There is a phrase that’s often used in the UK when somebody states the obvious, the phrase has an expletive in it so we can’t post it in full. It’s a reference to the superb detective skills of the fictional character Sherlock Holmes, we’re sure you can guess the gap in the three word phrase; “no, (blank) Sherlock!” The phrase came to mind when considering Barack Obama’s claim that USA economic recovery was slow.
Compiling a full record of the monies the USA has spent in order to stimulate their economy post the 2008 crisis is tricky, there were many bailouts of private companies related to the banking crisis that were secretive, after and during the initial TARP 1 and TARP 2 bailouts. Then there’s the rounds of quantitative easing, which are easier to calculate given that they’re recorded. But then we have a budget deficit that runs at circa $150 bn per month and the open ended QE to infinity (or until unemployment reaches 6.5%) and the national debt that’s increased by approx a trillion dollars a year.
But what is without a doubt, other than equities reaching recent new highs, the ‘recovery’ is extremely weak, even without accounting for the stimulus from all directions. Taking all the stimulus into consideration the recovery is quite frankly pathetic.
Anecdotal evidence suggests that the USA economy has bought two dollars of growth for every sixteen dollars of debt. A point missed by Obama in his speech in the Whitehouse Rose Garden. Oh and unemployment, despite the contentions otherwise, isn’t shrinking, unless (like last week) the authorities casually lose two states’ data due to a computer upgrade that is. Quite useful when you need obfuscation of the real numbers.
Barack Obama;
[quote]“If you add it all up, over the past 3.5 years, our economy is looking up. What this means is we’ve cleared away the rubble from the financial crisis and begun to lay a new foundation for growth. And we should be proud of that, and on this five year anniversary we should take note of how far we’ve come.”[/quote]
[quote]”But, we are not yet where we want to be. We need to grow faster, we need better paying jobs, we need more broad-based prosperity, we need more ladders for people who are poor, but want to get into the middle class.”[/quote]
For those in the USA who’ve lost their jobs, or are struggling working 2-3 jobs to keep their heads above water since the crisis, they must have been delighted to read the news that the 400 most wealthy in the USA have increased their gross worth by circa $500 bn over the past year, up to a combined $2.2 trillion. Trickle up wealth laid bare for all to see, whilst the losses have continually been socialised onto the masses in the from of national debts.
Greek schoolteachers greeted by tear gas during strikes
Greek secondary school teachers launched a five-day strike on Monday morning, in protest at government plans to cut thousands of jobs, and transfer staff to its ‘mobility scheme’, where employees are forced to take a new job or laid off. According to local reports, Greek police fired teargas to disperse school guards who tried to enter the Administrative Reforms ministry in central Athens this morning, as the walkout got underway.
European shares hit a five year high with the German DAX reaching an all time high
The DAX closed up 1.22%, the FTSE up 0.59%, the CAC by 0.92% with the Syrian conflict sensitive Istanbul exchange closing up 3.66%, the most of any European equity market on the day. The DJIA closed up 0.77% the SPX closed up 0.57% and the NASDAQ closed down 0.12%.
Naturally, with Syrian conflict concerns receding, oil fell sharply. ICE WTI crude fell by 1.76% to $106.31 per barrel, NYMEX natural was up 1.66% at $3.74 per therm. COMEX gold was up 0.60% at $1317.70, silver on COMEX was up 1.33% at $22.01 per ounce.
Looking at equity index futures the DJIA equity index future is up 0.78%, the SPX up 0.55% and the NASDAQ equity index future is currently down at the time of writing by 0.33%. European equity indices are all positive suggesting that several new highs may be repeated during Tuesday’s trading sessions.
Forex focus
The dollar fell 0.3 percent to $1.3334 per euro after dropping to $1.3386, the weakest level seen since Aug 28tb. The U.S. currency declined 0.3 percent to 99.08 yen after depreciating to 98.46 yen, the least since Sept 2nd. The euro was little changed at 132.11 yen.
The Aussie climbed 0.8 percent to 93.18 U.S. cents after rising to the strongest level since June 19th. The kiwi rallied 0.5 percent to 81.70 cents.
The dollar has depreciated 0.6 percent in the past week, the worst performer of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen rose 0.9 percent the euro was little changed.
The dollar fell to a one-month low as the exit of former Treasury Secretary Lawrence Summers from the race to lead the Federal Reserve damped bets for an early end to expansionary monetary policy.
The Bloomberg U.S. Dollar Index, tracking the performance of a basket of 10 leading global currencies versus the dollar, fell 0.3 percent to 1,020.97 late in the New York session. It touched the lowest level since Aug 12th.
Sterling climbed 0.4 percent to $1.5935 Late in the London session after rising to $1.5963, the highest level seen since Jan 18th. Sterling was little changed at 83.83 pence per euro after appreciating to 83.57 pence on Sept 13th, the strongest level since Jan 18th. Sterling has risen 6.9 percent in the past six months, the best performer amongst the ten developed-nation currencies tracked by the Bloomberg Correlation-Weighted Indexes. The dollar has gained 0.8 percent and the euro advanced 3.2 percent.
Canada’s currency appreciated 0.3 percent to C$1.0324 per U.S. dollar late in New York after earlier touching C$1.0283, the strongest level seen since Aug 12th. Oil, Canada’s biggest export, slid 1.9 percent to $106.16 a barrel in New York. The loonie has fallen by 2.6 percent in the past year versus nine other developed-nation currencies tracked by the Bloomberg Correlation-Weighted Index, making it the third-worst performer. The yen lost 20 percent, and the Australian dollar slipped 8.9 percent. The U.S. dollar rose 3.8 percent.
Fundamental policy decisions and high impact news events that may affect sentiment on Tuesday September 17th
Inflation figures take centre stage as they’re published in the UK on Tuesday morning, retail inflation is expected to up a tick to 3.2%, whilst CPI is expected to fall to 2.7% from 2.8%.
The German ZEW index is published in the morning European session, the expectations is that it will rise to 45.3 with the sentiment index rising to 47.2.
Manufacturing sales figures are published in Canada, the expectation is for a rise by 0.6% from last month’s fall of -0.5%. Core CPI is published in the USA, with the monthly rise expected to be capped at 0.1%.
