The Mess That Greenspan Made - Part 4

A Dearth of First Quarter Economic Growth

As was the case a year ago when harsh winter weather visited the East Coast, the first quarter of 2015 is turning out to be something of a bust GDP growth-wise as evidenced by the Atlanta Federal Reserve’s GDPNow forecast shown below.

Bolstering the argument that this was a weather-related slowdown, about a quarter of the recent decline can be attributed to shrinking fixed investment in structures by businesses (though, countering that argument is the lack of a similar decline in residential building).

A widening trade gap accounts for another quarter of the drop but, despite the conventional wisdom of the impact of sharply lower energy prices, it was consumption – America’s growth engine – that accounted for about half of the overall decline since this data series began in January,  all of which suggests the growth slowdown may not be a transitory.

Thursday Morning Links

MUST READS
Doubts over U.S. growth cool dollar rally – Reuters
Going Down: GDP Growth For Q1 2015 Is Now 0 – Confounded Interest
Greece unveils reforms, says euro ‘viability’ at stake – euobserver
Greek defiance mounts as Alexis Tsipras turns to Russia and China – Telegraph
Brown orders California’s first mandatory water restrictions – LA Times
These Charts Show the Horrific California Drought Conditions – Bloomberg
How one California farmer is battling the worst drought in 1,200 years – Quartz
This Anti-Gay Pizza Place Got Trashed on Yelp. Why Isn’t That Enough? – reason.com
Stanford just made tuition free for families earning less than $125,000 per year – Vox
The economically lost generation of Millennials – My Budget 360
False Signs Of “Recovery” Hide Economic Wall Dead Ahead – Contra Corner
Our Current Illusion of Prosperity – Mises

MARKETS/INVESTING
Asia stocks higher on stimulus hopes, European markets tepid – AP
Oil prices may be about ready to prove Warren Buffett wrong – MarketWatch
Shanghai Traders Make Trillion-Yuan Stock Bet Backed by Debt – Bloomberg
How Bill Gross will march through the low-rate madness – MarketWatch
Chinese investors trade way more often than Americans – CNN/Money
Gold holds around $1,200/oz ahead of U.S. payrolls data – Reuters
Gold’s Bull Market In Europe and Japan Remain Unnoticed – GoldSilverWorlds
Disappointing Nonfarm Payrolls Won’t Necessarily Help Gold – HSBC – Kitco
US Mint Bullion Sales Quicken in March – Coin News

ECONOMY/WORLD/HOUSING/BANKING
McDonald’s to raise wages for 90,000 US employees – BBC
Private Payrolls, Factory Data Point to Weak Economic Growth – Reuters
Why Investors May Be Rooting for a Weak Jobs Report – Fiscal Times
European Central Bank determined to stick with stimulus plan – AP
Abenomics: Overcoming the Legacy of the Lost Decades? – IMF Direct
Japan on Brink of Another GDP Contraction – WSJ
Vacation home sales exploded last year – CNN/Money
Central Bank Solvency and Inflation – Liberty Street Economics
Ben Bernanke’s second life as just another blogger – Fortune
Bernanke’s Misguided Global Savings Glut Hypothesis – Prag Cap
Why are interest rates so low: The Global Savings Glut – Bernanke’s Blog

 

China Stocks: What Could Go Wrong?

Bloomberg reports that China equity markets have become even bubblier after a wave of new irrationally exuberant “investors” that harken back to the U.S. in the 1920s when Joseph Kennedy purportedly began selling stocks after receiving a hot tip from a shoe-shine boy.

On a positive note, they now appear to have their real estate bubble under control…

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Wednesday Morning Links

MUST READS
Why are interest rates so low: Secular stagnation – Ben Bernanke’s Blog
On Secular Stagnation: A Response to Ben Bernanke – Larry Summers’ Blog
Iceland looks at ending boom and bust with radical money plan – Telegraph
Reckoning Arrives for Cash-Strapped Oil Firms Amid Bank Squeeze – Bloomberg
Three weeks into ECB quantitative easing, markets begin taper talk – Reuters
Mario’s magic is working: Eurozone GDP set for best quarter since 2011 – Fortune
Kevin Warsh: Are We Sliding Into Another Financial Crisis? – Forbes
Fed’s George Says Economy Could Do With Less Fed Stimulus – WSJ
Russian Soldiers Stop Pretending They Are Not Fighting in Ukraine – Vice News
The Middle Eastern Balance of Power Matures – Stratfor
The US Has Become a “Nursing Home” Economy – Acting Man
Bank threat to Democrats backfires – USA Today

MARKETS/INVESTING
Asian stocks lackluster as Japan, China data show weakness – AP
Chinese stocks close above 3,800 for first time since 2008 – MarketWatch
China’s Big Stock Market Rally Is Being Fueled by High-School Dropouts – Bloomberg
If markets get volatile this quarter, this is how you hang on tight – MarketWatch
‘Being There’ Is No Longer Enough: Doug Kass on the Unstable Market – Real Money
Gold steadies after downbeat March, awaits U.S. jobs data – Reuters
End of bear cycle for gold in 2014 – Metals Focus – Mineweb
Gold’s up, gold’s down, where is gold going now? – Mining.com
Gold In Fed Vault Drops Under 6,000 Tons For The First Time – Zero Hedge
Gold Flat In Quarter In Dollars But 11% and 5% Higher In Euro and Pounds – GoldCore

ECONOMY/WORLD/HOUSING/BANKING
Cheap oil prices chop jobs by thousands – USA Today
Why More Education Won’t Fix Economic Inequality – NY Times
World Inflation Falls To A New 5-Year Low – Gavekal Capital
What’s Behind China’s Decision to Launch Deposit Insurance – WSJ
Even With Free Money, Merkel Still Reluctant to Spend – Bloomberg
It’s A Near-Zero World, And “Structural Reforms” May Actually Hurt – Real Time Brussels
Pound Weakens as Political Risk Overshadows Manufacturing Growth – Bloomberg
Lowered prices create bidding wars in hot housing market – Boston Globe
Rise in Home Prices Paced by Denver, Miami, and Dallas – S&P Housing Views
San Francisco apartment hunters told their dog needs a resume – SF Gate

 
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