Karim writes:

  • ABC survey improved by 2pts this week, and 5pts over past 2 weeks; Still in range of past 2yrs.
  • MBA refi index up 17.1% this week

New Purchase index down a tad but remains reasonably flat after correcting when the home buying credit expired.

Yesterday, Minny Fed President Kocherlakota talked about last week’s FOMC:

“The FOMC’s decision has had a larger impact on financial markets than I would have anticipated. My own interpretation is that the FOMC action led investors to believe that the economic situation in the United States was worse than they, the investors, had imagined. In my view, this reaction is unwarranted. I would say that there is no new information about the current state of the economy to be learned from the FOMC’s actions or its statement.”

Agreed. Q2 earnings good with Q2 gdp probably around 1%. Q3 GDP estimates still around 2.5% should be good further support earnings.

Modest growth not enough to bring down unemployment for a while, good for stocks however.

This was my interpretation but nice to hear an FOMC member say so.

And this from page 1 of today’s FT:

Call centre workers are becoming as cheap to hire in the US as they are in India, according to the head of the country’s largest business process outsourcing company.


All above reasonably positive news…..

Yes, for stocks.
But not if you are a call center worker, or anyone else looking for a job…

8 Responses

  1. Call centre workers are becoming as cheap to hire in the US as they are in India, according to the head of the country’s largest business process outsourcing company.

    The great leveling at work as global labor arbitrage proceeds apace as US wages drop and emerging nation wages rise in the march toward global equilibrium. It’s a good thing in the long run but in the short run, it will cause economic dislocations and political volatility in the developed countries.

  2. Andy Xie:

    Yet in today’s globalized world, companies don’t need to expand within the U.S. in order to meet stimulated U.S. demand. They can expand their facilities in other countries, say China, in order to meet stimulated American demand. Thus American stimulus doesn’t create a sustainable cycle of economic expansion within the U.S. as it used to — it creates jobs in places like China rather!

    Read more: http://www.businessinsider.com/american-stimulus-jobs-in-china-andy-xie-2010-8#ixzz0wyEDw6OW

    1. Duh.

      This is why the world (and the US in particular for those of us living here) need to wake up and realize that we are now operating in a global economy and that the shape of that economy is going to make a big difference to everyone. Instead of trying to get a leg up nationally, the optimal course to set is a system that works for everyone, and one into which the world can transition with minimum dislocation.

      That means focusing on creating a global demand/income-based economy and not an asset-value debt-based one (the objective of global finance capitalism). One leads to greater liberty (options, choice) and prosperity (equal opportunity, distributional justice) and the other to growth measured only as GDP (disproportionate distribution, environmental unsustainability) and debt peonage (financial unsustainability).

  3. OMG. Is Peter Schiff starting to get it

    But to repeat the impact of WW II today would require a truly massive effort. Replicating the six-fold increase in the federal budget would result in a nearly $20 trillion budget today. That equates to $67,000 for every man, woman and child in the country. Surely, the tremendous GDP growth created by such spending would make short work of the so-called Great Recession.

    No No. Not quite…

    The truth is we cannot spend our way out of our current crisis, no matter how great a spectacle we create. Even if we spent on infrastructure rather than war, we would still have no means to fund it, and there would still be no guarantee the economy would grow as a result.

  4. My source (David Rosenberg) is estimating 3rd quarter GDP growth of around 0.5% and negative in 4th quarter, with deflation of -1% to -2% in coming years. This seems right to me, as the fiscal stimulus fades and inventory adjustment bounces back into contraction. The pro-cyclical wealth effect of equities falling as GDP estimates drop will exacerbate the GDP contraction and so on. Recent data on unemployment and credit seem to support his outlook in this regard…

  5. David has a very good track record. I moved a lot of money into government bonds due to his forecasts, and have done very well. Also, he predicted the poor economic and stock market performance we have experienced since 2007.

    He missed the big bounce back rally, but I’ll forgive him that just as I forgive him for missing the last years of the stock market run-up prior to the great collapse…

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