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 | 1335.3 | -13.0 | -0.96% |
| Eurostoxx Index | 2475.6 | -46.8 | -1.85% |
| Oil (WTI) | 98.15 | -1.7 | -1.69% |
| LIBOR | 0.506 | -0.004 | -0.78% |
| US Dollar Index (DXY) | 79.112 | 0.495 | 0.63% |
| 10 Year Govt Bond Yield | 1.97% | -0.07% |
Stock markets are weaker across the board as Greek austerity talks hit a snag. A party leader in Greece is now saying he won’t support austerity measures agreed upon. The Germans are holding Greece’s feet to the fire with a “no disbursement without implementation” stand. Greek sovereign debt is more or less flat. Portuguese debt still trades like a 1999-vintage .com with another big rally today. Their 10 year bond yield has blown out from 12.5% to over 18% and then back to 12.7% in about 4 weeks on no news. So much for “safe, boring, risk-free,” sovereign debt trading. S&P futures are down 13 points. The S&P 500 has gone from 1200 to 1350 on more or less a straight 45-degree line, so I wouldn’t fall out of my chair with shock if we had a retracement.
In economic data, the trade deficit increased again. Imports and exports increased, but imports increased by $3 billion while exports increased by $1.2 billion, to net out at a $48.8 billion trade deficit. $26.9 was with China. The full year 2011 numbers are included in the release as well. Takeaway – the consumer is returning. Pre-crisis, the trad deficit was in a 55 – 65 billion range. In summer of 2009, it dropped to 25 billion. So a smaller trade deficit isn’t necessarily a good thing.
Next week we have Retail Sales, Capacity Utilization, Industrial Production, PPI&CPI, FOMC minutes, and leading indicators. Earnings season is more or less over until the retailers with January fiscals start reporting. Still, a couple of big names will report – Deere, GM, and CF Industries.
Have a good weekend!
Filed under: Uncategorized |
All Things in Moderation 
thanks brent:
We’re missing a catalyst, so I’m expecting this will be a down day.
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John, I don’t know whether you saw my reply yesterday about labor force. I know you were quoting the BLS summary. I am curious whether you looked at their actual table, which shows it down .3% December to January (and down .5% in a year). I don’t know why they call this holding steady at 63.7%. In the absence of other explanation, I attribute it to government math.
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Greek Aid Deal ‘Much Better’ Than Euro Exit: Summers”
http://www.cnbc.com/id/46339290
Given Larry Summers history of always choosing the wrong of two options, I think the Greeks should leave the euro today!
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QB, yes I did, but you passed over the reference to annual January adjustments which explains the difference in our two positions.
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“bannedagain5446, on February 10, 2012 at 7:30 am said:
Given Larry Summers history of always choosing the wrong of two options, I think the Greeks should leave the euro today!”
Someone should ask Larry to contrast his view of the necessity of “stability” in the Greek banking system by staying in the Euro with the experience of Iceland.
http://www.washingtonpost.com/business/economy/iceland-makes-fledgling-recovery-from-its-economic-meltdown/2012/01/12/gIQAW1q83P_story.html
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From the WaPo story:
“The Icelandic krona crumbled, losing more than half its value against the euro and becoming worthless beyond Iceland’s shores. The currency collapse quickly doubled payments for many of those who had taken out loans in foreign currencies.”
This was part of the yen carry trade, where Japanese retail investors “Mrs. Watanabe” would borrow yen and buy high yielding government debt in countries like Iceland and New Zealand. These were highly levered positions which blew up when Iceland defaulted.
This is another danger of ZIRP that never gets talked about. With rates this low, we could see the dollar carry trade, with all of the dangers that represents.
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Even more than neurosurgery, currency trading in all its forms is a game strictly for experts.
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Sorry, Brent. ZIRP = zero interest rate p…olicy?
So a smaller trade deficit isn’t necessarily a good thing.
That’s in terms of our overall economic health for now, right? I know we’ve been running a trade deficit for decades now — do you think we’re ever going to get back to a trade surplus? Is it necessary?
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Sorry for hijacking Brent’s thread, but I just wanted to link to the AP story on BHO caving to the Catholic church pressure about health care coverage.
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Mike, you corked me, but on a different thread. My link is here.
But what the White House will likely announce later today is that the relationship between the religious employer and the insurance company will not need to have any component involving contraception. The insurance company will reach out on its own to the women employees. This is better for both sides, the source says, since the religious organizations do not have to deal with medical care to which they object, and women employees will not have to be dependent upon an organization strongly opposed to that care in order to obtain it.
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Mike:
stronger dollar equals cheaper imports, equals bigger trade deficit, and the dollar has been on a tear in the last couple of months
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@Mike. Yes, zero interest rate policy.
I do see the US becoming a net energy exporter which could turn our trade deficit into a surplus.
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brent:
WOW! do you really see the volume that would imply, AND the falling dollar scenario?
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banned – I firmly believe we will be a net energy exporter in less than a decade. I also think the cheap labor arbitrage is becoming played-out, which means more manufacturing here. So it is more than just energy.
Edit:
Note that something like $9 billion of our current trade deficit came from OPEC. (23.1 China, 9.6 EU, 9.1 OPEC) So turning that negative number into a positive would have a big impact, but won’t chew up the entire TD.
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brent:
In distillates certainly, but I don’t know where else we could make up ground. Crude oil can only be exported on permit from the Federal government, which isn’t issuing any. The market of LNG is tiny, and a lot of our coal isn’t suited for export purposes.
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I think LNG is going to be where it happens, and that demand is going to increase dramatically for it as power plants eschew nuclear and coal. I also think natural gas trucks and buses are going to become a bigger market worldwide.
Of course the NG chart is telling me I am wrong..
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The current NG market is most classic textbook case of supply and demand in the commodities market possible.
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Thanks, Brent and John.
I heard on NPR this morning that the NRC just approved a couple of new nukes, but that it will cost $14B to build one of them. That’s a pretty steep initial cost.
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Brent
I also think the cheap labor arbitrage is becoming played-out
Could you explain what you mean by this?
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Some of you know I volunteer as an EMT. My department lost a Medic yesterday. I used to run out of his station had have probably jumped off the back of the unit in that picture 100s of times.
http://alexandriava.gov/fire/info/news_firedisplay.aspx?id=57228
Not sure why I’m posting, but it seemed weird not to. if that makes any sense.
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The cheap-labor arbitrage means that the price and productivity differential between US labor and Chinese / Indian labor is narrowing as wages rise in China and India. At some point, the cost advantage goes away and it makes more sense to make things here. We aren’t at that point yet, but the cost advantage is smaller than it was a decade ago.
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That is sad to hear about, nova. Always tragic to lose a dedicated person like that.
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@Mike,
I saw that. I think they are building new plants on an existing site, so they don’t have the Shoreham risk. Also, the the regulatory environment is a little different in Georgia because the regulators allow Southern to charge ratepayers for the construction costs while it is being built, so delays don’t hurt them. Also DOE is kicking in over $8 billion in loan guarantees. Take away the subsidies and no utility would envision building a nuclear plant with natural gas so cheap.
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Very sad NoVA. He was too young. It was a very nice tribute to his accomplishments and dedication. And I completely understand the desire to mention it, we’ve become a family of sorts here, weird but true.
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Thanks Brent for the explanation. I thought I knew but wasn’t sure I was reading that right. We import from one manufacturer in Taiwan about three times a year and our costs have gone up appreciably, part of it’s labor and part materials. Most of our manufacturing is done here though so I hope no one calls me a traitor. 😉
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Nova, that sucks. Sorry for the loss.
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NoVA:
Not sure why I’m posting, but it seemed weird not to. if that makes any sense.
Makes total sense. It’s tragic — and a good reminder that there are lots of good people who take serious risks to help others. Like you.
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Brent:
That reminds me that Progress Energy just reached a settlement to refund their Tampa Bay area customers some of the costs they had charged for a repair job gone wrong on their Crystal River nuke plant. Something like $300M.
Ah, here’s the story. A self-inflicted wound, but one that goes to show the high costs of maintaining the nuke plants, in addition to their high start-up costs.
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mark:
If you’re here:
Economic Left/Right: 0.50
Social Libertarian/Authoritarian: -3.08
I’m in the upper left of the purple box, whatever that means.
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NoVa,
Thanks for linking that. It certainly is tragic and I understand why you would want to post it.
For what it’s worth, I too took the quiz with it’s often absurd questions. My results:
Econ L/R: 6.12
SL/Auth: -3.28
I was in the lower right box.
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I am so disgusted with this test for making me appear more moderate than Troll, Scott, and Brent. Clearly it is rubbish for anything but the broadest generalizations.
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For a friday contemplation
The Catholic church doesn’t just object to THIS regulation. It objects to ALL regulation of its church run institutions, no matter how secular they may be in character. They do this because of power and money, not because of doctrine.
For instance in the 1891 landmark encyclical “Rerum Novarum” Pope Leo XIII wrote:
“Let the working man and the employer make free agreements, and in particular let them agree freely as to the wages; nevertheless, there underlies a dictate of natural justice more imperious and ancient than any bargain between man and man, namely, that wages ought not to be insufficient to support a frugal and well-behaved wage-earner. If through necessity or fear of a worse evil the workman accept harder conditions because an employer or contractor will afford him no better, he is made the victim of force and injustice.”
In 1961, Pope John XXIII confirmed these principles in his encyclical “MATER ET MAGISTRA “, in which he wrote:
We, no less than Our predecessors, are convinced that employees are justified in wishing to participate in the activity of the industrial concern for which they work. It is not, of course, possible to lay down hard and fast rules regarding the manner of such participation, for this must depend upon prevailing conditions, which vary from firm to firm and are frequently subject to rapid and substantial alteration. But We have no doubt as to the need for giving workers an active part in the business of the company for which they work—be it a private or a public one. Every effort must be made to ensure that the enterprise is indeed a true human community, concerned about the needs, the activities and the standing of each of its members.
HOWEVER when it comes to the dignity of labor in it’s OWN enterprises, The Catholic church successfully argues in the 1979 SCOTUS case:
NLRB v. CATHOLIC BISHOP OF CHICAGO, 440 U.S. 490 (1979)
440 U.S. 490
That it would be an infringement of their 1st Amendment rights to have labor unions in their institutions.
“On respondents’ challenges to the NLRB orders, the Court of Appeals denied enforcement, holding that the NLRB standard failed to provide a workable guide for the exercise of its discretion and that the NLRB’s assumption of jurisdiction was foreclosed by the Religion Clauses of the First Amendment. Held: Schools operated by a church to teach both religious and secular subjects are not within the jurisdiction”
See the hypocrisy at work?
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“church run institutions, no matter how secular they may be in character.”
but there’s nothing secular about them at all from the Church’s view.
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The Muslims, Hindus, Jews and atheists who either visit or work at these hospitals for instance might disagree as would the ambulance drivers who bring emergency patients to the closest hospital without regard to the doctrinal views of the injured.
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Embrace your squishyness, QB. You know that you think Rockefeller Republicans are rightwing extremists.
;-).
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think of it as transubstantiation. it looks like a secular hospital, but it’s actually a “tangible manifestation of Christ living in the community”
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NoVA:
think of it as transubstantiation. it looks like a secular hospital, but it’s actually a “tangible manifestation of Christ living in the community”
That’s probably the funniest damned thing I’ve read/heard all day–thank you for a belly laugh!
I am truly sorry for your loss; I agree with everyone above who said it isn’t odd at all for you to have posted that. Those who work/volunteer in the line of fire don’t get thanked enough for the work you do, or get mourned enough when one of you dies. Thank you both for posting it and for going out and doing what you do.
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Thank you for sharing your loss with us, NoVAH.
re: stupid test – John, Tao, Kev and I are clustered near the midpoint, much as I would have guessed.
I feel QB’s pain. It’s one thing to have the teacher write a note about one not living up to potential, but it is quite another to fail in one’s own sight. It was just a wonky test, QB.
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