All Posts Tagged With: "employment"

A year ago, the RBA and the horde of market economists who hang on its every word expected interest rates to be higher by now. Even as late as September 2011 the RBA was sitting on its hands, unsure which way to move.

Consumer spending, pending home sales and factory orders were all weaker than projected in June, showing the US recovery lost momentum heading into the second half of the year as employment stagnates. Elsewhere in the news it is reported that more consumers than ever before are going bankrupt…

Summers is jubilant. He got the latest employment figures on Friday. They tell the story of an economy that he thinks is headed into outer space…

But February saw an unexpected upturn in consumer credit, reports the Times. And unemployment seems to have bottomed out, adds The Wall Street Journal.

Chinese bank lending and credit growth is already through the roof. Last year’s $685 billion stimulus program sent fixed asset investment in China much higher. It was, by most accounts, hugely supportive of resource prices, and thus most welcome in Australian resource circles.

On the surface of it, the idea is absurd. What does Obama know about airplanes? Who would want to fly in an airplane with Obama in the pilot seat?

Now, there is a very good reason investors are reducing their allocation to stocks. As we’ve said before, we think the equity premium – what people are willing to pay for stocks – is regressing to the mean. It was so high for so long because corporate cash flows in the second half of the last century benefitted so much from low interest rates and globalisation.

If it’s true that markets lead economies, markets are telling us that things are going to get much better. The FTSE index of emerging markets is up 99% from its March lows. The S&P 500 is up nearly 60%. And gold itself is up 25%, with much of that move coming in the last few weeks.