Advanced Q4 GDP reading announced - 5.7% growth, Q/Q. 4.7% was the concensus expectation. Futures markets indicate a big open in response.

 

 

And 3.4% was due to inventories. So not as impressive as it seems.

Is that negative 5.7% or dash 5.7%?

Sorry it was a dash: positive 5.7%. Should have used a semi-colon.

 

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Personal consumption was up only 1.44% so the consumer remains a weak spender, not surprising considering the unemployment rate. State and local gov't spending was slightly negative despite the fact that much of the stimulus bill went to them. As the stimulus winds down we will see more pressure on local govt's as tax revenue continues to be a problem.

 

This GDP is very misleading.

Personal consumption was up only 1.44% so the consumer remains a weak spender, not surprising considering the unemployment rate. State and local gov't spending was slightly negative despite the fact that much of the stimulus bill went to them. As the stimulus winds down we will see more pressure on local govt's as tax revenue continues to be a problem.

 

This GDP is very misleading.

The increased GDP being heavy in retail and wholesale inventory buildups, seems to be in line with the NABE reading we saw a few days ago. It seems like businesses are anticipating growth, this is another sign of that.

 

The increased GDP being heavy in retail and wholesale inventory buildups, seems to be in line with the NABE reading we saw a few days ago. It seems like businesses are anticipating growth, this is another sign of that.

 

 

Actually, no. For several reasons. First one is you've got a bubble on the automotive side. Second, inventories were at a really low level after 1Q2009... and is still low comparable to "normal" times. It's just a replenishment - and you won't see real growth spending if the stuff keeps up like it is.

I saw this AM that Business Capital Expenditures were the big leader in this number. It was +13.3% or somewhere around there.

 

(see my post prior about business spending increasing)

Well on our way to 1007-1010. Sell signals galore triggered this week. Classic sell the good news the past two weeks. If no bounce occurs down in the loww 1000's a larger correction could be at hand.

The Special Inspector General for TARP says the government is trying to blow the housing bubble back up.

•To the extent that the crisis was fueled by a “bubble” in the housing market, the Federal Government’s concerted efforts to support home prices risk re-inflating that bubble in light of the Government’s effective takeover of the housing market through purchases and guarantees, either direct or implicit, of nearly all of the residential mortgage market.

And also from this report:

To the extent that huge, interconnected, “too big to fail” institutions contributed to the crisis, those institutions are now even larger, in part because of the substantial subsidies provided by TARP and other bailout programs.

• To the extent that institutions were previously incentivized to take reckless risks through a “heads, I win; tails, the Government will bail me out” mentality, the market is more convinced than ever that the Government will step in as necessary to save systemically significant institutions. This perception was reinforced when TARP was extended until October 3, 2010, thus permitting Treasury to maintain a war chest of potential rescue funding at the same time that banks that have shown questionable ability to return to profitability (and in some cases are posting multi-billion-dollar losses) are exiting TARP programs.

• To the extent that large institutions’ risky behavior resulted from the desire to justify ever-greater bonuses — and indeed, the race appears to be on for TARP recipients to exit the program in order to avoid its pay restrictions — the current bonus season demonstrates that although there have been some improvements in the form that bonus compensation takes for some executives, there has been little fundamental change in the excessive compensation culture on Wall Street.

Spending and income numbers this morning, for December, give a mixed bag...

 

Income up 0.4%, expectations were 0.3%, but that was caused in part by a large SSI payment - wages and salaries increased by 0.1% (sixth increase in a row).

 

Consumer spending was up 0.2%, expectations were 0.3%. But November's number was revised up from 0.5% to 0.7%.

 

Basically, slow growth, just like we've seen for months - positive movement, but not enough to substantially lower unemployment.

 

So how long before the FDIC taps the $500 billion line of credit from Treasury?

 

They collected $45 billion in fees for 2010-2012 up front. This $45 billion is already down to $23.141 billion.

 

There have already been 15 bank failures in 2009. On a pace for 150-200.

 

ARMs and Negative Amortization Mortgages are starting to reset. But, they are too far underwater to be helped by mortgage modification programs.

 

 

I like my recessions with a double dip..

Run-down of the White House budget proposal they sent to Congress today. Glad to see they are removing oil and gas subsidies.

 

Run-down of the White House budget proposal they sent to Congress today. Glad to see they are removing oil and gas subsidies.

 

I am sure people who can't afford it will love to see their gas prices and utilities go up in price.

I am sure people who can't afford it will love to see their gas prices and utilities go up in price.

It makes zero sense to continue to subsidize oil and gas at much higher rates than alt energy. I prefer we don't continue barrelling towards economic disaster, and keeping reliance on fossil fuels will only hasten that.

 

I am sure people who can't afford it will love to see their gas prices and utilities go up in price.

I'm sure they happily tolerate budget cuts to their schools to pay for it.

I'm sure they happily tolerate budget cuts to their schools to pay for it.

Yeah, and police and fire layoffs too.

Yeah, and police and fire layoffs too.

(This is quite literal by the way, the cutback in those subsidies is key to the "Spending freeze" they're talking about)

I'm sure they happily tolerate budget cuts to their schools to pay for it.

 

If it means the difference between living in a house and on the streets, I am sure they won't mind...

If it means the difference between living in a house and on the streets, I am sure they won't mind...

But of course, they'd rather live on the street than have the gummint run their health care

Why don't you two get a room or something.

 

Yeah, and police and fire layoffs too.

 

 

Are these the same firemen and policemen the Clintons hired and then the states and citites had no way of paying? Let's put 200,00 more on the streets but then let the states try to pay for it when the Federal teat runs dry.

Are these the same firemen and policemen the Clintons hired and then the states and citites had no way of paying? Let's put 200,00 more on the streets but then let the states try to pay for it when the Federal teat runs dry.

Not often you hear a Republican explicitly argue "We need fewer policemen and firemen." I'm impressed.

Not often you hear a Republican explicitly argue "We need fewer policemen and firemen." I'm impressed.

What he's criticizing is that it was an unsustainable, partially funded mandate. And he's right.

 

Also, the right answer to fighting crime is not always more cops.

 

Not often you hear a Republican explicitly argue "We need fewer policemen and firemen." I'm impressed.

 

 

Is that what I said? You are better than Gibbs.

Today could be the first of 2 or 3 90% down days I mentioned last week. While I am completely bearish, I would not be surprised to see the mkt tag 1110-1011 one more time. 1067 vibrates off of today's date.

Former BofA head Ken Lewis charged with Fraud by NY Attorney General Andrew Cuomo.

 

He better have a legit case. He just put his career on the line.