I have only brief comments on one thing today. Barclays Capital has a US Macro Data Surprise Index and it was at all time highs in February. Andy Lees of AML Macro Limited noted in his morning note that it hit that high but has since dipped. He also noted that the 50-day moving average for the index hit an all time high in February as well. I think this is significant for a number of reasons.
First, let’s talk first derivative and second derivative here for a second. We should assume that the surprise index’s hitting highs in February means that the data coming in at that time was the best relative to expectations and so the macro numbers like GDP and corporate earnings should also likely be the best relative to expectations on the back of this. This means that the numbers now coming out are less robust relative to expectations and so the only questions should be whether this trend continues and what impact it has on economic growth, earnings and asset prices. My sense is that we are seeing a reversion to the mean in this index and in corporate earnings. Silver and gold members see my post "2012 an inflection point toward S&P500 margin compression" from a month ago. If I am right, then we will start getting more negative surprises and that will translate into less asset price appreciation over the medium term.
Moreover, if this index has any significance, it would also translate into lower GDP growth in the second half of 2012. I am already expecting this due to the dip in monetary aggregates and the lag in Dow Transports (gold-level post). The question then is whether the recovery in credit and employment growth is enough to spur capital spending by businesses and then even more hiring. If not, then this market will see a correction by the end of Q2 which will bring stocks down at least 10%.
This index bears watching.
That’s it. Here are the links.
P.S. – watch price inflation in Brazil, India and China as well as wage inflation in China because we need these countries to grow to power continued economic recovery.
Fast ein Viertel der deutschen Arbeitnehmer erhält einen Stundenlohn unter 9,15 Euro brutto. Besonders im Westen stieg die Zahl der Niedrigbezahlten.
The Google I was passionate about was a technology company that empowered its employees to innovate. The Google I left was an advertising company with a single corporate-mandated focus. Technically I suppose Google has always been an advertising company, but for the better part of the last three years, it didn’t feel like one. Google was an ad company only in the sense that a good TV show is an ad company: having great content attracts advertisers. Under Eric Schmidt ads were always in the background. Google was run like an innovation factory, empowering employees to be entrepreneurial through founder’s awards, peer bonuses and 20% time. Our advertising revenue gave us the headroom to think, innovate and create.
"If Yahoo gets a quick settlement here, they will continue to dig into their war chest to see what patents they can monetize,"
Britain is to offer 100-year gilts, meaning current Government borrowing will not be repaid until the next century, under a radical plan to be unveiled by George Osborne in next week’s budget.
While most of the tech world was partying at South by Southwest in Austin yesterday, Yahoo announced it was filing a lawsuit against Facebook for allegedly infringing on 10 patents from their 1,000+ patent warehouse. I’m no fan of Facebook, but this is a deplorable move. It’s nothing less than extortion, expertly timed during the SEC-mandated quiet period before Facebook’s IPO. It’s an attack on invention and the hacker ethic.
Goldman Sachs was viewed unfavorably by 54 percent of respondents in a Bloomberg survey of traders, investors and analysts conducted last May, more than double the negative rating of JPMorgan Chase & Co. (JPM), the biggest U.S. bank. Goldman Sachs’s score was among the lowest in a recent study of corporate reputations, according to a Feb. 13 statement from Harris Interactive Inc. (HPOL), the market research and polling firm.
TODAY is my last day at Goldman Sachs. After almost 12 years at the firm – first as a summer intern while at Stanford, then in New York for 10 years, and now in London – I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.
low- to middle-income workers benefit massively from redistribution in both Medicare and Medicaid. On an annual basis, it seems like Medicare beneficiaries are freeloading even more than Medicaid beneficiaries, primarily because Medicare is more generous and because Medicare beneficiaries are older and hence consume more health care.
The brilliant green artificial turf on high-school football fields here serves as a vivid symbol of the natural-gas boom that brought prosperity to this traditionally poor corner of northwest Louisiana. But the foundation of this wealth has started to crumble. The price of natural gas has plunged to a 10-year low, prompting a flight of energy companies from gas fields across the country.
Your constitution requires that bond principal and interest be repaid before your government can make any other expenditures. That means bond repayments take precedence over payments for education, healthcare, government-worker wages and pensions. Bond markets cheer for this, of course, but I’m not sure that your citizens are entirely aware of it.
The share of electricity generated by burning coal in the US has fallen to near a 35-year low as utilities shift to cheaper gas on the back of the shale revolution. The shift is reverberating beyond the US as domestic coal miners are forced to export a growing share of their production. It is creating a global glut that is depressing prices in the almost $100bn-a-year thermal coal seaborne market.
Japan’s finance minister said Tokyo has received approval from Beijing to buy $10.3 billion in Chinese government bonds, the first time China has allowed a major advanced economy to buy its sovereign debt.