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BubbleVision
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   Posted: 08/Nov/2007 at 2:07pm |
MORE EVIDENCE OF A POSSIBLE U.S. RECESSION? GOLDMAN SACHS ANALYST LOOKS AT THE LINK BETWEEN CALIFORNIA AND BROADER U.S. ECONOMY
- Jan Hatzius, an economist at Goldman Sachs points out that "historically, every increase in the three-month average of the California unemployment rate by more than 0.6 percentage point has been associated with a national recession." This is notable, since 3-month moving average of the California unemployment rate is now 0.7 percentage points above the cyclical low of 4.8% seen in December 2006 (California unemployment rate now stands at 5.5%).
- "Together with the regional recessions already visible in Florida and Nevada, a California recession would mean that the housing bust has pushed an area responsible for 20% of US GDP into an outright downturn," says Hatzius. "We suspect that a California recession would form one additional argument for additional monetary easing. At a minimum, we would assume that that San Francisco Fed President Janet Yellen will be arguing for another rate cut at the December 11 FOMC meeting."
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You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer!
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BubbleVision
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Posted: 08/Nov/2007 at 9:12am |
Originally posted by xbox
I was reading fortune once again, it says whenever short term interest rate exceed long term interest rate, once can expect USA going into recession.
<<USA could find hard to avoid recession>>
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X-Box.....See This chart and sl** the guy who told you the above thing.....
Yield curves. a lot to digest, but worth the study. Extremes in terms of recent movement are U.S. (steepening) and Australia (deep inversion). Steepening implies a stronger economy while inversion implies a slower econony.
See the Australian Inversion!
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You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer!
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xbox
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Posted: 08/Nov/2007 at 9:15am |
Yield curves. a lot to digest, but worth the study. Extremes in terms of recent movement are U.S. (steepening) and Australia (deep inversion). Steepening implies a stronger economy while inversion implies a slower econony.
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Sar ke bhahut uppar se gaya hai!!, pls aam aadmi ke bhash me bataye.
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Don't bet on pig after all bull & bear in circle.
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basant
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Posted: 08/Nov/2007 at 9:44am |
Extremes in terms of recent movement are U.S. (steepening) and Australia (deep inversion). Steepening implies a stronger economy while inversion implies a slower econony.
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Isn't that a bit out of sync with what is actually happening?
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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
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BubbleVision
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Posted: 08/Nov/2007 at 9:53am |
X-Box - This means that we should look at actuals and NOT what others are saying. I know that I am also an "Other" here!
BasantJi....Yes, this is out of sync what is happening! I dont know why!
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You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer!
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Vivek Sukhani
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Posted: 09/Nov/2007 at 12:27pm |
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Although Yield curves are good to study but I believe we are in the stage 1 when all we know is US is facing a threat of slowdown/recession/stagflation. So, dollar is getting the drubbing at the hands of other currencies. what we dont know is how other countries' economies will be able to behave in the face of a slowdown in US. Its only when you will see the economies of other countries starting to suffer owing to a slowdown in US will the currencies of those countries start to get the drubbing. So a contrarian will start to short those currencies whose issuer is likly to suffer at the hands of slowdown in US and start going long on currencies which will continue to remain unaffected. A simpler strategy will be to just short that currency whose issuer will suffer the most and trade long on the greenback.
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Vivek Sukhani
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Posted: 09/Nov/2007 at 12:30pm |
Originally posted by BubbleVision
X-Box - This means that we should look at actuals and NOT what others are saying. I know that I am also an "Other" here!
BasantJi....Yes, this is out of sync what is happening! I dont know why!
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Perhaps this event is very similar to the case of backwardation that is prevailing in the NYMEX crude oil futures. Bubble, can we say this a case of backwardation when the yield differentials between the longer tenor and the shorter tenor is negative?
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BubbleVision
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Posted: 09/Nov/2007 at 12:38pm |
Originally posted by Vivek Sukhani
Perhaps this event is very similar to the case of backwardation that is prevailing in the NYMEX crude oil futures. Bubble, can we say this a case of backwardation when the yield differentials between the longer tenor and the shorter tenor is negative? |
Vivek....Nymex crude is different, as its a commodity. Backwardization occurs due to producer hedging.
Interest Rates are different, in the sense that in US, most mortgages are tied to the longer term bond yield, which has not fallen relative to the short term yield fall (leading to steepening of curve).
US 2-Year yield is now at 3.49%, a full 101 basis points below the US Fed Funds rate. They are pricing in a rate cut of >50 bps in Dec, inspite of a message of "no further rate cut" by the Bernanke FED. I think in the short term (10-15 days), Bond yields are underpriced!
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You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer!
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