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Tuesday, June 08, 2010

UaaAUUHHH - Godzirra!

Ah yes, here it comes. The drunken sailor has seen a massive prehistoric (but radioactive and oddly anthropomorphic) form swimming toward Yokohama prefecture, and all the officers are laughing and explaining that no such creature exists.

Feel free to provide the sound effects at your desk, and perhaps use paper airplanes to dive bomb the scaly form as it squashes Tokyo and scatters your supervisor's papers all over his/her desk. After all, it is not as if there is a recession on and jobs are hard to find, is it?

From the Daily Treasury Receipts, here is May YoY:
WIET 2009: 126,011
WIET 2010: 126,759

FUT 2009: 187
FUT 2010: 162

CIT 2009: 6,054
CIT 2010: 7,785
Of particular concern is that the YoY growth in WIET has pretty much stopped, whereas it was clearly evident in April (2009: 133,220, 2010: 139,398). The YoY decline in FUT has been building pretty much all this year, and is one of the reason I have been so pessimistic. Freight is still pretty good, and is the primary reason I changed my forecast to a steep slump in growth rather than a second contraction in later 2010.

It's not hard to guess that some of the slump in WIET gains is due to the end of the housing tax credit. FUT has been forecasting a very weak private sector jobs market, and clearly that is a factor. What IS surprising is that WIET slumped so early, because the Census jobs should have been a real help in May. FUT is not charged on government jobs, but Census workers will have income tax, SS and Medicare taxes withheld.

Anyway, shortly some Fed governors should be appearing making mildly reassuring noises about Godzirra, while promising that they will hold rates down for an extended period and perhaps buy some more housing MBS.

Auto sales showed up quite dramatically in April's consumer credit report. On an SA basis, non-revolving credit rose 7.1% while revolving (CC) dropped a resounding 12%. Those are annualized changes, but still the revolving credit collapse is epic. And a great deal of that comes from chargeoffs instead of paydowns.

Since a lot of unemployed workers are losing their employment benefits, the jobs situation is very dire.

Note: NFIB released its June report (covering the May survey). Overall, the index increased to 92.2, which is the best since September 2008. Hiring and spending plans are still extremely low. There was a slight improvement in profit trends, and inventory moved a little faster. One problem is that the index has rebounded only to about the recession lows from 1991. However this does make the case that economy will continue weak growth through the end of the year. The six-month indicator (see the bottom of page 8) has improved massively since March, but still remains worse than it was last May. That is a bit daunting.

PS: Additional reading - Pimco on "Keynesian endpoints".

Comments:
I believe the phrase of art is "aaaiiieee, Gojira!!!!" or "ゴジラ!!!!"
 
"Anyway, shortly some Fed governors should be appearing making mildly reassuring noises about Godzirra, while promising that they will hold rates down for an extended period and perhaps buy some more housing MBS."

Interest rates to stay low for "some time": Fed's Evans
 
Gojira! Thank you, Bernard.

Mark - I see Bernanke has a very heavy speaking schedule lined up this week.

I am not sure that the massive coverage in Monday's short-term treasury auction can be talked away. It is interesting that although non-financial commercial paper is creeping up, financial and ABS commercial paper is at extreme lows.

Today's three year auction had lighter coverage and the yields weren't suppressed. There is still a window out there.
 
MOM,

Mark - I see Bernanke has a very heavy speaking schedule lined up this week.

That will certainly allow me to sleep better.

I think how productive I might have been at work had I been speaking to large audiences every day.

Of course, managing and understanding the subtle nuances of the economy's database of 21,336 U.S. economic time series is probably much easier than managing the programming of educational computer games designed for children.

Oops. I just got snarky again. Bad Mark. Bad! Bad! ;)
 
Mark - I may read his speeches, just for the fun of it. There is not much anyone can do in these circs. We're out of ammo. I have gone back to look three times at the one-month auction on Monday. 4.8 coverage!!!!
 
Sorry, M_O_M, I'm not keeping up.

What's "4.8 coverage" mean? That sounded important.
 
Neil - t's a ratio expressed in dollars. Total bids to buy were 4.8 times the total offered. For a sample, go here..

Note the historical summary at the bottom. You can check the auction results each week really quickly at the Bloomberg's economic calendar.
 
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