Take a look at construction employment. Now you know why the President’s political handlers are so desperate to get the housing market turned around. Normally lower interest rates stimulates the construction and leads the economy out of recession. This time is different as the monetary transmission mechanism is broken due to the legacy of the credit and housing bubble.
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Good interview with the IMF’s Christine Lagarde. They discuss a wide range of topics, including the Greece debt swap, the two Super Marios of Europe, the “new Italian Renaissance,” and the future of the International Monetary Fund. Well worth your time.
Click here for full interview.
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A couple of interesting charts of the S&P500, which frame the recent trading action.
Short-term the S&P500 is in a trading range of 1340-1378 and looks to be working off severe overbought conditions with a healthy consolidation. This seems to be the pattern of the 20+ percent move since October – a strong move up followed by a few weeks of range bound consolidation. The bears will seize on the longer term chart and warn the index can’t seem to break through last year’s high.
Nevertheless, the index remains in an uptrend; the market bounced nicely at 1340 support after a sharp sell-off last Tuesday; the declining VIX is confirming the move higher; Greece has now officially defaulted and the world has not come to an end; and global central banks are gushing with liquidity. Our sense, however, is the S&P500 needs to close above 1380 sometime soon before markets get too nervous about elevated oil prices and the China slowdown.
How do our waffles taste?
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Dollar/yen cleared the top of the resistance zone, which we identified in our last post. Note the rocket ship to a 10-month high after retesting the generational low in February.
We’re in the process of constructing a Weekly Japan Sustainability Watch and looking and searching for some real-time indicators similar to our Weekly Eurozone Watch Contact us if you have any suggestions.
Stay tuned.
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From today’s BLS release,
Nonfarm payroll employment rose by 227,000 in February, and the unemployment rate was unchanged at 8.3 percent, the U.S. Bureau of Labor Statistics reported today. Employment rose in professional and businesses services, health care and social assistance, leisure and hospitality, manufacturing, and mining…
The change in total nonfarm payroll employment for December was revised from +203,000 to +223,000, and the change for January was revised from +243,000 to +284,000…
The number of unemployed persons, at 12.8 million, was essentially unchanged in February. The unemployment rate held at 8.3 percent, 0.8 percentage point below the August 2011 rate.
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Key Points:
1) Greece announces results of PSI bond restructuring;
2) International Swaps and Derivatives Association unanimously declares Greece PDI a “credit event” triggering CDS;
3) Greece PSI bonds begin trading when issued;
4) Italy 10-year sovereigns tighten 59 bps through Spain 10-years;
5) Major Eurozone bank stocks have worst week since Jan 6th;
6) Portugal 10-year sovereigns widen 117 bps over German bund.
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