Oblivion is Bliss

15 Tháng Tám 201012:00 SA(Xem: 2473)
Oblivion is Bliss

Oblivion is Bliss


August 15 – After strong rallies of over 2% on the first trading day of

August, major stock indices have managed to retain their gains, riding

through the miserable July payroll reports, and turning the S&P 500 from a

loss into a gain of 0.5% year-to-date. Yet, the labor statistics again

highlighted the bleak employment outlook and continuing lack of jobs for

the rising ranks of the unemployed. Overall, the nation lost 131,000

non-farm jobs in July, with 202,000 cut in government payroll. The loss of

48 thousand jobs in state and local governments surprised economists.

The gains in private sector jobs of 71 thousand were pitiful, just a bit over

half of what is needed to keep pace with population growth; to reduce

unemployment, the U.S. needs to gain at least 200,000 jobs a month

consistently. 

The poor payroll reports surprised even optimistic economists. “No

question about it, the three-month average of adding 50,000 jobs is

disappointing versus almost anybody’s expectations,” said Robert J.

Barbera, chief economist of Mount Lucas Management, who has said that

the economy is on track for sustained recovery. “And certainly it’s less

than half of what you need to keep things stable.”

Fear, however, has come back to the stock market the last few days.

Bullish sentiment and optimism came to face with the economic reality

American consumers and the unemployed have felt in their lives and their

guts for many months: This is not the economic recovery and strong

growth which market pundits have been broadcasting.


On Wednesday, the Dow lost 265 points, after dropping one-half percent

the previous day; and losses kept up through the week after weak

attempts to rally. Now the S&P 500 looked at a loss of over 3%

year-to-date.


Unpalatable news –not that they were surprises. What else could be

expected? – suddenly converged and drew attention to what “is going to

be a long slog,” as phrased by David H. Resler, chief U.S. economist of

Nomura Securities International. After giving signals of its sagging

confidence in a robust recovery earlier this year --“The pace of recovery in

output and employment has slowed in recent months…” – the Fed showed

“a feeling of panic”, as an economist put it, in its announcement that the

proceeds from its huge portfolio of mortgage bonds will be used to buy

long-term Treasury bonds. With interest rates at virtually zero, the Fed

now has little leeway to stimulate the economy; the only resort is printing

money, or putting more politely, quantitative easing. 


Now that the most authoritative forecaster of economic growth –and

guardian of the economy-- has said it, Wall Street began to once again pay

attention to the stream of bad economic news coming from Washington

and abroad. They were not disappointed, from faltering American exports

to retail sales. In June, the trade deficit jumped 18.8% from May, rising to

$49.9 billion, with exports slipping and imports increasing. Retail sales

looked better on the surface, gaining 0.4% in July; but excluding autos and

gasoline, retail sales went down 0.1%, disappointing economists who had

predicted 0.5% overall gains and 0.2% rise, excluding gasoline and autos.


Abroad, China is showing signs of slowing down after growing 11.1% in

the first half. Although Chinese growth is forecasted to continue strong,

signs of slackening are showing in retail sales, imports, and fixed asset

investments. Bank lending also has begun to taper off, being reduced to

Rmb533 billion ($79billion) last month, from Rmb603 billion ($89 billion) in

June. Growth of money supply has also declined, to 17.6% year-on-year,

from 18.5% in June. At the same time, the Bank of England marked down

its forecast of 2010 growth to 3% from 3.5% only a couple of months

earlier. Citing softening business and consumer sentiment, the Bank’s

governor hinted at expanding the economic stimulus package to support

the British economy. Elsewhere


So, in lock steps with the S&P 500’s loss of 2.8% on Wednesday, the

Eurotoxx blue chip index gave up 2.6%.


The Japanese Nikkei dropped 2.7%, raising the year-to-date loss to more

than 12%. After a two-decade decline, it looks like Japanese stocks are

facing another wasted year.


A ray of hope in this gloomy outlook is Bernanke’s policies of aggressive

monetary easing, promising to apply all measures available to pump

liquidity into the system. Unfortunately, fiscal imbalances at local, state and

federal levels continue to show unrelenting strains, not only robbing the

economy of stimulus funds, but also dragging it down. 


Tran Quang Vinh

CTKD1







Gửi ý kiến của bạn
Tên của bạn
Email của bạn
16 Tháng Mười Hai 2010(Xem: 2495)
The Fed Reflates the Economy December 15, 2010 – On November 3, the Fed announced after its policy setting Federal Open Market Committee meeting that it was launching the second phase of quantitative easing, with purchases of up to $600 billion in Treasury bonds through the first half of 20111. Although QE2, as it is referred to, is much less than the first round of $1.75 trillion between 2009 and 2010, the Fed’s latest move came to immediate criticism from all circles. Trần Quang Vinh, Ph.D. CTKD 1
23 Tháng Mười Một 2010(Xem: 2186)
There Will Be Blood By PAUL KRUGMAN It’s hard to see how this situation is resolved without a major crisis of some kind. Mr. Simpson may or may not get the blood bath he craves this April, but there will be blood sooner or later. And we can only hope that the nation that emerges from that blood bath is still one we recognize.
02 Tháng Mười 2010(Xem: 2399)
Delusions and Denouement September 15 – Albert Edwards, an equity analyst at Societe General in L o n d on wrote a hard-hitting article about delusions in the stock market. For the column “ Loi Ba n,” I thought it would be an insightful reading and worth sharing it with you in its e ntirety. Trần Quang Vinh, CTKD 1
31 Tháng Tám 2010(Xem: 2277)
Fleeing the Stock Market? August 31, 2010 – In a stunning reversal, investors have been taking money out of stock mutual funds! Is that so? In a recent front page article, the New York Times headlined “In Striking Shift, Investors Flee Stock Market.” Vinh Q. Tran, Ph.D. CTKD1
02 Tháng Tám 2010(Xem: 2408)
August 2 – The temperature soared to oppressive levels but stocks enjoyed a great month. In July, the S&P 500 surged 7%. Except for the bounces from the March 2009 bottom, it has been years since the market saw such elevated returns. A casual observer would understandably conclude that all is well on the mend for the economy. Vinh Q. Tran, Ph.D., CTKD1
17 Tháng Bảy 2010(Xem: 2477)
July 15, 2010 – The stock market has been experiencing severe mood swings, going up and down from one day to the next. After reaching the highest levels since the bottom last March, the key market indices crashed into bear market territories in May and June upon discovery of the not-so-secret fiscal mess of the PIIGS countries. Vinh Q. Tran, Ph.D.
24 Tháng Sáu 2010(Xem: 2554)
Deflation, debt and budget deficits June 22 – It is difficult to think of the U.S. experiencing a deflationary cycle like in the 1929 depression, or a la Japan in the last two decades, with its devastating impacts on economic growth and wealth of the nation.
31 Tháng Năm 2010(Xem: 2423)
Lời Bàn - Kinh Tế và Thị Trường Chứng Khoán Manic Depressive May 31, 2010 – “Sell in May and go away,” so goes the adage about stock market doldrums in summer. Better to sell in May and wait for better market conditions comes fall. Vinh Q. Tran, Ph.D. CTKD K1
SINH HOẠT
MINH XÁC QUAN ĐIỂM
- Website do một ít Thụ Nhân chung sức, dù rộng mở đến tất cả đồng môn trong tình thân hữu, nhưng không nhân danh hay đại diện tập thể nào.

- Quan điểm của bài viết trong Diễn Đàn là của cá nhân tác giả, không hẳn phản ánh quan điểm chung của Ban Biên Tập và những người tham gia Diễn Đàn.
KHÁCH THĂM VIẾNG
291,436