation. GDP is the tail of that dog. Talk about one sided accounting.
All the news in recent weeks is that growth in Europe & Japan is slowing dramatically. So any thought of +4% GDP based partly upon export growth are premature. Rather, I think we are headed into recession about now...
If your looking for a link between MEW and GDP, I suggest a look at Hot Topic. This chain of clothing stores in malls focuses on teens.
Teens get money from working at a burger joint and/or mom and dad.
Sales are falling, I know the burger joints aren't laying people off so the parents are making the easiest cut backs on spending, allowances.
infinity
The connection between the trade deficit and Wal*Mart is not a stretch. After all, China accounts for about 80% of their shelf space...
I think so. Best regards
In a world where so many people are full of it, it's refreshing to read CR.
You never get that "correlation does not imply causation" from any of our journalist friends in the media.
Although I digress, ...if I remember correctly, the Census Bureau reported that the gap with China widened yet again. It could be that they are not as related as we thought.
slightly OT but wanted to remind everyone that tomorrow is the 15th and the 15th is the cut off date for investors to notify hedge funds of redemption requests under standard terms of 45 days notice per quarter. After the 15th the hedge funds know who is pulling the plug and how much they have to liquidate to meet investor redemptions. If they liquidate, that forces prices down. Alternatively, the hedge funds will have to suspend redemptions - further spooking the markets with the implication that their holdings are illiquid and unmarketable. Either way it could be the start of a bad down cycle that is self-perpetuating. Instead of runs on banks this time around, we'll see runs on the 9,800 hedge funds - many of which could only survive (like American homeowners) with increasing levels of leverage and liquidity.
Although I digress, ...if I remember correctly, the Census Bureau reported that the gap with China widened yet again. It could be that they are not as related as we thought.
Imports are growing at a slower pace, but from what I've read the major reason for the improvement in the trade deficit is the increase in exports.
The recalls by Mattel will do a lot to hurt Wal*Mart and Target and other large resellers of toys.
It will also probably impact imports from China, so that's another link in the correlation.
With the cat food, toothpaste, and lead-in-toys stories recently, there will be a reaction. I exepct parents are likely to get very picky about where toys are made, and where food is made.
With recent revisions to consumption and now the trade deficit numbers, GDP forecasts for Q2 are back up over 4%.
I understand these figures are not annualized? Then:
59.2 / 31 = 1.91 billion/day (May)
58.1 / 30 = 1.94 billion/day (June)
Doesn't look like it's slowing.
Money Market Fund Sentinel Management Group Halts Redemptions
All those people Peter Schiff told to buy gold aren't so happy with him:
It's a mystery,'' said Peter Schiff, chief executive officer of Darien, Connecticut-based brokerage Euro Pacific Capital, with $700 million in customer accounts.These are ideal conditions for gold. The fact that gold hasn't risen means there's a lot of complacency out there. People aren't panicked yet.''
If you believe that much of the inflation over the past several years has come from credit then there is no mystery here.
Gold Lags Treasuries as Dollar Fails to Ignite Rally
Ditto on the Mattel, etc. recalls affecting Walmarts and other consumption.
Is it just me, or does there seem to be a bit of glee about these recall articles re China? Some nationalism perhaps?
Telling the consumer to stop buying from China won't work. Casting doubt on toxicity coming in from China, well, that might just shrink the trade deficit right there.
The slight decline in the trade deficit is because we are returning - and receiving credit for - all the mislabeled fish, tainted toothpaste and toys sprayed with lead-based paint back to China.
Lance McDude, what's your source on the Sentinel news?
Sentinel discussion on CNBC right now. "We don't know how significant this is...", etc., etc.
Is it just me, or does there seem to be a bit of glee about these recall articles re China? Some nationalism perhaps?
Outsider
That is an interesting idea. I think an orchestrated media campaign is a very real possibility, there have been lots of those during this administration's reign, especially in the first term.
DBRS Says 17 Canadian Commercial Paper Issuers Tap Financing
By Mark Pittman
Aug. 14 (Bloomberg) -- Seventeen Canadian asset-backed commercial paper issuers, including Coventree Inc., are seeking back up financing from banks after failing to sell their short- term debt, ratings company DBRS said.
Banks Refuse Funding for Canadian Commercial Paper (Update2) - Bloomberg.com
Although I digress, ...if I remember correctly, the Census Bureau reported that the gap with China widened yet again. It could be that they are not as related as we thought.
No conflict in the data... China is taking it out of their neighbor's hide... Korea, Taiwan and to some extent Japan.
Couple that with what Steve noted (increased US exports) and the weak dollar is starting to 'work'... if China floated we'd see a significant narrowing of overall deficit but not a 'zeroing' anytime soon... I'd expect oil to increase as OPEC has a lot of their debt denominated in euros & wouldn't be too happy about selling us oil at a mere $70/bbl.
Overall this was a hopeful report suggesting maybe things can rebalance at least somewhat orderly... on the currency/trade part of the problem anyway.
I agree that the recent China-import product quality issues seem a bit like a backdoor way to start some protectionist sentiment. China is playing the same game... they have rejected some of our imports (food items) over quality concerns.
Lance McDude, what's your source on the Sentinel news?
Kevin L | 08.14.07 - 11:13 am | #
Don't know about Mr. McDude But I saw it at the Big Picture:
The Big Picture
He has the links.
What is the effect on GDP of this decline ?
First Fed (FED) buyback have been , so far, a toal failure.
I wonder how solvant is a bank that buys 25% of it;s own shares.
They took a loan some time - which funded about 2/3 of the previous buyback. (about 60M) They also have some Dividend that is paid from Fed to their holding comany - about 50M back in April (all this from memory).
Somehow all these tricks do not add up well in my book but I am not an accountent and do not know exactly how to read First Fed reports. I just wonder if at some point they are going to fail the regulatory requirement for cash since what they are doing sounds very risky and crazy to me. (it seems the market agrees)
What is the effect on GDP of this decline ?
See Steve's entry above... and the WSJ article he linked to. Q2 GDP at 4% or more... Q3 estimates raised too.
It wouldn't surprise me one bit - not from what I'm hearing from 'global' manufacturers in the last two months. Forecasts I am seeing are being bumped WAY up.
Kiss any hope (fear) of a rate cut goodbye for a long time.
So much focus on GDP. The big problem is that is like assessing a company by focusing only on sales and disregarding the balance sheet. Years ago it took $1 dollar of debt added to the balance sheet to get $1 dollar of sales. NOW, it takes $7 of debt to generate $1 of sales. The balance sheet has dramatically worsened but no one seems to give a damn as long as sales go up. Does anyone understand where this ends?? Fiscal solvency is a reflection of the balance sheet of the nation. GDP is the tail of that dog. Talk about one sided accounting.
anyone have nay link to SEC/NYSE rules about buybacks ?
I'm surprised no one has seconded Abe,NYC's observation.
It does seem like a more natural way to look at it would be Average Daily Deficit.
So, quite clearly, the average daily deficit is higher for June versus May.
If the average had stayed the same, you'd expect the June Deficit to be:
~$57.3 billion
instead of ~$58.1 billion
The deficit seems to be increasing.. not declining.
dryfly, you're back!
I learn so much from your comments.
Thank you!
To clarify, it appears to be increasing not decreasing if you just examine the May and June data.
The overall trend is decreasing it seems.
Dryfly, Steve,
All the news in recent weeks is that growth in Europe & Japan is slowing dramatically. So any thought of +4% GDP based partly upon export growth are premature. Rather, I think we are headed into recession about now...
vow, US imports 590 billion a year instead 600 billion!
its a sea change!
CONJURE BAG ALERT
Conjure Bag is in the corner shaking and mumbling something that sounds like "recession." I think it's almost ready to make the call. Wait...
CR, Conjure Bag wants to know if there's a contest.
mp - the contest was two years ago, I think we're still waiting for the recession.
BTW - I think my call was for recession in early Q1 2006... I don't think I'm going to win.
The biggest change in US exports is raw matrerials, which last I checked is not a value added product.
Negligible effect on GDP except if you work in the Iron Range or parts of rural Arizona.
dryfly, everybody else revises every month... I don't see why you can't!
If your looking for a link between MEW and GDP, I suggest a look at Hot Topic. This chain of clothing stores in malls focuses on teens.
Teens get money from working at a burger joint and/or mom and dad.
Sales are falling, I know the burger joints aren't laying people off so the parents are making the easiest cut backs on spending, allowances.