Posts Tagged ‘wealth effect’

Notes From Underground: Bill Dudley refills the PUNCHBOWL (or why New York bankers shouldn’t Head the NY FED)

April 3, 2011

All was right with the markets as the unemployment data was released and for one of the few times in recent memory, the Wall Street analysts, ADP and others were right on target. Private sector job growth continued to improve, and the state and local governments were continuing layoffs to try to balance its budgets. The softest part of the employment data was the average hourly earnings, which were FLAT. This implies that employers are under no stress to lift wages with the unemployment rate at 8.8 percent. The markets took the data in stride as the DOLLAR was rallying on the positive data. With the previous day’s comments from various FED presidents, there appeared some need to lift some of the SHORT DOLLAR positions. The short-end of the yield curve was under pressure, aiding the DOLLAR RALLY and the selloff in the precious METALS. The equities seemed to be basking in the perfect storm for no WAGE GAINS, a mere threat of 1 percent FED FUNDS with an improving JOBS PICTURE doesn’t get any better for the EQUITIES.

(more…)

Notes From Underground: I will “Badger” Andy Stern on the issue of Undefunded pensions

February 18, 2011

No real surprises on the data releases yesterday. The U.S. inflation numbers were much as expected but all the DEBT futures markets rallied as it seems the shorts in the markets are nervous about new uncertainties in the Middle East. One would think that the equities would have been sold and the DOLLAR bought for safe-haven purposes, but this was not to be the case. The  DOLLAR safe-haven status is breaking down on a correlative basis, throwing all the “talking heads” into a confused state. As I continually warn the readers of NOTES, markets are dynamic in data usage and always in flux and for those who stay static in thought, I merely offer a shoulder on which to cry. What is bothering the markets?

(more…)

Notes From Underground: BOE, check; ECB, check; Bank of Korea Raises

January 13, 2011

As expected, the U.K. and the Trichet-led ECB held rate steady. The surprise was the South Korean Bank raising rates 25 basis points to 2.75 percent. Yet the markets, although purportedly surprised, did very little with the WON. More interesting for the currency markets was Trichet’s statement that the ECB was concerned about inflationary pressures within the EU. This on a day when Greek unemployment rose to more than 13 percent. Mr.Trichet, will you ever learn? The markets have just allowed the EU to phony up the Spanish and Portuguese DEBT auctions and before the DOLLAR can even try to rally, Trichet plays the INFLATION card. Really, with an overall European unemployment rate of 10 percent, do the ECB policy makers not believe in output gaps, and, of course, NAIRU?

(more…)