►Bond Bubble: A Sterile Debate
James Montier/The Big Picture
“…unless you believe that Japan is the correct template for the US (i.e. inflation will be zero for the next decade), government bonds don’t offer an attractive return as a buy-and-hold proposition.”
►Tyson’s Keynesian Confusion
Mark A. Calabria/Cato@Liberty blog
“Unlike consumption, which has largely rebounded, investment today is about 20% below its peak. Of course we should keep in mind, that peak was a bubble. The good news is that investment in such things a equipment and software, are slowly, but steadily, climbing back. The real drag on investments is from the construction industry, particularly residential, which is still down about 50% from its peak…
What most of this suggests to me is that unemployment is being driven mainly by a mismatch between skills of the unemployed and available job openings. You simply cannot, overnight, turn a construction worker into a nurse or computer programmer…
At the end of the day, what we need to get employment increasing is to create an environment where business feel confident to invest.”

►Fork In The Road For The Bond Market
Bill Mast/Morningstar
“The strong disagreement about the direction of U.S. interest rates can be attributed in part to the distortive effects of unprecedented central bank intervention. The $1.25 trillion purchase of mortgage-backed securities was successful (in most minds) in pushing down mortgage rates to support housing. Without the support, however, are mortgage rates headed higher? Will the declaration to buy Treasuries with cash from the Federal Reserve balance sheet push risk-free rates lower? The central bank was no doubt sincere in the proclamation that the Federal Open Market Committee “is prepared to provide additional monetary accommodation through unconventional measures if it proves necessary, especially if the outlook were to deteriorate significantly,” but many still question the bank’s ability to deliver.”
►Nowhere To Go
The Economist’s Free Exchange blog
“Ben Bernanke, in his recent assessment of the American recovery, shocked some people by declaring that the conditions are still in place for a recovery in 2011. Economic data have certainly been disappointing lately, leading many to extrapolate various downward pointing lines back into negative territory.
But Mr Bernanke has a point. The conditions are in place for a recovery. Primarily because they can’t get much worse.”
►U.S. stock futures edge up ahead of key payrolls data
Polya Lesova/MarketWatch
“‘It seems that every fresh U.S. data point is eagerly awaited at the moment,’ said Jim Reid, strategist at Deutsche Bank, in a note to clients. ‘This sharper focus will likely be a regular feature of the post-crisis world due to the likely lower trend rate of growth.'”
►Jobs report may show rise in unemployment rate
Christopher S. Rugaber/AP
“The unemployment rate may be about to rise again.
Economists are bracing for a weak showing in the August employment report, which is scheduled to be released Friday. The private sector is forecast to add a net total of only 41,000 jobs, the fewest since January, which isn’t enough to keep up with population growth. The jobless rate is expected to increase to 9.6 percent from 9.5 percent, the first rise since April.”