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 | 1334.7 | 6.5 | 0.49% |
| Eurostoxx Index | 2186.7 | 8.0 | 0.37% |
| Oil (WTI) | 92.98 | -1.0 | -1.06% |
| LIBOR | 0.467 | 0.001 | 0.21% |
| US Dollar Index (DXY) | 81.31 | 0.086 | 0.11% |
| 10 Year Govt Bond Yield | 1.80% | 0.03% | |
| RPX Composite Real Estate Index | 175.5 | 0.4 |
S&P futures are firming this morning after hitting lows of 1321 overnight. Good earnings reports from Target and Deere seem to be overshadowing the bank run going on in Greece. Greek, Irish and Portuguese yields are higher this morning. US Treasuries are down half a point while MBS are flat. Everyone is waiting for the minutes of the last FOMC meeting which will be released this afternoon.
Industrial Production increased 1.1% in April, a reasonably strong reading. Capacity Utilization ticked up to 79.2%, but the Fed revised down everything for the past year.
The recent drop in rates is triggering refi activity, as evidenced by a 9.2% jump in mortgage applications last week.
April Housing Starts came in at a 717k annualized rate, better than expectations, but still horribly depressed. To put that number in perspective, the in the 74-75 recession, starts bottomed at 904k. In the 81-82 recession, they bottomed at 837k. In the 91-92 recession, they bottomed at 798k. These bottoms were V-shaped and typically lasted 6 months or so before returning to normalcy of around 1500. When was the last time we saw a 800k print? September of 2008 – almost 4 years ago. Housing historically leads the economy out of a recession, and its absence has been a big part of why this recovery has been so anemic.
Is the summer of 2012 going to be a replay of the summer of 2011? Certainly the pieces are being put in place – Europe’s sovereign debt crisis is again in the forefront, the economy is decelerating after a good Q4 / Q1, and the old saw “Sell in May and go away” was good advice again. We even have the prospect of major tax increases Jan 1 as the Bush tax cuts expire. The only thing we are missing is a debt ceiling fight. Oh, wait…
The Florida Supreme Court is hearing an foreclosure case that asks an interesting question – can the banks who filed foreclosures based on robo-signed documents voluntarily dismiss these cases and re-file them with better documents?
The good market reception to the Facebook IPO means that sellers are increasing the amount for sale. Existing holders like Goldman, Tiger, and Accel are blowing out of 241MM shares, much more than they originally planned. Surprisingly, and perhaps no coincidentally, GM has dropped paid advertising with Facebook because they “weren’t effective enough”. Apparently “likes” doesn’t necessarily translate into sales or dealer inquiries.
Filed under: Morning Report |
All Things in Moderation 
Lms, from yesterday’s ‘morning report’ :
” That Bloomberg piece regarding where the 40% of the money for schools will go is really a depressing piece. School districts basically have very little choice as they have to fund their portion of the pensions which were legislated btw.”
This AM, NPR reported an effort by Ford to reduce pension obligations by offering one-time buyouts. The story noted that others are likely paying attention. Certainly many gov’ts are in the same boat – pensions have been underfunded and poorly managed & shrinking budgets offer no room to make up the difference.
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FL makes into the valued Morning Report! A local take on the foreclosure case that was argued in front of the FL SC last week. It sounds like the justices were pretty skeptical of the fraud claim by the plaintiff.
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Banned – Looks like you win:
“Merkel says she’s open to ‘stimulus’ for Greek economy”
http://www.washingtonpost.com/world/europe/merkel-says-shes-open-to-stimulus-for-greek-economy/2012/05/16/gIQAUdacTU_story.html?hpid=z1
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Typical of the fuzzy math that got CA into this mess in the first place:
“Facebook’s $12 Billion Gift to California?”
http://www.cnbc.com/id/47435168
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jnc:
With liberty and stimulus for all.
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Warren Buffettt just bought another round at the ‘Immunity Bar” for his investments in WFC and BAC:
“OMAHA, Neb. – Warren Buffett’s company is apparently bullish on the U.S. auto industry.
Berkshire Hathaway Inc. took a new 10-million share stake in General Motors Co. in the first quarter. The investment comes as the Detroit automaker continues to rebound from bankruptcy three years ago. Fueled by U.S. vehicle sales, it posted first-quarter net income of $1 billion.”
This will keep GM from cratering in the short term.
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jnc:
In light of your post, perhaps we should look on the lightning that struck Hollande’s plane as God working on a shoot the hostages plan.
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Worth noting for future debates over government spending:
http://www.washingtonpost.com/blogs/ezra-klein/post/50-years-of-government-spending-in-one-graph/2012/05/16/gIQAFaloTU_blog.html
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“The Fed also announced that for the rest of this year and next year all of its meetings will last for two days, to allow more time for discussion.”
Waterboarding takes time, and Ben is relatively new at it.
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jnc4p writes:
“Worth noting for future debates over government spending:”
What is interesting is how the numbers change when you remove SS & Medicare, which are supposed to be funded separate from the budget via dedicated payroll taxes. We end up with the following distributions in 2011:
defense 33.77%
safety net 18.83%
everything else 17.48%
medicaid, etc 15.09%
interest 9.31%
transportation 3.74%
international affairs 1.79%
compared to 1962:
defense 58.62%
safety net 6.58%
everything else 16.78%
medicaid, etc 1.13%
interest 6.92%
transportation 4.31%
international affairs 5.67%
I am a bit surprised to see defense so much lower; assuming Afghanistan spending is lumped under defense. It is not a surprise that the safety net consumes more of the budget during a recession. The growth in the cost of interest is of particular concern. That is clearly a bad trend.
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bsimon:
The growth in the cost of interest is of particular concern.
It seems to me an odd view that sees the growth of the cost of one budget item that increased less than 2.5%, from 6.92% to 9.31%, of “particular concern” when the growth of the cost of another budget item was nearly five times as much, from 6.58% to 18.83%.
BTW, I would guess that the current recession accounts for a relatively small portion of the growth in the safety net figures, and that most of the growth existed even prior to the recession.
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I believe your interest percentage quote is mistake. From the chart linked, interest percentage appears to be as follows:
1962: 6.1 %
1987: 13.3%
2011: 6.23%
Safety Net also doesn’t appear to match the graph:
1962: 5.8%
1987: 7.2%
2011: 12.6%
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