The Mess That Greenspan Made - Part 3

Trump Eats Bald Eagle

This is the best Donald Trump cartoon (amongst many) that has crossed my desk this week:

 

Friday Morning Links

MUST READS
China’s Long Minsky Moment – New Yorker
Chinese currency devaluation, explained – Vox
China’s Yuan Rate Rises for First Time Since Devaluation – Bloomberg
Hedge Funds Bloodied by China Rout in Worst Month Since 2011 – Bloomberg
China’s Devaluation May Initiate New Phase in Global Currency War – NY Times
Greek ruling party heads toward split before bailout vote – Reuters
As Greek Bailout Deal Passes, Alexis Tsipras Faces Rebellion – NY Times
Hedge Fund Seeing College Bubble Bets Against Companies – Bloomberg
For fat loss, low-fat diets beat low-carb diets handily – LA Times
Man looking for lost cellphone hit by roller coaster – USA Today
Iowa surprise: Trump is actually trying to win – Washington Post
Donald Trump Talks Like a Third-Grader – Politico

MARKETS/INVESTING
Global stocks drift as yuan stable for second day – AP
Opinion: Dow ‘death cross’ is pure voodoo – MarketWatch
Oil sinks below $42 US a barrel, a 6-year low – CBC
The Time to Sell the Dollar Is Now as Fed Gets Real on Liftoff – Bloomberg
Wednesday Was A Record Day For Corporate Buybacks – Barron’s
The advantage high-frequency traders have over everyone else – MarketWatch
Gold steadies, set to snap 7-week losing streak – Reuters
Gold won’t have been tested until the crap really hits the fan – MarketWatch
Gold Offers The Most Profitable Secular Opportunity – GoldSilverWorlds
Gold Jumps After China Reveals It Bought Another 19 Tons In July – Zero Hedge

ECONOMY/WORLD/HOUSING/BANKING
Revolt of The Numbers – Alhambra Partners
Why the Job Market Hasn’t Really Recovered – Fiscal Times
Renters Spent a Record-High Share of Income on Rent This Spring – WSJ
Euro-Area Growth Cools as Germany, France Fall Short – Bloomberg
Brazil Braces for Protests as Referendum on Rousseff Impeachment – Bloomberg
Auckland housing market fears lead to Standard & Poor’s bank credit rating cuts – Stuff NZ
These are the 10 hottest U.S. housing markets by zip code right now – Housing Wire
Solid retail sales bolster Fed rate hike expectations – Reuters
The Gold Standard and Price Inflation – St. Louis Fed
3 Reasons to Rejoice Higher Interest Rates – Rick Ferri

 

Q3 GDP Now Slips to 0.7% Rate

From the Atlanta Fed’s GDP Now forecasting tool comes news that the U.S. economy is again slowing (in reading the accompanying note, it’s clear they didn’t get the memo about what impact data collection/reporting adjustments are supposed to have).

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2015 was 0.7 percent on August 13, down from 0.9 percent on August 6. The previously reported nowcast of 1.0 percent for August 6 was revised down due to a minor adjustment in the method for nowcasting investment in computers and peripherals. Since a week ago, the nowcast for the contribution of inventory investment to third-quarter real GDP growth has declined from -1.8 percentage points to -2.2 percentage points. This decline more than offset an increase in the nowcast of the third-quarter growth rate in real consumer spending from 2.9 percent to 3.1 percent after the release of this morning’s retail sales report from the U.S. Census Bureau.

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Thursday Morning Links

MUST READS
China allows yuan currency to drop for third day – BBC
China Adds a Chainsaw to Its Juggling Act – Bloomberg
China central bank tries to soothe global markets – Reuters
PBOC vows continuity, stability in monetary policy – China Daily
China cannot risk the global chaos of currency devaluation – Telegraph
Currency war? Investors playing a dangerous game with Beijing – FP
Devaluation Hints at China’s Rising Distress Over Economy – NY Times
Cashin: These are the Street’s real China concerns – CNBC
The Syriza effect? Greek economy ‘grows’ by 0.8pc in second quarter – Telegraph
Memorandum of understanding: what exactly has Greece signed up for? – Guardian
Busted: The Liberal Claim You’re Too Stupid To Make Health Care Decisions – Forbes
California Must Get Serious About the Nation’s Worst Roads – RCM

MARKETS/INVESTING
World stocks rebound as China soothes yuan weakness fears – AP
Wall Street’s wild swings all about China – USA Today
Brent crude reclaims $50 as China fears ease – MarketWatch
European Stocks Rise as China’s Third Devaluation Seems the Last for Now – The Street
Who’s Crazy Now? Yuan Bears Vindicated by Tumble See More Pain – Bloomberg
Ask Matt: What can kill the bull market? – USA Today
Gold dips as worries over China’s yuan devaluation ease – Reuters
Massive buying of gold stocks as fear trade returns – Mining.com
Everyone from Putin to ordinary savers are stockpiling gold – Telegraph
Silver Cycle Low – NOW – GoldSilverWorlds

ECONOMY/WORLD/HOUSING/BANKING
What Would It Take for the Prime U.S. Workforce to Fully Recover? – dshort
U.S. CEOs Who Make the Most Money Compared to their Workers – Bloomberg
Eurozone economic recovery likely stalled in Q2 – AP
Maybe China Doesn’t Have a Master Plan – Bloomberg
Yuan slide ‘could cool Australian housing market’ – SBS
Japan Can Offset China Yuan Move by Easing, Says Abe Adviser – Bloomberg
Despite oil slump, Houston housing market breaks record – bizjournal
Surge in Commercial Real-Estate Prices Stirs Bubble Worries – WSJ
The Fed Is on Thinner Ice Than It Realizes – Bloomberg
Soft Patch Might Ground the Fed’s Liftoff – RCM

 

China and the Fed

The Federal Reserve brain trust must be rolling their eyes at the latest market turmoil resulting from China’s currency devaluation – first Greece, now China.

Keen on notching that first rate increase in about a decade, lest they be accused of leaving rates “too low for too long” again amid more “Fed-bubble machine” accusations, they are now growing more fearful of repeating the European Central Bank’s 2011 error when they raised short-term rates on nascent signs of inflation, only to reverse course months later.

Here’s Art Cashin’s take on the situation:

There’s nothing worse than a central bank that makes a bad situation worse and the trade-off here is whether the Fed’s action or inaction results in a near-term market crash or bigger asset bubbles later. My guess is that it will be the former combination.

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