The staying power of the current rebound remains an open question, but the data du jour at least confirm that a recovery is underway. It’s a precarious rebound, but the economy must walk before it can run.
Author Archives: James Picerno
THE TROUBLE WITH MACROECONOMICS
Hyman Minsky is a popular guy these days. An economist who studied under Joseph Schumpeter, Minsky has become the dismal scientist of choice in the wake of the Great Recession as the man who told us so.
FROM RUSSIA WITH CAVEATS
Is it me or is there a growing supply of video feed available gratis on the strategic and tactical investment topics du jour? In any case, the Russia Forum 2010 from last week offers some intriguing commentary by Marc Faber, Nassim Taleb and others (hat tip to Mebane Faber). Faber’s set-up question: How would you invest $100 million today for the next 12 months?
RETAIL SALES & EASY GAINS
Today’s update on retail sales for January shows that the annual change in consumer spending has returned to pre-crisis levels in terms of 12-month rolling changes. In fact, the 4.7% increase in retail sales over its year-ago level as of last month is quite a bit better compared with the trend in early 2008. But like so many other measures of economic and financial activity, the return to levels that pre-date that financial crisis that swept through the markets and the global economy starting in September 2008 is only half the battle, and arguably the lesser part.
HISTORY LESSONS ON DEBT, DEFAULT & INFLATION
The Wall Street Journal today has an interesting look at the troubles associated with red ink. Among the resources cited is new research from Morgan Stanley with a clever title that asks: The Return of Debtflation?
A TIMELY FALL IN JOBLESS CLAIMS
This morning’s update on initial jobless claims is a timely bit of good news. In fact, the markets probably couldn’t wait another week for this. For starters, the decline of 43,000 in new filings for jobless benefits last week is the biggest weekly drop since last summer. Even better, this fall comes at time of heightened anxiety for this data series and so the latest turn for the better is welcome for all the usual reasons, and more.
THE STRANGE WORLD OF INVESTMENT ADVICE
Jason Zweig’s latest investing column in The Wall Street Journal is disturbing, but not necessarily for the reasons he outlines.
Consider this passage: “…many investors who followed the best advice were punished the worst. Someone who held a total-stock-market index fund lost more than 58% from October 2007 through March 2009 and remains 31% behind even after last year’s recovery. ” Zweig goes on to note that “these people can’t blame themselves; they did as they had been told.”
BERNANKE SPEAKS OF EXITS & THINGS…
The snow didn’t stop Ben. Blizzard or not, there were no stormy surprses in Fed Chairman Bernanke’s testimony today in Congress. Yes, the central bank was contemplating an exit strategy, but nothing was imminent.
“We have been working to ensure that we have the tools to reverse, at the appropriate time, the currently very high degree of monetary stimulus,” he said, according to prepared remarks. “We have full confidence that, when the time comes, we will be ready to do so.”
REGULATION VS. REGULATION
Is the goal of avoiding the risk of “too big to fail” in regulating banks by keeping them smaller too improbable to work? Yes, according to Avinash Persaud of Intelligence Capital, a financial advisory firm. In a new essay posted today on Vox, he argues that policymakers should instead focus on making “the financial system less sensitive to the error in the markets’ estimate of risk…”
STAG + INFLATION?
No one’s talking about stagflation these days, and for good reason. Inflation expectations remain quite low in the U.S., although the outlook for prices has been rising over the past year, albeit from a depressed state. As such, the stag part of the equation–a stagnant economy–seems more likely, although one might think otherwise in the wake of the latest GDP report, which superficially looked quite strong. But there may be less to the top-line rise in GDP than it appears, as we discussed.