ECONOMY: the likely scenario
macroeonomico The debate over the U.S. revolves around two schools of thought.
The first, supported by the Fed and major markets, is convinced that the slowdown of GDP in the first quarter is due to the inventory cycle and the impact of one-off real estate crisis, then intended to return immediately with the new growth above the 2% for the remainder of the year.
The second, carried out by many scholars, believes that the worst of the housing crisis is yet to come, and above that have yet to be felt the effects on consumption.
Personally, as written many times, I think that both schools did not seize the momentous appearance in place: the growth increasingly depends on the super financialization economy, the latter may therefore be able to contain the housing crisis as it finds the first school of thought, but the enormous cost of increasing long-term credit excesses and global imbalances. And if it is true that the indebtedness of households, businesses and government has become too high to continue to expand to sustain growth, it is also true that given the incredible expansion of the financial sector (banks and non banks) mega whose income contributes to the keeping of national income, especially consumers. No coincidence that we are witnessing a boom town for mergers and acquisitions, stock buybacks, special dividends, etc., which corresponds to a boom town in the issue of new debt in the financial sector thanks to the leverage that supports the increasingly aggressive market liquidity during difficult times (like the current mortgage).
To be more clear: when you make a purchase with the issuance of new debt is added liquidity to the new system, some of which ends up with sellers who then use it to buy other securities, in part, it ends the same buyers through the now popular in carrying out special dividends, and partly still going to increase the income of the myriad of financial intermediaries involved in the process. It is no accident that any notice of the newly acquired stock from rising, causing automatically an increase in collateral values \u200b\u200bas a guarantee for new debt, in a self-sustaining process and seemingly without end.
These are real problems, not debate recession recession-no, which also ignores the risk overall inflation, now in the official accounts to 4% as the GDP deflator.
From the perspective of the economy I would say that everything is very clear when, as rarely before.
China and Japan do not change monetary policy, with the two main consequences of which remain intact:
1) the global liquidity continues to grow;
2) partial inflation (of manufactured goods imported from China) remains low, allowing banks power of holding the real interest rates (with some increase in the facade, here and there, but no actual monetary restrictions).
queso In context, the global economy will continue to financialized increasingly meet the local or sectoral crises with the growing global credit megabolla (and a thousand blue bubbles that arise).
course will continue to grow slowly but surely the total inflation and the global trade imbalance, which provided an income rationem dramatic ending, but it is now clear that it is difficult to see in 2007.
latter was started in the perception of the market, with the idea that the U.S. housing crisis would lead the Fed to lower the rates, thus, bond yields had fallen to 4.5% in the decade, reversing the curve, the dollar had lost more than 4% as the overall index, the commodity and stock exchanges were up, with gold up to $ 700, reabsorbing quickly hiccup on 27 February sparked by fears that the Asian (China, Japan) to change policy: fear proved unfounded.
From early May we are convinced that the Fed will hold rates firm throughout the year as bond yields have worked around the tenth and moved up close to 5%, flattening the curve, the dollar has regained third the previous fall, the raw materials are a little reversed with gold up to 650, and the stock markets have continued their march anyway, because being blown every excuse to go (because they thought the first cut in rates now because they think that the economy is fine, etc.). .
These adjustments started a month ago, could continue for a while, maybe go over the decade to 5%, the dollar recovered a little bit more, and so on, but basically there is no reason why we go beyond the understanding as mentioned above the ' immobility of the de facto global central banks, especially that of Asia.
the near future so the forecast is simple: we will stay with
yields a slight upward trend at the turn of 5%, with the dollar in the lateral band between 81 and 84 as a general index, while commodity and stock exchanges, despite ups and downs, continue their inflated.
Any fluctuations, as well as their size, two variables depend on the usual "stupid" they look at the markets:
1) partial inflation, excluding oil and food: should surprise to the upside, then the markets will perceive the risk of rising interest rates (in this case the rise in yields and the dollar could go beyond the limits mentioned above, while stock and commodities will suffer a correction).
2) the economic growth were to surprise on the downside, then return the current expectations of lower rates and different prices may return to the levels at the end of April.
But I think that neither the one nor the other variable, for the coming months will present significant surprises, so I expect the laterality cited above, despite the inevitable fluctuations (without which the rest of the markets out of business).
Obviously, any geopolitical surprises are always possible and, above all, to the extent that will impact the oil may cause new scenarios and still more acute phases of volatility, but when you do not need think about.
macroeonomico The debate over the U.S. revolves around two schools of thought.
The first, supported by the Fed and major markets, is convinced that the slowdown of GDP in the first quarter is due to the inventory cycle and the impact of one-off real estate crisis, then intended to return immediately with the new growth above the 2% for the remainder of the year.
The second, carried out by many scholars, believes that the worst of the housing crisis is yet to come, and above that have yet to be felt the effects on consumption.
Personally, as written many times, I think that both schools did not seize the momentous appearance in place: the growth increasingly depends on the super financialization economy, the latter may therefore be able to contain the housing crisis as it finds the first school of thought, but the enormous cost of increasing long-term credit excesses and global imbalances. And if it is true that the indebtedness of households, businesses and government has become too high to continue to expand to sustain growth, it is also true that given the incredible expansion of the financial sector (banks and non banks) mega whose income contributes to the keeping of national income, especially consumers. No coincidence that we are witnessing a boom town for mergers and acquisitions, stock buybacks, special dividends, etc., which corresponds to a boom town in the issue of new debt in the financial sector thanks to the leverage that supports the increasingly aggressive market liquidity during difficult times (like the current mortgage).
To be more clear: when you make a purchase with the issuance of new debt is added liquidity to the new system, some of which ends up with sellers who then use it to buy other securities, in part, it ends the same buyers through the now popular in carrying out special dividends, and partly still going to increase the income of the myriad of financial intermediaries involved in the process. It is no accident that any notice of the newly acquired stock from rising, causing automatically an increase in collateral values \u200b\u200bas a guarantee for new debt, in a self-sustaining process and seemingly without end.
These are real problems, not debate recession recession-no, which also ignores the risk overall inflation, now in the official accounts to 4% as the GDP deflator.
From the perspective of the economy I would say that everything is very clear when, as rarely before.
China and Japan do not change monetary policy, with the two main consequences of which remain intact:
1) the global liquidity continues to grow;
2) partial inflation (of manufactured goods imported from China) remains low, allowing banks power of holding the real interest rates (with some increase in the facade, here and there, but no actual monetary restrictions).
queso In context, the global economy will continue to financialized increasingly meet the local or sectoral crises with the growing global credit megabolla (and a thousand blue bubbles that arise).
course will continue to grow slowly but surely the total inflation and the global trade imbalance, which provided an income rationem dramatic ending, but it is now clear that it is difficult to see in 2007.
latter was started in the perception of the market, with the idea that the U.S. housing crisis would lead the Fed to lower the rates, thus, bond yields had fallen to 4.5% in the decade, reversing the curve, the dollar had lost more than 4% as the overall index, the commodity and stock exchanges were up, with gold up to $ 700, reabsorbing quickly hiccup on 27 February sparked by fears that the Asian (China, Japan) to change policy: fear proved unfounded.
From early May we are convinced that the Fed will hold rates firm throughout the year as bond yields have worked around the tenth and moved up close to 5%, flattening the curve, the dollar has regained third the previous fall, the raw materials are a little reversed with gold up to 650, and the stock markets have continued their march anyway, because being blown every excuse to go (because they thought the first cut in rates now because they think that the economy is fine, etc.). .
These adjustments started a month ago, could continue for a while, maybe go over the decade to 5%, the dollar recovered a little bit more, and so on, but basically there is no reason why we go beyond the understanding as mentioned above the ' immobility of the de facto global central banks, especially that of Asia.
the near future so the forecast is simple: we will stay with
yields a slight upward trend at the turn of 5%, with the dollar in the lateral band between 81 and 84 as a general index, while commodity and stock exchanges, despite ups and downs, continue their inflated.
Any fluctuations, as well as their size, two variables depend on the usual "stupid" they look at the markets:
1) partial inflation, excluding oil and food: should surprise to the upside, then the markets will perceive the risk of rising interest rates (in this case the rise in yields and the dollar could go beyond the limits mentioned above, while stock and commodities will suffer a correction).
2) the economic growth were to surprise on the downside, then return the current expectations of lower rates and different prices may return to the levels at the end of April.
But I think that neither the one nor the other variable, for the coming months will present significant surprises, so I expect the laterality cited above, despite the inevitable fluctuations (without which the rest of the markets out of business).
Obviously, any geopolitical surprises are always possible and, above all, to the extent that will impact the oil may cause new scenarios and still more acute phases of volatility, but when you do not need think about.
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