Chillin' out till it needs to be funded
Two days to go for the third round of Republican Primaries, Mitt Romney’s untold millions were improbably wiped out on the electoral war grounds by a resurgent Newt Gingrich again rding the media with a staba t John King for brining old personal questions from his first marriage into play. Of course there were others and Rick Santorum had won the Iowa caususes according to reports concurrent ot the televised debate, but South Carolina is still an unknown with just 24 hours to go. However the state has some pinch hitters in the employment scales (see figure on right) incl Boeing and Michelin.
Newt’s $3.1 mln 2010 tax return and his $994k in taxesa re only going to help him, but ensuring that the electoral caucuses vote inspite of the Republicans’ first tryst with a high unemployment state, seem to make it fun for Obama watchers. interestingly Newt made sure he told off the ‘elite media’ as making the Republican candidates fodder for Obama’s case.
Back to the data then, Housing came to the lowest rate in 2011 on completions (calculatedriskblog.com) and the 67% rise in Multi family starts over 2011 just ticked up starts to 167k for 2011 and even as single family starts lag behind in even that growth, most of these starts are coming into 4 and less units , than in 5+ units multi family homes and obviously nothing has completed from these slow but sure new starts. Calculated risk also offers a forecast for 2012 by Lawler if you are up for it.
Today’s Housing sales number ( Existing housing sales) went the usual mile with 5% MoM and 3.6% y-0-y growth but yet only 4.61 mln and not even defining an upturn in the last six months. Housing invesntories went down yet to 6.2 months supply and that is better than 7.2 months in November.
Negative yields on TIPs
The 5-year TIPs cut off at 1.5% so all inflation above that is now freely insured for the 0% cutoff and the 10-year TIPs awarded yield was a negative finally returning a near 3 Bid Cover Ratio to see real demand and not just the fed pushing Repos thru the Dealers. The 10 year TIPs ‘target’ 1.75% and people wanted to pay. However the move up in yields , satisfying the TRF to 1.98 bp on the 10 year was not really bullish , it was just too less paper kind of demand crunch and as most had heavily inventoried just in December i think we should wait before jumping to the right slide up. Another $100 bln in auctions in 2, 5 and 7s take up 3 days next week
The Fed Balance Sheet, Money Supply and the EUR inching it up
Firstly, with the Dollar and Euro both back in strength, most are now sure tactically, that the Fed Balance sheet size does not matter or the 50% larger ECB balance sheet. Liquidity operations from both have succeeded like anything making Morgan Stanley bullish on the Euro with us ( For MS(MS:NYSE) results see The unlikeliest bank on Wall Street) Balance sheet expanded by $20.2 bln last week ( ended Jan18) and of that $7 bln came from MBS holdings with the Fed, $13 bln from Central Bank swaps (Anasdaq.econoday.com, 20/01)
M2 increase settled down to a more staid $22 bln for the same week after a $85 bln surge last week as Oil inventories keep reducing, Philly lags the Empire State index at 7.3 to 13.3 and inflation dropping out of sight out of mind.
LTRO detractors at zerohedge seemed significantly bowled over by the simplicity of the op and the stability inthe Europan bank financing thence too and thats a good sign for Mr Euro 🙂 They also look like shortlisting EMs finally!