Wednesday, June 5, 2013

Growth outlook modest to moderate

The latest edition of the Fed's "Beige Book" characterizes economic growth as "modest to moderate," and the ISM's May survey of the service sector says essentially the same thing. No sign of any pickup in growth, and no sign of any deterioration. Just more of the same: modest to moderate growth, which remains disappointing because it's not enough to significantly reduce the economy's idle capacity or the unemployment rate.

The survey of business activity improved marginally in May, but was otherwise unremarkable. Since the service sector is far more important than the manufacturing sector, this partially offsets the weaker trend in the manufacturing sector.

The prices paid index was neutral, just as it was for the manufacturing sector.

The employment index also was neutral, just as it was for the manufacturing sector. This reflects a lack of business confidence in the future, and portends more of the same kind of growth we've seen to date: modest to moderate.

Conditions in the U.S. service sector are "OK," while the Eurozone continues to struggle with contractionary influences.


Thoughtful said...


Can you tie together your opinions on the modest growth of our economy with the less-than-optimistic valuations you see in the domestic equity markets? Your past posts lead me to believe you feel the equity markets have room to run, but with the slow to moderate growth of the U.S. economy, perhaps the equity markets are fair to fully valued. Thank you!

William McKibbin said...

There's no easy money out there, that's for sure -- the best advice I have for Americans is to invest into acquiring world-class skills that earn premium wages that convert into dividend and rent-earning equities over a lifetime -- the 21st century is going to be tough on those without means or world-class skills, plain and simple -- watch for real working wages in the US to continue to regress to global norms over the balance of every American's lifetime into the 22nd century...

Benjamin said...

The recovery is "modest" and the inflation rate is 0.7 percent and falling. Inflationary expectations are also dead.

You thinking what I am thinking? That the Fed is asleep in the "tight" position, and forget to set the alarm clock?

theyenguy said...

Thanks for the report, but I do not operate by, or go with the Beige Book.

I go by God's book, that is the Bible, which presents Jesus Christ at the helm of the economic plan of God, Ephesians 1:10, and which describes Him as unraveling the Four Apocalyptic Seals, Revelation 6:1-8, to destroy all economic and political life, as well as to take peace from the world, to introduce scarcity, and to unleash death by all types of really bad actors.

On Wednesday, June 4, 2013, the mother of all bear markets began as the Abenomics crash hit Asia Excluding Japan, EPP, and the Emerging Markets, EEM, quite badly, and turned US stocks, VTI, lower.

The twin spigots of Liberalism’s Finance, these being trust in the most toxic of debt, as well as currency carry-trade financing failed, on May 24, 2013, transitioning the world from the Liberalism’s Banker Regime into Authoritarianism’s Beast Regime, thus terminating the fiat money system, and birthing the diktat money system.

Fiat money died on May 24, 2013 with the failure of currency carry-trade investing, ICI, and disinvestment out of Junk bonds, JNK, on the failure of the world central banks’ monetary authority, and especially the Bank of Japan’s Kuroda Abenomics monetary policies. These have crossed the Rubicon of sound monetary policy, turning “money good” investments bad.

While the diktat money system was conceived by Herman van Rompuy acting together with the EU Finance Minsters, in early May 2010 with the provision of Greek Bailout I, as well as the more recent Greek Bailouts II and III, and the Cyprus Bank Bailin, the diktat money system was unleashed onto the world by the bond vigilantes calling the Interest Rates on the US Ten Year Note, ^TNX, higher, and the currency carry traders calling the Yen, FXY, higher, on May 24, 2013, inducing investors out of currency carry-trade, yield bearing investments, such as Electric Utilities, XLU, Mortgage REITS, Global Real Estate, DRW, and Premium REITS, KBWY, and then this week, inducing investors out of Nation Investment, EFA, and Small Cap Nation Investment, IFSM, as well as risk assets such as Biotechnology, IBB, and Small Cap Pure Value Stocks, RZV, which were the loss leader style of the day, which included CBK, NWY, CTRN, PSUN, EXPR, MW, BBW, BYD, MCRI, PNK, CSV, URI, CSU, STMP, CAR, HTZ, AHC, CNK, MT, TNH, NLS, LOV, BC, BGF, EEFT, CATY, CPE, GBCI, PACW, OSBC, FULT, TRMK, ORIT, BOH, ITG, FMD, NICK, RM, LAD, ABG, SAH, FRCI, RUTH, PLCE, DKS.

Aggregate Credit, AGG, traded somewhat higher but Junk Bonds, JNK, UJP, and the Euro Yen currency carry-trade, EUR/JPY, continued lower, a trend that developed Friday May 24, 2013.

The Australian Dollar, FXA, plummeted, turning Major World Currencies, DBV, lower, and Emerging Market Currencies, CEW, traded lower, as the Japanese Yen, FXY, traded strongly higher, unwinding carry-trade investments worldwide.

Zero Hedge reports ECB To launch EU-wide audit of Bank's balance sheets. Under Liberalism, wealth was generated by the world central banks, and was coined by the Too Big To Fail Banks, such as JP Morgan, JPM, via programs such as POMO, as well as by Asset Managers, such as Blackrock, BLK, via securitization of ETFs, such as RZV, PSP and PJP, for one’s investment gain. Under Authoritarianism, wealth is generated by the word, will and way regional sovereign bodies, such as the ECB, and is coined by the diktat of sovereign regional nannycrats and statist public private partnerships, such as Macquarie Infrastructure Company, MIC.

Liberalism was an age of prosperity and credit that came by trust in the monetary schemes of Bankers such as Ben Bernanke and Hiroki Kuroda. Authoritarianism is an age of austerity and debt servitude where one complies with and trusts in the schemes of new taxes, bank deposit bailins, and capital controls of regional sovereign nannycrats such as Olli Rehn, Jeroen Dijsselbloem, and Michel Barnierm, all for regional security, stability and sustainability.

William McKibbin said...

@theyenguy, the Bible describes an economic horror story for the masses -- I hope that's not where we are headed...