Do we double-dip or do we drip?

[Magox]

This simple truth is this is just one in a long list of miscalculations this administration has made which adds to the narrative about their lack of business experience. Anyone with even the slightest bit of sales sense knew that the housing credit was, for the most part, doing nothing other than expediting sales from one time period to another. It's a sales managers quintessential quest for a "blue sky bonus" with the understanding that what he'll make on the carousel this quarter will surely be lost on the merry-go-round the next quarter. So you look smart for a moment, but the truth will always find its way up for air, as it did with the recent housing report.

 

We were just talking about this, I was listening to HUD Secretary Shaun Donovan over the weekend on CNN and he acknowledged that the housing numbers were worse than expected and it appears that they are considering reinstating the $8000 Tax credit.

 

 

Just when I thought the housing market was finally being left to correct on its own, I'm starting to hear talk regarding yet another home buyer tax credit. From HUD to the hedge funds, it sounds as if it is gaining steam yet again. This one could involve not just first time/move-up buyers, but a credit for buyers purchasing foreclosed properties or short sales (when the bank allows you to buy a home for less than the value of the outstanding mortgage).

 

HUD Secretary Shaun Donovan, appearing on CNN's State of the Union this weekend, didn't rule out another tax credit. He did say it's "too early to say," but then added that "we're going to be focused like a laser on where the housing market is moving going forward, and we are going to go everywhere we can to make sure this market stabilizes and recovers."

 

I know a lot of you out there would argue that a housing market correction, as painful as it is, is necessary for housing to truly find its footing again and recover for the long term. Another artificial stimulus could just prolong the agony and set us up for the same drop off in sales and prices that we're seeing right now.

 

It's truly a keynesian mindset. I honestly believe that they have come to the conclusion that these "stimulus" programs will serve as a bridge to recovery. Sure we will get a bump in sales, but once the program expires, then what? Another tax extension?

 

I believe many economists and a few of us had said all along that many of these sales would of taken place regardless, and that all it does is distort the natural bottoming process at the expense of the U.S taxpayer.

 

[Magox]

ISM manufacturing numbers were better than anticipated, still weak but an improvement from last week. Jobless claims numbers the last two weeks were at 478,000 and 472,000 which is still weak (425,000 shows expansion in labor) but an improvement from the last 3 weeks. ADP private sector labor numbers showed a loss in private sector jobs, which is the first loss in the last 7 months and Factory orders were weaker than expected. Pending home sales were up 5% from last month, but still an incredibly weak number.

 

Overall, the numbers over the past week would indicate that maybe the pace of the recovery could be at it's bottom. Obviously it's way too early to tell, but I wouldn't say the numbers are encouraging but it it doesn't appear that it has deteriorated any further. It looks as if we won't see a Double-dip but more of a drip, a protracted drip.

[Magox]

 

Overall, the numbers over the past week would indicate that maybe the pace of the recovery could be at it's bottom. Obviously it's way too early to tell, but I wouldn't say the numbers are encouraging but it it doesn't appear that it has deteriorated any further. It looks as if we won't see a Double-dip but more of a drip, a protracted drip.

Todays job numbers back this assertion up.

 

http://noir.bloomberg.com/apps/news?pid=20601087&sid=anqVne_skyTM&pos=1

 

Companies in the U.S. added more jobs than forecast in August, easing concern the economy was falling back into recession.

 

Private payrolls that exclude government agencies climbed 67,000, after a revised 107,000 increase in July that was more than initially estimated, Labor Department figures in Washington showed today. The median estimate of economists surveyed by Bloomberg News called for a gain of 40,000. Overall employment fell 54,000 for a second month and the unemployment rate rose to 9.6 percent as more people entered the labor force.

 

The report bolters Federal Reserve Chairman Ben S. Bernanke’s view that the conditions are in place for a pickup in U.S. growth in 2011. Companies such as Caterpillar Inc. are boosting staff as the global economy grows, a sign some businesses see the recent slowdown in growth as temporary and are looking toward an improving economy.

 

“An increase in private payrolls is a move in the direction,” Ken Mayland, president of ClearView Economics LLC in Pepper Pike, Ohio, said before the report. “It will ease concern about a double dip. It’s a stunted recovery and we still have a lot of headwinds.”

 

Odds of Double-dip have gone down this week, as well as the odds of another imminent round of QE. I still believe QE will occur just not in the next couple months.

[Magox]

Todays job numbers back this assertion up.

 

http://noir.bloomberg.com/apps/news?pid=20601087&sid=anqVne_skyTM&pos=1

 

 

 

Odds of Double-dip have gone down this week, as well as the odds of another imminent round of QE. I still believe QE will occur just not in the next couple months.

This trend is continuing.

 

Jobless claims number has gone down to 451,000 even though the jobless claims numbers for the weeks before were revised up, but none the less, these numbers are improving. Still not pretty but improving.

 

New U.S. claims for unemployment benefits fell more than expected last week to their lowest level in two months, a hopeful sign for the troubled labor market.

 

 

 

Initial claims for state unemployment benefits dropped 27,000 to a seasonally adjusted 451,000, the lowest since the week ended July 10, the Labor Department said on Thursday.

 

Analysts polled by Reuters had forecast claims dipping to 470,000 from the previously reported 472,000 the prior week, which was revised up to 478,000 in Thursday's report.

 

In other economic news, the U.S. trade deficit narrowed more than expected in July, as imports retreated and exports shot to their highest since August 2008, according to a government report on Thursday that could lift hopes for third-quarter economic growth.

 

Also, considering the U.S trade deficit narrowed more than expected, this will contribute to a little bit higher GDP 3rd quarter. I would say somewhere around 1-2%