Dollars and Jens
Friday, July 28, 2006
GDP report
The GDP report came out this morning, and it's time to criticize financial reporting, but this time on grammatical grounds:
The 2.5 percent pace was the slowest [sic] since a 1.8 percent growth rate in final quarter of 2005, when the economy was suffering fallout from the devastating Gulf Coast hurricanes.
Of course, what they mean is that this pace was the slower since the final quarter of 2005, there only having been one intervening.

If you want something done right, do it yourself. They taught me in school to go to the original document (pdf); my favorite part is page 13. Note that residential fixed investment, which was slightly lower the previous two quarters, tugged down this quarter's number by 0.4 percentage points. Don't expect that to get better in any sustained way for a while. Also always of interest to me is how much of this is due to inventory, and the number this time happens exactly to offset residential fixed investment (i.e. it added 0.4 percentage points to the headline number); that's not enough to really make me sit up.

Thursday, July 27, 2006
benign cycles

NEW YORK ( -- Mortgage rates retreated from a two-year high this week, brought down by signs that the economy is cooling, Freddie Mac reported Thursday.
My belief that no wide-spread housing crash is imminent is tied in with my belief that a slowdown will have a significant impact on the economy. Insofar as that connection is tight, a slowing economy keeps mortgage rates in check, which keeps demand from sagging too much.

Tuesday, July 18, 2006
calendar effects
Nail this one to the counter.
The third quarter is typically the worst because of what might be called "the Hamptons effect," meaning, hey, it's summer, and bulls would rather be on the beach than making big changes to their portfolios.
Because, you know, bulls like going to the beach, but bears like skiing, and take their vacations at other times of the year.
Earnings may not be much help, either. The analysts consulted for this story seem to agree that overall S&P 500 earnings growth in the second quarter through the rest of 2006 is likely to either meet or miss forecasts.
Are these the same analysts who make those forecasts? Just wondering.

The article may have worthwhile content, but it's primarily, as with much financial journalism, for entertainment purposes only.

Friday, July 14, 2006
The lowest the Nasdaq closed since May of 2005 was on Oct 12, at 2,037.47.

Until today. It closed today at 2,037.35, though it was never as low today as it was intraday last October.

Bank of Japan (continued)
The Bank of Japan has raised its target interest rate to .25%.

Thursday, July 13, 2006
TIPS auction
Description:          2 1/2 % TIPS D-2016
Term: 10-Year
High Yield: 2.550 %
Price: 99.593010
Allotted at High: 88.43 %
Accrued Interest: $ 0.13591 per $1,000
Total Tendered**: 17,451,670
Total Accepted**: 10,588,254
Issue Date: 07/17/2006
Dated Date: 07/15/2006
Original Issue Date: N/A
Maturity Date: 07/15/2016
CUSIP: 912828FL9

**In thousands

Tuesday, July 11, 2006
Bank of Japan
The Bank of Japan's meeting is Thursday and Friday; if it doesn't run late, the announcement of the new interest rate policy is expected around 2AM Friday morning, Eastern Time.

I may be just the sort of nerd to stay up for that.

Wednesday, July 05, 2006
markets and jobs
There was some attempt to explain today's market moves in terms of Korea's missile tests, but I would tend to expect bonds to benefit from that; bonds tanked. I would guess most of the markets were paying more attention to Korea than to a strong privately constructed jobs number that suggests a strong number on Friday and a higher chance of inflation and/or more federal funds hikes; bonds markets may well have been paying more attention to the latter, though.

Of course, there's a significant just-so quality to any of this.

Tuesday, July 04, 2006
Japanese interest rates
The Japanese central bank had flooded the banking system with liquidity, and has been targetting 0% interest rates for a long time. It has been removing the excess liquidity since March or so, but keeping the 0% target up to this point there's a good chance that will change next week.

Some Japanese politicians are openly opposing such a hike, and there are historical reasons for anxiety; the bank raised rates a few years ago when the economy gave a head fake, and then promptly fell back into deflation.

If you make continuity assumptions, you would suppose the ideal time to raise interest rates would come when neither hiking them nor standing pat would appear obviously wrong, and that seems to be the case now. Inflation is positive, but quite low, and the economy strong right now; I'm inclined to agree with the bank that negative real interest rates aren't called for right now, but I'm sure Koizumi has been following the Japanese economy more closely than I have.

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