Limited Shorts

I went to the movies this afternoon and saw, Limitless—PG-13 of course—to see how the main character deals with a serious case of writer’s block. Not very well, since pharmaceuticals were involved. However, I recently tried one of those little 5-hour energy shots without apparent adverse consequences.

It’s not that there’s no news to write about, but that so much of it seems to “go without saying.” For example, to make much of the sharp decline in silver, gold, oil and other commodities is to imply that they weren’t obviously in a bubble. Funny how we excoriate our policy makers for bubbles past, but don’t urge remedies for bubbles currently inflating.

Then there’s all the to-do that’s been made lately over the devastating decline in the dollar, usually illustrated with a graph that begins at the height of its crisis-induced safe-haven high. The dollar is pretty much where it was before the crisis.

Then there’s the recent excitement over the Euro’s strength, even though it’s considerably below its pre-crisis high, and the tougher stance of the ECB, as if its entire history hasn’t been marked by barely disguised Buba envy. That’s Buba as in the Bundesbank; not Bubba as in yours truly. Today, the absence of the usual tough talk by Mr. Trichet sent markets into a dither. Perhaps it’s time to pass the ECB torch from a Frenchman to an Italian, anything but a German.

I was a bit surprised at the weakness of the 1st quarter real GDP number of plus 1.8 percent. That was because the 4th quarter number of 3.1 percent so understated the 4th quarter strength because it was cut by more than half by declining inventories. The weak 1st quarter number actually benefited from inventory accumulation, going back to the quarterly pattern prior to the 4th quarter. It’s looking like the 4th quarter was the anomaly.

While I’m getting ahead of Friday morning’s official employment numbers, I’m guessing, based on the new claims numbers, that a similar patter will show up there. In recent months (one in particular) the household survey was considerably stronger than the establishment survey, accounting for the faster than expected decline in the unemployment rate. I hope I’m wrong, but I’m afraid the Friday morning number will restore the employment gloom.

I’ve been thinking about the “historic” Bernanke press conference, and have had little to say because I thought it was a tour de force, and who wants to hear that from me? There was one comment, however, that may be worth exploring in a separate post if and when the block goes away.

Comments (4)

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  1. EHRosen says:

    Interesting and informative post as always. Expecting a lot of $ volatility if your right and the economic data is weaker. Mr. Bernanke basically said that QE2 ending won’t be a big deal because of the Fed’s transparency. On reflection, it is becoming increasingly clear that the genius is, as is a pattern, missing the obvious. The issue is not communication but credibility. By not sticking to his stated policy of not monetizing the debt, the markets see him as wishy washy and not to be trusted.
    Again, bring back Greenspan, who though opaque often, when he did speak clearly, had the backbone to stick with what he said, and the markets knew it and trusted him.
    Increasingly, I think the untold cause of the financial crisis was not only the subprime etc etc but the markets anticipation of the changing of hands from strong to weak leadership.

  2. Ian Kodanik says:

    I’ve been mulling over this for more than a week. I too thought the QIV numbers were encouraging, and for precisely the same reason. Too bad. As for Fed transparency, we’re asking the Fed to do a lot more than it was created to do; in the process, the politicization of monetary policy is inescapable. He will not and cannot be commenting on that!

  3. james guisinger says:

    From :”Limited Shorts” dated May 5th

    “Perhaps it’s time to pass the ECB torch from a Frenchman to an Italian, anything but a German”

    ah ah!…conspiracy

    I thought you might find this a little humorous…

  4. Michael says:

    Vinavu You are so hilarious .. On the one hand you talk about how other ppluoar newspapers are diverting people’s attention from real issues and here you are writing about an individual and his private affairs . You should wite a separate article on IMF and John Perkins