Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Arcanaut
novahockey
quarterback
ScottC
yellojktVital Statistics:
| Last | Change | Percent | |
| S&P Futures | 1184.8 | -5.9 | -0.50% |
| Eurostoxx Index | 2158.5 | -1.820 | -0.08% |
| Oil (WTI) | 97.29 | 0.370 | 0.38% |
| US Dollar Index (DXY) | 78.229 | -0.136 | -0.17% |
| 10 Year Govt Bond Yield | 1.94% | -0.01% |
US and Euro stock indices are lower on widening Euro sovereign yields and a disappointing GDP report. EUROBOR / OIS is out at 94 basis points, close to a post-crisis high. US 3Q GDP (QOQ) came in at 2.0% vs 2.5% expected. This is the first pass at 3Q GDP and it will probably be revised higher if past experience is any guide. 3Q Consumption came in at 2.3% vs 2.4% expected.
The European banking crisis is causing a credit crunch in emerging economies, the WSJ reports. Latin America is particularly affected by Spanish banking activity, and it appears the French banks have pulled out completely. The most exposed are the Eastern European economies.
So now that the Super-committee failed to reach an agreement, should you be shorting defense stocks? Not so fast, according to the WSJ. There is a loophole (go figure) – wartime costs are exempt from the automatic defense spending cuts. So expect a little budgetary jiggery-pokery as non-wartime costs are shoved into the wartime cost category. The Joint Strike Fighter will probably take a hit, though cutting on weapons procurement rarely produces the anticipated savings, largely due to increased average costs for the remaining items purchased and termination penalties.
There is a slew of economic data tomorrow, but volumes should be light ahead of the Thanksgiving holiday.
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All Things in Moderation 
There is a slew of economic data tomorrowAny predictions?There is a loophole (go figure)And so Obama's veto threat of holding firm to the trigger probably means nothing in reality.
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Sticking with my prediction that 3Q started off slow and growth accelerated at the end. I think a surprise is possible in durable goods orders.And yes, I think the veto threat is more or less meaningless.
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I'm wondering if there will possibly enough positive economic news next year to change the dynamics of the election. That would be interesting I think.
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I think this election will be all about unemployment, and that is usually the last indicator to flip from negative to positive. Reagan got re-elected in 84 with 7.4% unemployment, but it declined rapidly from late 83 to late 84, from 8.8% in Oct 83 to 7.4% in Oct 84. A 7.2% unemployment rate did in GHWB, so unemployment over 7% is usually a big problem for an incumbent president.There is a big difference between recessions, though. Reagan's recession was caused by the Fed tightening to quell inflation. This one was caused by a burst asset bubble. These recessions have different dynamics.Since home construction usually leads the economy out of recession, I don't foresee a rapid drop in unemployment. That said, Lennar just announced a bond issue to raise capital, and sales data indicates real estate activity may be picking itself up off the mat.
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It's definitely an interesting situation regarding Obama. The polling is all over the map and I think most people aren't really sure who they can trust politically anymore, but I have seen polling that reflects the base hasn't deserted him. As always it's the independents who will decide whether or not to give him another four years. This was the worst recession we've had since I've been around and I think most people realize it was never going to be easing getting out of it. Whether they decide to give him another chance may just depend on even small improvements in the economy and who's running against him. We'll see.
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Here's an interesting analysis:The timing of McDonald's McRib sandwich 'limited time' appearances corresponds to pork price arbitrage. "Arbitrage is a risk-free way of making money by exploiting the difference between the price of a given good on two different markets—it’s the proverbial free lunch you were told doesn’t exist. In this equation, the undervalued good in question is hog meat, and McDonald’s exploits the value differential between pork’s cash price on the commodities market and in the Quick-Service Restaurant market. If you ignore the fact that this is, by definition, not arbitrage because the McRib is a value-added product, and that there is risk all over the place, this can lead to some interesting conclusions. (If you don’t want to do something so reckless, then stop here.)The theory that the McRib’s elusiveness is a direct result of the vagaries of the cash price for hog meat in the States is simple: in this thinking, the product is only introduced when pork prices are low enough to ensure McDonald’s can turn a profit on the product. The theory is especially convincing given the McRib's status as the only non-breakfast fast food pork item: why wouldn't there be a pork sandwich in every chain, if it were profitable?"A Conspiracy of Hogs: The McRib as Arbitrage
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