Chillin' out till it needs to be funded
Leading indicators are again up 0.6% thought the Chicago index fell to 0.37& (negative score) The earlier months 0.29 (negative) was however revised back to a -0.11. and November scored a fresh low before probably being revised too. Profits are going to be ona negative patch Y/Y in December too but bond yields may rise in 2012 and the U-Mich indices have crossed all the customer Disaster sectors, Call center industries at 69.9 ahead of the best in Healthcare companies prescribing your health on the phone.
Though my appointment letter from a big bank is due, I would venture to say that banks would survive next year on fee advisory from deal income than credit card spends, transaction cents and contributions subject to Tobin tax ( thus excl lobbying and political contributions made this year, earlier) Noting back to to a discussion germaine to the subject for Economists to refer, Credit card spending has just recovered one month of positive gain in the last 3 years and 2 months and this Holiday season’s retroactive posturing or attentive pre holiday posturing about weak retail sales, remains a boon.
The advantage of having a large educated population who refuses to leverage after the fracas on housing loans which has seemingly cost US its Economic leadership.
In so much as the Dollar continues to be a safe haven and the US continues to borrow internationally instead of financing the deficit and/or raising domestic bonds, it will be buying some growth but it also knows a s a country how close it is to the precipice thought the GOP elephant does not seem to know much when it comes to that, still shopping around for some exotic bamboo shoots instead of good old taxes and balanced spending cuts.
As far as consumers go, they have already been spending considerably less by driving less even as 140,000 more fall off the cliff having become ineligible to receive jobless claims, the dwindling number no tmaking too many market makers or households happy.
Sum total of this opinion is of course that despite inventory adjustments keeping US growth alive at 1.8% it was more than 1% in Q3 and Q4 will be almost 2.5% if retail sales during the holidays are indeed surprisingly higher or even if the December number of 3% sales growth in retail is correct, Q$ would be a good enough number for the US, having survived July and August in Q3. Also note that the new upward estimate of Q4 GDP by banks did assume bad credit growth in personal because of continuing revolver misses(’empties’?) from the Fed reportbad corporate credit from a shaky Europe which holds $1 Tln in US treasuries and bonds (“for safekeeping its Capital without collateral”). European Banks hold $1.8 tln of the $10 tln held by Non-US banks. This drop would come from a direct shrinkage in US assets bank hold (Forbes:Shrinking US assets) However the Forbes analysis also estimates GDP curbs of 1% from this shrinking of US exposure by non US banks and presumably the exports rough up of $400 bln.
I think the US would be happy with a 2% growth if the turmoil continues and the estimates can revise themselves as it goes along, factoring the realisation that Europe’s troubles and decelerationa re not ours or our banks’!