The Banking and Strategy Initiative

Chillin' out till it needs to be funded

US Economy: Dull, weak, wait, Tired, May, Recovery??? Duh!

Case Schiller good news Tuesday for May 2012, would have equity markets in raptures throughout the day as the YOY change for the Seasonally adjusted data is just 2.8% below March 2011 in the data released for March 2012 this AM. The data for the new Composite 20 *( for 20 US cities) is even better as it has lost only 2.6% ont he year. If you detect the sarcasm alone, the numbers are indeed better as the February numbers were worse. And thus the S&P had no problems jumping out of bed this morning after the data, having started sputtering back at 1310-1320 levels last week.

Memorial Day was not so dull for those across the pond, but as we said Rinse. Lather. Repeat for the European throes and nothing worse will happen esp if they can find a cashless way of providing Bankia that EURO 20 B. For those who actually think anyone will survive if they give this from the Eurosystem without new bonds even if ECB foots the bill instead of the Spanish government or even the local FROB which has only EUR 5B left in the fund, it is rather unfortunate but no, nothing can stretch this much except a deficit or if you can still go for it, Rajoy can probably give a sovereign guarantee that does not count in the Spanish Balance Sheet/ Deficit

Don’t mind the Euro, its downswing will continue and it has a big support at 1.19so, till then all increases in Spanish debt costs, all ECB announcements ( except new LTRO / Eurobonds/Growth spending) will do nothing to change the ride much.

Commodities got a new ride too, with the Dollar weak over the extended holiday but then, Is China buying? US exports to Brazil and China have increase multi fold in the mean time with a more than 30% growth than its secular 10% growth in other regions. The Services surplus does put US in a strong position in this upmove but nothing much has changed with Production likely being tested in the next couple of months before we can think we have recovered.

A read to go? Barry Ritholtz recently presented on the ifs and buts of the Housing Recovery crisis that has got  a life of its own..The presentation was made at a UBS morning meeting ( Trade Strategy) and has a few action points..( Especially it matters that this time we may never generate enough jobs to get back  all that we lost since 2008..and the new Home sales graph of this “recovery” showing the gap of over a million in the rate of new home sales to catch up to ( we carried it in our first few 2012 aanalyses focussing on the housing recovery)

The citywise chart from the Hopi index is courtesy the


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