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Housing is economy's elephant in the room

By Lou Barnes, Friday, February 3, 2012.

<a href=http://www.shutterstock.com/gallery-70890p1.html>Elephant image</a> via Shutterstock.com.

In a double surprise, the job market may at last have begun to revive, but the double-the-forecast, 243,000-job surge in January has done little harm to mortgages. We are still near 4 percent; with 10-year Treasury notes up from 1.82 percent but holding nicely at 1.95 percent.

Ordinarily a payroll jump like this would have killed us, especially in combination with strong results in the two Institute for Supply Management surveys for January: manufacturing to 54.1 from 53.1 in December, and the service sector way up to 56.8 from 52.6 last month. more...

Fed shocker: extended interest-rate policy

By Lou Barnes, Friday, January 27, 2012.

<a href="http://www.shutterstock.com/gallery-707365p1.html" target=blank>House and interest rates image</a> via Shutterstock.com.

" 'Stranger and stranger,' said Alice," and so it was this week at the Federal Reserve, in Europe, and in President Obama's State of the Union address.

Some brave souls thought the Fed would surprise by rolling out "QE3," a third round of quantitative easing, and begin to buy more mortgage-backed securities, driving mortgage rates down. Everyone expected a pair of meaningless inside-Fed jokes (more transparency, and an inflation target), and we got those. more...

Don't believe the good news in housing

By Lou Barnes, Friday, January 20, 2012.

<a href="http://www.shutterstock.com/gallery-98072p1.html">Real estate news image</a> via Shutterstock.com.

More positive U.S. data and relaxation of European frights have combined for higher interest rates and support for Wall Street's warm-fuzzy machine.

One week ago, downgraded credit in Europe and another failure in Greek debt negotiations had taken the 10-year Treasury note to 1.85 percent and big-equity refinancings a hair below 4 percent. Today, nothing is resolved in Europe but nothing is falling, either, so 10-year Treasurys are back to 2.02 percent and even a 20 percent-down, low-fee mortgage is near 4.25 percent. Adios, refis. more...

European endgame is at hand

By Lou Barnes, Friday, January 13, 2012.

Image via <a href="http://www.shutterstock.com/gallery-69468p1.html">Kostyantyn Ivanyshen </a>/<a href="http://www.shutterstock.com">Shutterstock</a>

The one bright spot in the world is the resilience of the U.S. economy, not re-entering the recession so widely forecast last fall, and so far impervious to events in Europe.

However, the failure of leadership in Europe, and here -- hell, everywhere -- seems to be coming together in another chaotic moment. There is no dominant thread to events, instead a tangle rather like the first time the kids helped to take down the Christmas lights. Find the end of one string, then another ... more...

Where have all the down payments gone?

By Lou Barnes, Friday, January 6, 2012.

<a href="http://www.shutterstock.com/gallery-518080p1.html">Piggy bank image</a> via Shutterstock.com.

It is an election year. In addition to the distorted economic "analysis" offered by the ever-cheerful stock market channels, CNBC and Bloomberg, political interests will add their garbled gabble all year long.

Today's reports of 200,000 new jobs in December and unemployment down from 8.7 percent to 8.5 percent were greeted with happy bugles from the usual suspects. Ignore that, and watch the markets themselves. more...

2012 is make or break

By Lou Barnes, Thursday, December 29, 2011.

Image via <a href="http://www.shutterstock.com/gallery-6748p1.html">charles taylor</a>/<a href="http://www.shutterstock.com">Shutterstock</a>

A new year begins next week, and it is time for my annual dodge. Peter Drucker, one of the world's few worthwhile business theorists: "Nobody can predict the future. The idea is to have a good grasp of the present."

This year, no flinching. Why such foolish courage? In more than one econo-political arena we have dithered and fiddled so long that something is going to happen, and all I have to do is guess what. In order from easiest to hardest ... more...

U.S. economy caught in 'debt and austerity trap'

By Lou Barnes, Thursday, December 22, 2011.

<a href="http://www.shutterstock.com/gallery-69182p1.html">Money trap image</a> via Shutterstock.com.

There's very little real news this week, with markets lurching to no account, and trading so thin that the landing of a snowflake avalanched 300 points of Dow. Uphill.

The issue at hand: the debt and austerity trap. We must stop borrowing, but to stop we must cut spending or raise revenue, or both. If we do that, and our economy -- or the ones overseas -- slow down, then we will have less tax revenue and more need, or wishes, for spending. more...

Europe's financial follies echoed by US shell game

By Lou Barnes, Friday, December 16, 2011.

Flickr/<a href="http://www.flickr.com/photos/theodorescott/4516759806/" target=blank>Theodore Scott</a>

Optimism about the U.S. economy has actually crowded Europe off-screen from time to time this week.

The center of U.S. happy-talk: an abrupt decline in new filings for unemployment insurance. Stuck near 400,000 each week for 18 months, last week's figure dropped to 366,000. more...

Bid to save European Union: more smoke and mirrors

By Lou Barnes, Saturday, December 10, 2011.

<a href="http://www.shutterstock.com/gallery-78671p1.html">Smoking candle image</a> via Shutterstock.

The newest European maneuvers have triggered a stock rally, but credit markets are not buying the deal. The small upward pressure on U.S. yields is preparatory to a big borrowing binge by the Treasury next week, not anything fundamental.

Through the fog of Europe, dominating and concealing everything, one pattern is clear: The U.S. economy is doing better than forecast 90 days ago, and the rest of the world is in some stage of sinking. more...

Europe's economic 'charade' may be exhausted

By Lou Barnes, Friday, December 2, 2011.

<a href="http://www.shutterstock.com/gallery-287881p1.html">Euro coins image</a> via Shutterstock.

Everybody struggles now to find guideposts in the thicket of new economic information. Two old ideas may help: more...

First, the time-sense of humanity is more calibrated to getting the bear out of the cave than musing about why bears like caves.
Second, a version of frog in hot water -- we tend not to notice the gradual onset of lunacy, grasping the insanity only in retrospect.

Time to ditch the euro

By Lou Barnes, Wednesday, November 23, 2011.

Image <a href="http://www.shutterstock.com/gallery-55841p1.html">ARTSILENSEcom </a>/<a href="http://www.shutterstock.com/">Shutterstock</a>

It is Thanksgiving here, not over there, but given the sudden silence over there you'd think they were the ones on holiday.

Here we got the mild disappointment of third-quarter GDP revised down from 2.5 percent to 2 percent. Stock market Pollyannas are already spinning: Since inventories were not rebuilt in the third quarter, contributing to the downward revision, the fourth quarter is going to be hot, hot, hot! more...

Jury is in: Recovery depends on real estate

By Lou Barnes, Friday, November 18, 2011.

<a href="http://www.shutterstock.com/gallery-2300p1.html">Rui Vale De Sousa</a>/<a href="http://www.shutterstock.com/">Shutterstock.com</a>

The top story is still Europe, but a bore except for the entertaining incompetence on parade. Dr. Johnson maintained that nothing so concentrates the mind as the prospect of one's hanging in the morning, but that concept has eluded Europe.

All bond markets there fell apart this week, saved from collapse only by the purchases of the European Central Bank, which said it is forbidden by treaty to do so, won't do, can't do, but is doing. All other paths to euro status quo salvation are dead. more...

European bailout doesn't pencil out

By Lou Barnes, Friday, November 11, 2011.

A stone gargoyle has a panoramic view of Paris from its perch on the Cathedral of Notre Dame. Image via <a href="http://www.shutterstock.com/gallery-54190p1.html">Matt Ragan</a>/<a href="http://www.shutterstock.com">Shutterstock</a>.

Events this week are more "Ripley's Believe It or Not," or "Saturday Night Live," than financial market proceedings.

Italian 10-year bond yields screamed from mid-sixes to 7.48 percent on Wednesday, collapsing U.S. and European stocks. Then somebody bought a lot of those bonds to put out the fire, or gave orders to banks to stop selling, yield back to 6.89 percent. The European Central Bank says it is forbidden to buy sovereign debt to bail out nations, but the ECB is the last hope to buy significant time. And, on a continent in which everyone says one thing and does another, buying time is all. more...

No external salvation for Europe

By Lou Barnes, Friday, November 4, 2011.

Flickr photo by <a href="http://www.flickr.com/photos/studiofour/6226930086/">BlaisOne</a>

U.S. markets have begun to fibrillate, pumping wildly and pointlessly, unable to measure prospects for slow-slide recession here, and Europe confounding everyone. In the last five weeks, the S&P 500 has traded from 1,097 to 1,292, caving to 1,244 now; the 10-year T-note in that time 1.75 percent to 2.37 percent, today back to 2.04 percent. The mortgage centerline is 4.25 percent, a huge spread to 10-year T-notes, which may soon draw the Fed's attention.

The ISM surveys (old "purchasing managers") arrived at 50.8 for manufacturing in October, teetering at break-even and down from 52.1; the service sector 52.9 unchanged. Rather more ominous, the European equivalent dumped to 43, clear recession, and China is now below 50. August and September U.S. payroll gains were revised up by about half, but far below levels necessary to absorb the unemployed. October's 80,000 gain is statistically undetectable. more...

Consumer spending debunks new recession theories

By Lou Barnes, Friday, October 28, 2011.

<a href="http://www.shutterstock.com/gallery-540784p1.html" target=blank>Lightspring</a>/<a href="http://www.shutterstock.com" target=blank>Shutterstock</a>

On the same morning the newest Euro-can clunked along came news that American third-quarter GDP jumped 2.5 percent -- not far above forecast, but the shape of the gain was a stunning surprise. The strength was in the consumer, a 2.4 percent increase in household spending. Common distortions were absent: no weird upside-downs in trade accounts, and inventories if anything understated gross domestic product. Inflation also waned.

The Euro-can got all the ink, but in any cross-weaving flow of economic data, the most important thread is always U.S. data. The report distributed concussions evenly among all of those who had bet on a new recession; and banged an especially embarrassing knot on the head of the respected Economic Cycle Research Institute. The ECRI had never in its history false-called a recession; two weeks ago it said that the U.S. was either rapidly falling into recession or was already in one. more...

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