Strategas
A Double Dip Versus a Short Business Cycle (The Latter Makes More Sense Versus the Former) , 7.13.10
There are a number of reasons, including the steep yield curve, corporate compensation rising slower than corporate GDP (which is good for profits), and cash on corporate balance sheets that make it, we believe, hard to make a double-dip in the U.S. economy the base case. Recovery, we continue to believe, is easier when cyclical economic variables such as home sales or auto sales are starting from depressed positions. That is, it’s easier to generate a negative GDP number with housing starts falling from 2 million to 500,000 rather than bottoming around 500,000 and then looking for another drop from there.
Additionally, while there are clear problems in economies abroad – eg. Greece as it pursues austerity packages - there has been a strong package of economic data out of countries such as Germany (industrial production up sharply in May) and Canada (employment showed a solid increase in June) in recent weeks. China also appears to be interested again in going for growth as we enter 2H. The OECD leading indicators are generally still pointing to growth. To be fair, what investors are willing to pay for... »»
Quarterly Review in Charts:
Fear Makes A Comeback, 7.01.10
We have been consistent in our belief that investors should be “bullish until the bill comes due.” Of course the tab can arrive in the form of deflation and a run on U.S. Treasuries just as easily as in the form of inflation and the concomitant rise in long-term interest rates. The developments in Greece and their aftermath appeared to convince investors worldwide that its private sector debt problems had only been transferred to the public sector. Simply put... »»
Despite Recent Events in Gulf, Expanded Nat Gas Extraction Still Faces Many Political Hurdles, 6.08.10
In today's Policy Outlook Dan Clifton notes that policymakers still view natural gas as a fossil fuel that requires drilling. As such, regulatory and tax risks remain for natural gas exploration including: hydraulic fracturing regulations at the state and federal levels, tax increases that could change the economics of the industry, and heightened safety regulations that would raise the cost of extraction. »»
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