M2, Money Supply a Sobering View (Graph) -- A Look Beyond the Obvious

Sometimes you have to look beyond the obvious.

Roubini and Kudlow on Recession Depression (Video)

Discussing whether the recession is headed for a double-dip, with Nouriel Roubini, Roubini Global Economics chairman.

Google’s New Droid X and the Winner Is?

Good versus evil?

clipped from www.thedailybeast.com Google’s new Droid X won’t be released for two weeks, but Dennis Kneale, who snagged a preview, reports that more than just a better smartphone, it’s the key to ending Apple’s dominance. Yet Apple’s legions of devotees should brace their hipster selves for an inevitable fall from grace. In addition to the iPhone 4, I’ve also been playing with Verizon and Motorola’s new Droid X, which won’t be released until July 15, and I have a bold prediction: One year from now, the iPhone will lose its perch as the world’s most important mobile platform, toppled by Android, the “open,” all-comers-welcome design from Apple’s avowed enemy, Google.

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Financial Reform Legislation Does Not Eliminate Too Big To Fail

Gee, this is a big surprise.

clipped from moneywatch.bnet.com This bill is not going to end the problem of too big to fail. If the banking system is threatened, then one way or the other it will be bailed out. The consequences to the economy would be too large to do otherwise. Thus, banks that are big enough to pose a systemic risk enjoy an advantage over other banks. Banks that pose a systemic risk will be assumed to be safer than other banks due to the implicit government guarantee. This gives large banks an advantage over smaller banks that do not, on their own, threaten the financial system if they fail. In addition, the implicit guarantee gives large banks the incentive to take on too much risk, and this is a reason to regulate the amount of risk they can take (and I don’t think the proposed legislation does enough in this regard).

Cassano Defends AIG Swaps, Lewis Says ‘We Were Wrong’

Uh huh.

clipped from www.businessweek.com Joseph J. Cassano, whose derivative bets on subprime loans forced American International Group Inc. into a U.S. bailout, defended the deals while the insurer’s chief risk officer said the firm was “wrong” on the trades. Cassano, 55, head of AIG’s Financial Products unit until March 2008, said he “never compromised our standards” on the credit-default swaps blamed for the firm’s losses, according to remarks submitted to the Financial Crisis Inquiry Commission. Three years ago, AIG executives couldn’t envision a “scenario within any kind of realm or reason that would see us losing $1 in any of those transactions,” Cassano told analysts then.

30-Year Conventional Mortgage Rate (Chart)

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Silver – A Brief History of De-monetisation

FYI

clipped from www.dailyreckoning.com.au Silver – A Brief History of De-monetisation clipped from www.dailyreckoning.com.au But throughout history, gold has not been the only monetary metal. Silver has always played a role alongside gold. In fact, up until the beginning of the 20th Century, more people used silver as money than they did gold. You wouldn't know it though, would you? Beginning in the last quarter of the 19th century, the major economic powers, the US and Great Britain, systematically de-monetised silver. That is, they worked to remove silver from the global monetary system. This conclusion is debatable but as you will see the decision to stop using silver as money was not one taken voluntarily by the people. As a consequence, gold/silver ratio has fallen from around 15.5:1 in the early 1700s to 66:1 today. The accompanying chart shows the gold/silver ratio from the early 1970s to today, along with the silver price. If silver is in the process of becoming 're-monetised', at these levels it is exceedingly cheap.

Original content Bob DeMarco, All American Investor

Robert Shiller Says the Depression Scare is Back

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China Leading Index Gain Cut to Smallest in Five Months, Hammering Stocks

clipped from econompicdata.blogspot.com The Conference Board revised its leading economic index for China to show the smallest gain in five months in April, in a release that contributed to the biggest sell-off in Chinese stocks in more than a month. The gauge of the economy’s outlook compiled by the New York-based research group rose 0.3 percent, less than the 1.7 percent gain it reported June 15. The Conference Board said in an e-mailed statement that the previous reading contained a calculation error for floor space on which construction began.

Original content Bob DeMarco, All American Investor

Technical Talk: S&P 500 hovering above key support

clipped from www.investmentpostcards.com As seen in the chart above the S&P 500 is range bound between the 1,041 (upper orange line) and 1,142 (lower red line) levels. Momentum as highlighted by the 14-week RSI is in a weak­ened state as well. Given the S&P 500 has now tested this 1,041 level on three separate occasions − February 2010, May 2010 and June 2010 − any additional test would increase the likelihood of a break. Only a move back above the 100-day moving average (1,133 level and not seen in the chart above) above which the S&P 500 recently tried to rally, and failed, would turn the short-term trend positive.

A Nobelist’s Energy Pitch for Obama

clipped from dotearth.blogs.nytimes.com A recipient of the  1976 Nobel Prize in physics, Richter was a signatory on a letter from 34 Nobel laureates to Obama last year pushing for a big and sustained rise in the  federal investment in energy research. (He told me he is unaware of any response from the White House.) He also has written “ Beyond Smoke and Mirrors,” a cogent road map for facing the daunting long-term challenge of cutting emissions of greenhouse gases even as humanity’s growth spurt crests in the next few decades.

Original content Bob DeMarco, All American Investor

A Nonsurprise Shakes Markets

clipped from blogs.wsj.com By Neelabh Chaturvedi Oddly, well-telegraphed events continue to rattle markets. This Thursday the European Central Bank’s extraordinary €442 billion 12-month liquidity facility expires. That’s been known for some time, but that hasn’t stopped investors from getting skittish as the day approaches. German bunds are rallying, stocks are selling off and the euro is falling. In addition, three-month Euribor, a key interbank lending rate, was set at 0.761% Tuesday, its highest level since Sept. 2009, and the yield on the U.S. 10-year Treasury fell below 3%, highlighting the nervousness in the market. “Risk aversion is in the ascendancy. Concerns about the European banking system ahead of the expiration of the ECB 12-month liquidity facility on Thursday is weighing on the market. Fears of a faltering Chinese economy are also creating negative sentiment,” said Markit’s Gavin Nolan.

Original content Bob DeMarco, All American Investor

Personal Income and Outlays, May 2010

Personal income increased $53.7 billion, or 0.4 percent, and disposable personal income (DPI) increased $49.0 billion, or 0.4 percent, in May, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $24.4 billion, or 0.2 percent. In April, personal
income increased $59.4 billion, or 0.5 percent, DPI increased $63.7 billion, or 0.6 percent, and PCE increased $1.4 billion, or less than 0.1 percent, based on revised estimates.

Real disposable income increased 0.5 percent in May, compared with an increase of 0.6 percent in April. Real PCE increased 0.3 percent, in contrast to a decrease of less than 0.1 percent.

Jumbo Mortgage Delinquency Rates 90+ Days (Map)

Darker shading indicates higher percentage.
Data for counties with fewer than 200 loans have been removed; the counties are shaded yellow because small-population statistics are prone to extreme values and erratic fluctuations.

Year-year map: Year-year changes are stated as percentage point differences from one year ago (or per 1,000 point differences for the categories per 1000 housing units). The relative shade of each color is also determined by the percentage point change.

Go here to play with chart http://data.newyorkfed.org/creditconditions/

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Mortgage Delinquency Rates 90+ Days (Map)

Darker shading indicates higher percentage.
Data for the smallest 10 percent of the counties by population have been removed; the counties are shaded yellow because small-population statistics are prone to extreme values and erratic fluctuations.

Go here to play with chart http://data.newyorkfed.org/creditconditions/

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Reserve Bank Credit (Chart)

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M2 Money Stock (Chart)

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Balance on Current Account (Chart) Q1

The current account balance is the difference between a country's savings and its investment.

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Industrial Production Index May (Chart)

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Why the Wall Street-BP Double Standard?

clipped from www.huffingtonpost.com We're living through two of the most catastrophic ecological disasters in history. BP's spill is wrecking the Gulf's ecosystem. It slaughtered 11 workers and destroyed the livelihoods of thousands in the fishing and tourist industries. And soon, we'll start hearing about the terrible toll exposure to oil-related toxics is taking on the bodies of clean-up workers. Meanwhile, Wall Street, led by financial giants like Goldman Sachs, JP Morgan Chase, Bank of America and A.I.G., polluted our financial system with toxic assets. The wreckage includes $6 trillion in lost economic value and at least 8 million US jobs destroyed in a matter of months. And like the Gulf spill, the Wall Street catastrophe will have deadly long-term consequences, as hundreds of dislocated workers die prematurely from the economic shock.

Original content Bob DeMarco, All American Investor

S and P 500 Not Oversold 625 (Chart)

The chart below is of the S&P 500. From this view the market is not oversold.

The blue area on the chart is +2 and -2 standard deviation above and below the line.

The Renminbi Runaround

clipped from www.nytimes.com The Renminbi Runaround Last weekend China announced a change in its currency policy, a move clearly intended to head off pressure from the United States and other countries at this weekend’s G-20 summit meeting. Unfortunately, the new policy doesn’t address the real issue, which is that China has been promoting its exports at the rest of the world’s expense. In fact, far from representing a step in the right direction, the Chinese announcement was an exercise in bad faith — an attempt to exploit U.S. restraint.

FedEx Founder Fred Smith Explains How to Keep America #1 (Video)

Housing GOOD NEWS, BAD NEWS & STILL WAITING...

Drag on the economy.

clipped from www.capitalspectator.com New weekly filings for unemployment benefits have been meandering between 450,000 and 500,000 so far this year. The implication: the recovery in the labor market has hit a rough patch. Recent economic news doesn’t offer much reason to think that’s a material change for the better coming in the immediate future. For example, yesterday we learned that new home sales crumbled by a third in May to a record low annual pace of 300,000. "We’re going to see a home-sales air pocket after the end of the tax-credit stimulus," said Richard DeKaser, the founding economist at Woodley Park Research told Bloomberg News. "That means housing will be a drag on third-quarter economic growth."

“Chuck Prince” Is Going To Run This Bank (Into The Ground)

clipped from baselinescenario.com “Chuck Prince” Is Going To Run This Bank (Into The Ground) “Breaking up big banks would actually increase system risk” is a refrain heard from top administration officials, ever more vocal after they helped kill the Brown-Kaufman amendment (that would have limited the size and leverage of our largest banks) on the floor of the Senate. But while Mr. Geithner and his colleagues are still taking their victory laps and congratulating themselves on retaining “business as usual” after the biggest crash-and-bailout in world financial history, educated opinion starts to feel increasingly uncomfortable. People who worry seriously about system risk break the problem down into several distinct buckets, including the nature of shocks and the way these are propagated across the system.  In this typology, the “Chuck Prince problem” is in a class of its own.

First Quarter Producer Earnings Increase While Refining Remains Weak

clipped from www.eia.doe.gov During the first quarter of 2010 (Q110), earnings of oil and natural gas producers increased significantly above the levels seen a year earlier, when oil prices were at their low point for the last several years. However, earnings of refiner/marketers and oil field companies (oil field companies provide drilling and other services to producers) fell sharply in Q110 compared to year earlier levels. These results are drawn from quarterly EIA reporting on the financial performance of energy companies (see the (see the Financial News for Major Energy Companies, First Quarter 2010 and the Financial News for Independent Energy Companies, First Quarter 2010) that together represent about half of U.S. oil and natural gas production and nearly two-thirds of U.S. refining capacity.

Notes from the deflationary quicksand

clipped from ftalphaville.ft.com Deflationary quicksand… We will all end up Japanese… Collapsing houses of cards… Yes, it’s another missive from SocGen’s perma-bear Albert Edwards, who on Thursday developed some recent riffs on deflation a tad further: …although our deflationary arguments are gaining some traction in the bond market, investors have yet to fully acknowledge we are now walking on the deflationary quicksand that will inevitably suck us towards total fiscal and financial ruin – you ain’t seen nothing yet. With core inflation rates now sub-1% in the eurozone and the US, we are only one recession away from Japanese-style deflation. Albert thinks recession will return by the end of the year, but that’s not the main issue. The real problem is that private-sector de-leveraging has barely begun, Edwards says, especially if you strip out the efforts made by financials — see chart (click to enlarge):

Halfway Back to Lehman: New Report Shows Financial Conditions Tightening Sharply

Be careful.

clipped from blogs.wsj.com The Federal Reserve said today that financial conditions had weakened recently because of market turmoil abroad, meaning Europe. A  new report suggests they’ve been worsening for some time and are now about as bad as they’ve been since late 2008, when the financial crisis was raging. “Financial conditions appear to have worsened substantially in recent quarters based on our update of the broad index of US financial variables presented earlier this year at the US Monetary Policy Forum,” economists at Deutsche Bank said in a note to clients.

Google’s Android: 160,000 Devices a Day

Wo.

clipped from blogs.wsj.com One of the most surprising bits of news to emerge from the Motorola Droid X launch was the announcement that 160,000 new devices running on Google’s Android software are going into service every day. That figure, revealed by Google executive Andy Rubin, is up from the 100,000 activations a day Google claimed in mid-May and well beyond the 97,222 iPhones Apple sold on average every day in the first quarter.

Roubini: What a Flexible Yuan Means for the Economy

Back in April, when we were piecing together our last quarterly outlook on China, we projected that China would begin to allow renminbi appreciation against the U.S. dollar around mid-year. Last weekend’s announcement, then, came about two weeks ahead of schedule... We won’t complain!

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Best Odds Are on Siphoning, Not Stopping, Gulf Gusher

clipped from dotearth.blogs.nytimes.com The latest word from the team overseeing efforts to manage the oil gushing from the Gulf of Mexico seabed is that capturing the vast flow remains the prime goal, with chances of stopping it outright looking slim at least until early August. Adm. Thad W. Allen of the Coast Guard, the “incident commander” in charge of operations at the wrecked well, updated reporters on a telephone conference call this morning. (Somehow the word “incident” doesn’t adequately capture an unfolding disaster, but this is all new territory in an arena attuned to “spills.”) Here are a few notable developments (a transcript should be posted later): “We don’t know the exact status of the well bore,” Allen said. He said that one reason the  “top kill” procedure was abandoned was the realization that the well bore could be compromised.

Apple — the Bear Case

Bail, or stay with the trend?

clipped from blogs.wsj.com Apple — the Bear Case With more than 2 million iPads sold and the release of the new iPhone scheduled for this week, Apple is riding high. So, of course, it’s the perfect time to make the bear case against Apple’s stock. Apple recently passed Microsoft to become the most valuable technology company by market cap. Now Sanford C. Bernstein analysts aks in a research note out Monday if the company is too large to outperform the market. That doesn’t mean the analysts themselves are bearish on Apple; the note takes a look at “potential pitfalls” for the stock — “principally as a checklist of issues to monitor.” In April, the Journal’s Brett Arends outlined seven reasons for Apple shareholders to be cautious that included a number of the questions that the Bernstein analysts raise.