Posts Tagged ‘stimulus’

Notes From Underground: Putting Significant Stories In Perspective

August 26, 2012

Just as I wrote in the headline, qthere is a story in the UK TELEGRAPH that the Chinese plan to put forward a 800 billion POUND stimulus program of major projects in the provinces. At this time, the TELEGRAPH is the only outlet with the story and has otherwise not been confirmed. IF THE STORY IS TRUE AND THE AMOUNT IS CORRECT THEN THE EFFECT SHOULD PUT UPWARD PRESSURE ON ALL RISK ASSETS AS THIS STIMULUS WILL BE CELEBRATED WORLDWIDE. THE INDUSTRIAL METALS, WHICH HAVE LAGGED THE RECENT RISK ON PROFILE, SHOULD GET A HUGE BOOST SO I WOULD ADVISE WATCHING COPPER AS AN INDICATOR OF THE VERACITY OF THE CHINESE STIMULUS STORY. Again, IF the story has any veracity all asset classes except DEBT should receive a BID Sunday night.


Notes From Underground: The Use of Swap Lines … HMMMM

September 15, 2011

After Secretary Geithner told the CNBC audience that he was going to Poland as an observer of the ECOFIN meeting on Friday, it seems he changed his mind. U.S. policymakers have woken up to the fact that the European credit crisis is the real deal and risks sending the entire global financial system into a period vicious cycle of asset liquidation. The Obama administration has come to realize that a severe credit crisis can certainly undermine the JOBS PROGRAM AND ANY OTHER STIMULUS PROGRAMS IN THE WORKS. If the world frets of a U.S. renewed recession, then imagine the global trepidation of a simultaneous credit crunch in Europe. A EUROPEAN MELTDOWN WOULD BRING THE U.S. TO INCREASED UNEMPLOYMENT AND A CERTAIN DEFEAT FOR THE OBAMA ADMINISTRATION.


Notes From Underground: Did Obama’s Labor Day speech give birth to any new ideas?

September 6, 2010

The markets are very quiet today as the U.S. celebrates Labor Day and Canada has a bank holiday. President Obama was in Milwaukee where he laid out plans for a transportation bill that extends out six years and provides for roads, rail and airport construction. This should have been part of the original stimulus package but its lack of immediacy in job creation raises more questions than answers.


Notes From Underground: Unemployment was “less bad”

September 3, 2010

The unemployment rate moved higher but that is meaningless for the markets. However, talk radio will have something negative to discuss. The interesting data was that private sector jobs grew more than expected and, more importantly, average hourly earnings (AHE) rose much more than expected and that is a good thing for potential consumer spending.

The more important news is a story that the Washington Post broke about a new stimulus package coming from the Obama administration. The Obama camp have the cover of Nobel laureate Paul Krugman to bring forward a much more robust stimulus package heavily centered on tax cuts for small and medium business. What else is going to be forthcoming? We have no idea but this package will err on being bigger not smaller than previously projected.

Why do we believe a bigger program is coming? Because Secretary of Commerce Gary Locke opened his big mouth in a November 2009 interview and was forced to recant his words as being “impercise.”  It seems to us that Secretary Locke was so excited about the stimulus plan that he couldn’t contain his enthusiasm. A package of tax cuts aimed at small business is what the financial markets want to see.

A payroll tax moratorium would be a major move but we at NOTES doubt they will do that because if wage earners saw what came out of their weekly checks in real time there would be tax sticker shock. We still think that Geithner has plans for doing some type of massive mortgage refinance as the executive branch has control of Fannie and Freddie and does not need Congressional approval.

The bottom line is that something is up and coupled with a “less bad” employment, the Obama administration may be able to gain some positive momentum heading into the November elections so as to stem some of the negative political fallout. This election is not about wars. It is totally focused on the economy. The commerce secretary, through his premature excitement, has let the cat out of the bag. The question remains: How loud will it roar? If the plan includes the cut on dividend taxes, we could see the equity markets rally hard. We wait to see how aggressive they plan to be.