Economy | timiacono.com - Part 4

Now that the U.S. team has been eliminated from the World Cup, we ‘Mericans can focus on what we really do best – inflating asset bubbles – and that effort should be bolstered by what is shaping up to be a big number in the nonfarm payrolls data due out from the Labor Department on Thursday, just prior to the nation celebrating its 238th birthday on Friday.

From these two reports at Gallup come the charts below indicating all systems are go.

Of course, it doesn’t hurt that payroll processor ADP reported earlier today that the private sector added 281,000 jobs last month, the biggest job creation total since November 2012.

This should be much more fun than watching soccer…

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The Institute for Supply Management reported that the U.S. manufacturing sector continued to expand at a healthy pace last month as their purchasing managers index was little changed, down slightly from 55.4 in May to 55.3 in June. Recall that, in this index, readings above and below 50 indicate expansion and contraction, respectively.

The key new orders component improved from 56.9 in May to 58.9 in June, production fell from 61.0 to 60.0 (still indicating robust growth), and employment was unchanged at 52.8. A full 15 of the 18 industries tracked by ISM reported growth last month.

Pricing pressure eased somewhat as this component fell from 60.0 to 58.0, backlog orders fell from 52.5 to 48.0 (indicating contraction), and inventories were unchanged at 53.0.

Obviously, the stock market likes this news quite a bit.

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The Fed Has Been Wrong Everytime

Here’s a rather harsh (and well deserved) assessment of Federal Reserve policy from Sri Kumar, president at Sri-Kumar Global Strategies, who points out the central bank’s abysmal track record on forecasting economic growth and how they have a fantastic track record for “taking the punch bowl away” far too slowly.

His closing comments are interesting. Particularly after the recent developments in Iraq, 2014 is suddenly starting to feel a lot like six or seven years ago when stocks had reached all-time highs and then oil prices started rising rapidly. We all know how that turned out.

It’s All About the Dots

The Fed will, at some point, rue the day they decided to make dot-plots showing the collective view of central bank members on where they think interest rates are headed.

Here’s an animated version of the recent progression from this CNN/Money story showing why interest rates rising sooner rather than later has become a concern for investors.

While the graphic will be updated at CNN/Money later today, that may not happen here.

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