The Mess That Greenspan Made - Part 20

Thursday Morning Links

MUST READS
Argentina defaults for second time – BBC
As US economy accelerates, Fed remains cautious – AP
Moscow fights back after sanctions; battle rages near crash site – Reuters
Global QE ends as China opens second front in bond tapering – Telegraph
Fed Tunes Into Yellen Still Playing Labor-Market Blues – Bloomberg
The most important sentence to come out of the latest Fed meeting – Vox
Banco Espirito Santo Plunges After Posting 3.6 Billion-Euro Loss – Bloomberg
Marc Faber: Expect A Deflationary Bust In Asset Markets – GoldSilverWorlds
Bank of America ordered to pay $1.27 billion for ‘Hustle’ fraud – Reuters
California Health Insurance Rates Rise Up to 88% in ’14 – Bloomberg
Treasury Bond Yields Still Catching Bid – Advisor Perspectives
The Zero Interest Rate Decade – Pragmatic Capitalist
How menus trick you into spending more – MarketWatch

MARKETS/INVESTING
Stocks: 4 things to know before the open – CNN/Money
Greenspan says stocks to see ’significant correction’ – CNBC
Total Margin Debt Again Spikes Toward All-Time High – The Street
Putin Sows Doubt Among Stock Bears Burned by 29% Rebound – Bloomberg
Just Your Run-Of-The-Mill Blockbuster Returns – Forbes
One bond market veteran is now getting worried – MarketWatch
Treasuries Poised for 2nd Monthly Loss on Growth, Fed – Bloomberg
Gold below $1,300 on U.S. growth optimism, set for monthly loss – Reuters
Decent Employment Numbers Could Pressure Gold Friday – Kitco
Hold some gold. Better safe than sorry. – Mineweb
Goldcorp slashes costs 30% – Mining.com

ECONOMY/WORLD/HOUSING/BANKING
Figuring out the Inflation Vigilantes – Econospeak
Bouncing Back, Economy Grew 4% for Quarter – NY Times
Average Price of Electricity Climbs to All-Time Record – CNS News
Eurozone inflation slips further into the ‘danger zone’ – BBC
China Trade Numbers Still Don’t Add Up Post-Fake Exports – Bloomberg
China’s Risky Play in the U.S. Debt Market – Caixin Online
Interest rates rises could thwart G20 growth goal – CNA
IMF says China property sector poses near-term growth risks – China Daily
Bubble Watch: Top-Tier Home Prices Surge Past 2007 Levels – SF Curbed
Great Graphic: Dissents at the Federal Reserve – Marc to Market
Dissent From an Unexpected Fed Hawk – WSJ
FOMC Statement – Fed Watch

 

Economy Expands at 4.0% Annual Rate in Q2

The Commerce Department reported that the U.S. economy expanded at a rate of 4.0 percent in the second quarter, well above the consensus estimate of 3.0 percent, and the contraction during the first quarter was revised up from a -2.9 percent rate to -2.1 percent.

Inventory growth was the primary reason for the strong expansion as this component contributed 1.7 percentage points to the overall growth rate after subtracting 1.1 percentage points to the first quarter rate. Consumer spending also contributed 1.7 percentage points with durable goods sales, particularly autos, responsible for the bulk of the increase.

This report also included regular annual revisions to the data that showed growth in 2011 and 2012 was worse than previously believed but that 2013 was much better. Based on the quarterly rates, 2011 growth was revised down from 2.1 percent to 1.7 percent and, in 2012, the economy expanded at a rate of just 1.6 percent versus 2.0 percent  as previously reported. Data for last year was revised sharply higher, up from 2.6 percent to 3.1 percent.

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Wednesday Morning Links

MUST READS
As Fed meets, key issues likely to stay unanswered – AP
Decision-Day Guide: QE Tapering to Inflation – Bloomberg
Five Things to Watch in Wednesday’s U.S. GDP Report – WSJ
Time almost up for Argentina to avoid debt default – Reuters
How Argentina’s Default May Trigger $29 Billion in Claims – Bloomberg
New sanctions for Russia—here’s where they’ll hurt – CNBC
West seeks to inflict more economic pain on Russia – AP
Carnage at U.N. school as Israel pounds Gaza refugee camp – Reuters
Europe’s bond yields lowest since 15th century Genoa on deflation, Russia – Telegraph
WSJ Reporter: “The Entire U.S. Market Has Become One Vast Dark Pool” – Wall St. on Parade
Pay yourself first: The habit that can help you build wealth – The Week
Profit Soaring After Disgrace at Steven Cohen’s Hedge Fund – NY Times
This billionaire is still trying to make you panic about federal debt – LA Times

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MARKETS/INVESTING
Stock Futures Rise on Earnings – Bloomberg
Twitter 2Q results soar, stock flies high – AP
What’s next for this wishy-washy market? – MSN
Wall Street to read economic tea leaves from Fed, GDP – CNBC
pstart trading venue IEX may prompt U.S. market rule change – Reuters
Hong Kong may soon end its link with the US dollar. It’s about time. – Sovereign Man
Bonds Surge From U.S. to Germany on Outlook for Record-Low Rates – Bloomberg
Gold treads water below $1,300 ahead of Fed, economic data – Reuters
China’s Hong Kong gold imports continue to dive – Mineweb
The Coming Silver Shortage – SRSrocco Report
Gold Could Go To Infinity – Ron Paul – GoldCore

ECONOMY/WORLD/HOUSING/BANKING
Economy picking up as consumers turn bullish – USA Today
What Debate? Economists Agree the Stimulus Lifted the Economy – NY Times
Italy Borrowing Costs Drop to Record at Six-Month Bill Sale – Bloomberg
Japan’s factory output drops 3.3% on-month in June – CNA
Japan’s Retail Sales Drop in Challenge to Abe Reflation – Bloomberg
Spain’s GDP to grow by 1.5 pct in 2014: minister – xinhuanet
Housing Market in France in ‘Meltdown’ After Hollande Rent Caps – Bloomberg
China’s struggling housing market has one bright spot – MarketWatch
Hong Kong Popping Housing Bubbles London Can’t Handle – Bloomberg
ARMs Race Leaves Yellen Able to Raise Before Carney – Bloomberg
The Fed’s Failure Complicates Its Endgame – of two minds

 

U.S. Home Price Gains Slow … or Reverse

Standard & Poor’s reported(.pdf) that U.S. home price gains have slowed dramatically in recent months and, on a seasonally adjusted basis, home prices have now declined for the first time in two-and-a-half years as shown below.

As the the non-seasonally adjusted data and the year-over-year data in this report traditionally receive more attention than the adjusted data, few news headlines are indicating (gasp!) U.S. home price declines, but that may soon change.

The 20-City Home Price Index rose 1.1 percent during the month of May, however, this is less than half the increase reported for the same month in 2012 or 2013. As is the case for home sales, seasonality plays a big role in home prices, and after adjustments are made the result is a decline of 0.3 percent in home prices.

On a year-over-year basis, both the raw and adjusted indexes showed a gain of 9.3 percent, however, this is down sharply from an annual gain of almost 14 percent six months prior.

While unadjusted data showed home price gains across the board during one of the strongest month of the year for price gains, some 14 cities in the 20-city index showed declines in adjusted prices, paced by a drop of 0.9 percent in Atlanta and a decline of 0.8 percent in Chicago. In April, the adjusted data showed only five cities with falling prices and, all told, this should serve as another warning sign of a faltering housing market.

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