Blog

16 Dec 2005

Posted at 15:56h in The Friday Brief by
In a huge turnout, 11 million Iraqis cast their ballots yesterday in their parliamentary elections, which, if the estimate holds, would put the overall turnout at more than 70%.  The main story was the lack of violence.  The Wall Street Journal notes that the election marks a significant milestone in Iraqi politics since the fall of Saddam Hussein's regime.  It is the first political event deemed legitimate by a large swath of Iraqis, including Sunni Arabs who had shunned the political process, the Journal notes.

09 Dec 2005

Posted at 16:01h in The Friday Brief by
The asset category leader for the fourth quarter so far, aside from Internet stocks, is gold.  The metal is up almost 13%, quarter to date.  Traditionally a move like this signaled bad news – too much liquidity leading to inflation, or falling currencies, or recession.  But, not this time.  Inflation remains tame, the dollar is actually rising with gold, and the economy continues strong. 

02 Dec 2005

Posted at 16:03h in The Friday Brief by
The economy continues to expand, in spite of hurricanes, high energy costs, and Fed Funds rate increases.  The weeks’s crowded raft of economic reports was kicked off by housing.  The reports were mixed, but generally point to a slight cooling.  The National Association of Realtors reported Monday that sales of existing homes fell 2.7% in October to a seasonally adjusted annual rate of 7.09 million.  Houses stay on the market longer as the inventory of homes on the market rose to a 4.9 months' supply in October, from September's 4.6 months' supply.  Meanwhile, housing affordability dropped as the median sales price rose 16.6% on an annual basis to $218,000.  That was the biggest jump in 26 years. 

18 Nov 2005

Posted at 16:06h in The Friday Brief by
There’s a great deal of talk these days about a lack of trends and market leadership.  Most recently, homebuilding and real estate have driven the market, along with energy.  With interest rates rising and energy prices declining, the likelihood of these industries continuing their out-performance near-term is doubtful.  Additional leadership has come from investment banks and brokers as their earnings have increased on the rise of mergers and acquisitions.  But this activity is a bi-product of excessive capital and compelling market values.  Better allocation of capital and increased productivity will improve profits to a degree, but it will not significantly drive GDP.  Where’s the next big wave of real growth coming from?

11 Nov 2005

Posted at 16:18h in The Friday Brief by
November 11, is the anniversary of the Armistice which was signed in theForest of Compiegne, in Île-de-France by the Allies and the Germans in 1918, ending the four-year conflict of World War I.  The War officially ended on June 28, 1919, with the signing of the Treaty of Versailles, but the actual fighting between the Allies and the Germans ended seven months earlier with an armistice, which went into effect on the eleventh hour of the eleventh day of the eleventh month in 1918.  In November of 1919, President Woodrow Wilson issued his Armistice Day proclamation. 

04 Nov 2005

Posted at 16:20h in The Friday Brief by
Indications are that a slowdown is in the cards for this quarter and for the first quarter of next year, but that does not mean recession must follow, as some more pessimistic economists suggest.  Indeed there are many reasons to expect a significant pickup.  Productivity, the driver of this powerful economy remains alive and well.  Productivity not only keeps our economy growing without inflation, it is vital for the U.S.to remain competitive in an increasingly competitive global economy.  Yesterday, the government reported that Non-farm Productivity was up a whopping 4.1% for the third quarter and well ahead of last quarter’s 2.1%.  The increase more than offset the 3.6% increase in hourly compensation, so unit labor costs fell 0.5% during the quarter.  

28 Oct 2005

Posted at 16:26h in The Friday Brief by
The rear-view mirror shows the economy continued to expand in the third quarter.  US Gross Domestic Product increased to a 3.8% annual rate, more than predicted, despite higher energy prices, rising interest rates, and two devastating hurricanes.  Consumer purchases of automobiles and slower growth in imports contributed to the increase.  Housing was also a significant contributor, but it is slowing.  Residential fixed investment grew 8.9% in the third quarter, down from 10.9% in the previous quarter.  Federal government spending went up 7.7% in the third quarter, significantly higher than the 2.4% growth in each of the previous two quarters.  

23 Sep 2005

Posted at 16:36h in The Friday Brief by
If they were considering a pause in their relentless rate increases the Federal Reserve Governors missed a great opportunity to both assess the effectiveness of past increases as well as to show a little social empathy.  They called Hurricane Katrina's economic disruption only temporary and made no mention of the potential economic cost of Hurricane Rita as it raced toward the heart of the nation’s oil, gas, and gasoline production facilities.  Instead of pausing they raised the federal funds rate by a quarter percentage point to 3.75%.  The increase marked the 11th time since June 2004 and the longest sustained tightening campaign since 1977-79, when the Fed was fighting runaway inflation.

09 Sep 2005

Posted at 16:37h in The Friday Brief by
Inflation talk is picking up as Fed governors and economists speak these days.  This week, the Labor Department trimmed its estimate for non-farm business productivity growth in the second quarter to a 1.8% annual rate from 2.2%.  That’s down from a 3.2% pace in the first quarter.  The Labor Department also said labor costs rose more sharply in the second quarter than it first estimated, and that labor costs rose in the year ending in June at the fastest pace in five years.  Labor costs are the biggest generator of consumer inflation.