Some quick facts Another reason I might want to stay out of ZQ for a while "Jan Hatzius, chief U.S. economist at Goldman Sachs Group Inc. in New York, said in a March 6 e-mail to customers that he anticipates payrolls this month will climb by about 275,000. About 50,000 of that represents the âunderlying trendâ in employment, he said, with about 100,000 attributable to the weather and another 125,000 to the census." Some are saying it might be a 400K print Fed info of the day "In addition to debate at official meetings every six weeks, there is a great deal of jockeying ahead of meetings. For example, Fed staff circulate a document, called a blue book, in which officials are shown options for how they might alter communications." The war on traders continue "Swaps Come Under Fire U.S. Regulators, European Leaders Seek More Oversight on Trades in Derivatives"
"So, at the time of maximum policy stimulus (second-half of 2009), final sales were growing only at a pathetic 1.8 percent average rate," Roubini explained. http://www.cnbc.com/id/35792768
There are a few guys out on the tape with this kind of stuff. I assume its the exact same group of guys who promoted the whisper nuimber of -150K for last week's job report. Its one of the more over-reported stories of the year thus far and if there is any truth to it, expect the 2 year to take a serious dive (in price) well before the first Friday in April. Should this happen and should the report come in way positive, I will be standing there that morning as a large buyer of GE (options, futures, whatever), as this will be a great fade. Here's a leaked story out of the Fed, presumably from the hawks, about the debate going on about when to change the extended period language. Hoenig is definitely not a lone voice here. Plosser is down for the fight. Bullard is pretty much in as well (although he's not mentioned in this article, he's made it clear that he's "losing patience" with the extended period language). http://online.wsj.com/article/SB10001424052748704145904575111983688270258.html Fed Debates How to Signal Next Rate Move By JON HILSENRATH And SUDEEP REDDY Long before the Federal Reserve raises short-term interest rates amid an improving economy, it will need to signal to the public that a change is in the works. Central-bank officials are intensifying discussions about how to communicate that when the time comes. For the past year, the Fed has signaled plans to keep interest rates near zero for a long time. Although officials aren't yet ready to change that wording, they are trying to think through a script well in advance for how to walk away from that pledge. The issue will be at the center of discussions at the Fed's meeting next Tuesday. Central-bank officials also are likely to decide at the meeting to end their purchases of $1.25 trillion of mortgage-backed securities by the end of this month, as planned, according to Fed officials. Although the housing market has softened recently, the broader economy appears on track to grow at about a 3% rate in the first quarter, enough to start creating jobs. Futures markets anticipate the Fed will raise its target for the fed funds rateâa rate banks charge each other for overnight loansâto 0.5% from near zero by November or December. "The markets seem prepared for the risks toward tighter policy," Brian Sack, director of the New York Fed's markets group, said in a speech Monday. At some point, the Fed must undertake some delicate wordsmithing in the statement it releases after policy meetings. The current languageâthat officials plan to keep rates "exceptionally low" for "an extended period"âis meant to convey that rates will stay near zero for at least several more months. A change is highly unlikely at next week's meeting. Many officials believe a recovery isn't fully enough entrenched. Inflation is so low that they're under little pressure to act. "I can envision that [the current stance] will continue to be appropriate for quite some period of time," Charles Evans, president of the Chicago Fed, said in an interview Tuesday. Timing depends on the economy. If it weakens or fails to produce jobs, rate increases are off the table. If it heats up, increases could come sooner. The Fed has botched its communications in the past. In 1994, for example, investors were surprised by rate increases, and bond-market turmoil ensued. In 2004, some officials felt the Fed tied itself to increases that were too gradual. Different ideas are being bandied about now. Officials could say rates will stay exceptionally low for "some time," meaning the time for a rate increase is slowly getting closer, or that Fed policy will stay "highly accommodative," meaning rates might rise but not by much. As part of the planning, officials are studying how the Fed performed in 2004, when it shifted from saying rates would stay low for a "considerable period" to saying it would be "patient" before raising rates, to saying rates would rise at a "measured" pace. In addition to debate at official meetings every six weeks, there is a great deal of jockeying ahead of meetings. For example, Fed staff circulate a document, called a blue book, in which officials are shown options for how they might alter communications. [FED] EPA Inflation hawks are agitating to drop the "extended period" words, worried that keeping rates too low for too long will push up prices more than desired. Thomas Hoenig, Kansas City Fed president, dissented at the last meeting because he wanted the words removed. "I am not a big fan of that language," Charles Plosser, Philadelphia Fed president, said in an interview. The words "confine us." The end of mortgage purchases looks more certain. The central bank's program is credited with pushing mortgage rates down by as much as one percentage point, lowering other long-term interest rates and helping the housing sector. Some investors worry mortgage rates could shoot up without the Fed's support. But officials have been comforted by the fact that rates haven't moved up even as they have slowed their buying. The market reaction to a Fed pullback "will actually be a pleasant surprise," said Ajay Rajadhyaksha, Barclays Capital's head of U.S. fixed-income strategy. When the Fed became the dominant buyer of mortgages, big investors such as mutual funds and insurers walked away from the market and purchased Treasury debt instead. Once the Fed stops, Mr. Rajadhyaksha said, there will be pent-up demand from private investors to soften the impact. He expects Treasury and mortgage yields to rise no more than half a percentage point in coming months. Today, yields on 30-year fixed mortgages are around 5%. The Fed plans to gradually reduce its mortgage portfolio. As mortgage-backed securities are paid off by borrowers, it plans to avoid reinvesting the proceeds in new securities. Mr. Sack estimates $200 billion of mortgage-backed securities will be pared from the Fed's portfolio this way through 2011. Officials are debating whether to adopt a similar policy for $140 billion of Treasury securities held by the Fed that mature by 2011.
maybe not doubling or tripling, but here is some crazy action: http://finance.yahoo.com/q?s=AIG,C,FRE,FNM&d=s
The fact that he is not a big fan doesnt mean he wouldn't vote for it, and I mean this seriously. These guys love to talk all kinds of nonsense when they are out of the FOMC rotation, as soon as they sit down they are back to sanity. Bullard doesnt seem to be about to dissent any time soon
Not surprising to see your old bud Greenlaw in part of the big job increase crowd ... The U.S. may add as many as 300,000 jobs in March, the most in four years, setting the stage for what some economists say will be sustained employment gains. Better weather, hiring of temporary government workers and a growing economy may bring the biggest job increases since March 2006, said David Greenlaw, chief fixed-income economist at Morgan Stanley in New York. The rise would be the second since President Barack Obama took office in January 2009. February payrolls dropped by 36,000, the Labor Department reported last week, depressed in part by East Coast snowstorms that closed many businesses. Excluding the effects of the weather and the hiring of government workers to conduct the 2010 Census, payrolls would have climbed by about 100,000, Greenlaw said today in a Bloomberg Radio interview. âIf you get a plus 100,000 number again in March, then youâd be talking about a headline reading of a little bit better than 300,000 when you factor in the weather bounce-back and the census effect,â he said.
From dailyspeculations Stefan Jovanovich: "The gentleman from Omaha has an easy standard of comparison. If you apply the average tax rate of the S&P companies to Berkshire's past 20 years' earnings, the company's book value drops by roughly 1/3rd. Never mind being a specialist in a bull market; in my next life I want to come back as the owner of an insurance company who is on a first-name basis with the Secretary of the Treasury." His compounded rate I would assume drops to levels more consistent with the average US corporation. His compounded book value growth is about 20%, I dont know what would that be if you remove his tax advantage. IIRC Buffett mentions that average long-run book value growth of the average US corporation is 13%, by netting out his tax advantage is probably not very far away from that. This suggests Buffett outperformance mostly didnt come from stock picking(something he is certaintly very good at) but from using a superior tax structure and free leverage through an insurance company
The bloomberg 'extended period' article might hold some hawkish implications but at least it sends the Greenlaw theory of 'hikes with the statement in' to the garbage can http://www.bloomberg.com/apps/news?pid=20601068&sid=aFU6r1vdqIb8 "The Federal Reserveâs pledge to keep interest rates close to zero for an âextended periodâ has come under criticism from policy makers who say itâs restricting their room to maneuver as the economy recovers" There isn't going to be any hikes with that statement in pretty much
So it appears the movies will now have a futures market based on box office results http://www.nytimes.com/2010/03/11/business/media/11futures.html?ref=global That sounds fun but honestly I dont have a clue how one would go about predicting these things. I find tennis sports betting difficult enough and I both play and follow the tour results, there is a lot of randomness involved. Perhaps one tatic is betting on movies who have a potential 'black swan' of being the next Avatar due a certain movie characteristic that the market is not aware, you lose many times in a row but when you pick an Avatar you get your money back plus profit
An interesting fact "More than 40 per cent of global GDP now resides in jurisdictions (overwhelmingly in the advanced economies) running fiscal deficits of 10 per cent of GDP or more. For much of the past 30 years, this fluctuated in the 0-5 per cent range and was dominated by emerging economies." http://us.ft.com/ftgateway/superpage.ft?news_id=fto031020101453310596