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ShelladyOptions
Senior Contributor

OptionEye - Macro Outlook - Aug 8th

Good morning. 

 

Mixed signals this morning as stocks rally here, gaining back some lost ground but they are lower in  Europe on Iraqi news..I'm not buying it. But, air strikes in Iraq are enough to get that 10 year yield down to 2.38%. I am a firm believer, whether you want to blame it on geopolitical events or our own slow economy, this 10 year yield is going to 2.15%. How will those that have been talking about an interest rate rise since the beginning of the year square that with the fact that since Jan we have gone from 3.00% to 2.38% this morning. 

 

Oil is up .38 cents to $97.72 and gold is op .15 cents to $1312.77. 

 

The dollar a little weaket this morning at 81.41 dow .11.

 

Economically we don't have any real good numbers today so the headlines will be the driver. Wholesale inventories will be what we watch today. 

 

Again, this economy is much closer to a Japanese like long running deflationary economy rather than a 1930's inflation plagued Germany. We have some big hurdles ahead of us. 

 

Corn is down 1, beans are unchanged but the fronts are well bid while wheat is down 2 as well. 

 

 

 

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7 Replies
Palouser
Senior Advisor

Re: OptionEye - Macro Outlook - Aug 8th

It's an interesting test of economic theory IMO. Essentially there is little being done in the economy. The Fed program may pump some money into big banks but the banks are not very engaged with the average Joe, except trying to charge WAY to much interest and fees. Credit debt is being paid down and consumer or housing spending is too low to stimulate the economy. Hourly wages have stagnated for years and much of the middle class is avoiding spending except on necessities. Jobs are hard to come by for little money.

 

Essentially we are proving that the economy does not heal itself when there is no intervention. True, the economy didn't slip into the abyss due to large efforts to avoid catastrophe, so now we sit, waiting. Consumers are smart enough to figure out that they better hod back because you can't get anything from nothing. The consumer economy is dead. But we aren't investing in infrastructure either. Effectively there is no stimulation for the middle class.

 

Congress sits and cannot get anything important done. The things said to be important they can't figure out how to do, even within their own party. It's not a winning combination. Unless it's to prove economies don't just heal themselves after a heavy hit by shysters.

 

 

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FARM4FOOD
Veteran Contributor

Re: OptionEye - Macro Outlook - Aug 8th

Well said  Palouser agree totally.

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lsc76cat
Veteran Advisor

Re: OptionEye - Macro Outlook - Aug 8th

The economy looks a little different here.  With a new Fleet Farm store, FedEx and WalMart distribution centers along with a host of smaller projects the Greater Mankato, MN area is quite active.  From construction to grain processing to sand mining to manufacturing there is so much activity it is hard to keep track of what's happening.  There are so many gravel trucks on the roads around here I'll bet the glass replacement guys are busy too.  Major problem here is finding qualified and willing workers.

 

Economy must be like the crops - just depends on where you are.

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nutlug
Veteran Contributor

Re: OptionEye - Macro Outlook - Aug 8th

I would disagree that intervention is needed. I would argue that the intervention that was done, ie big bank bailout, TARP, GM etc, is the problem. Creative destruction is what capitalism is all about and all of the institutions that took the big risks should have had to take their medicine. Their failures would have made room for new business to start.
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sw363535
Honored Advisor

Re: OptionEye - Macro Outlook - Aug 8th

nutlug I am with ya,

 

Letting it fall into the rock bottom area might have been worse, but we did so much intervention --- your list plus, wind energy, ethanol, electric car, health care, etc, etc.

I think the economy has become dependent on the federal stimulus and moves only when there is more.

  We have some building in the area also ------ federally funded cellulostic ethanol plant, state subsidized school building, some new federally subsidized housing projects,  etc.

 

How can we subsidize the electric auto development and at the same time prop up the  dinosaur it could be replacing.  No wait that is oranges and apples.  One was stimulating new industry and the other was paying back supporters.

Anyway there has been a lot of cash flung into the fireplace to say there has not been enough economic stimulus.

The last thing we need is to have the whole economy dependant on the government.  But that is where we are and if congress does "enough" that is where we will be.

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425Cat
Advisor

Re: OptionEye - Macro Outlook - Aug 8th

Intervention is the problem. Obamacare , burdensome regs, govt competing for capital, epa, high taxes fed state local. These are all hampering small business and job growth.
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sw363535
Honored Advisor

Re: OptionEye - Macro Outlook - Aug 8th

One kansas example

 

http://www.leaderandtimes.com/index.php?option=com_content&view=article&id=17705:feds-to-assist-in-b...

 

 

 

This is now,- today-- Several have said the ethanol building is over,  not true ---------Cellulostic Ethanol---this is a business model that does not support itself needs federal incentive to be built-- even start-- and now needs an another insentive program ------- transportation of biomass was an ignored cost factor from the beginning, because it assumed farmers would deliver and be anxious to get rid of their excess crop stubble.  Congressmen and Presidents without a grip on history.

 

Forest ------- The central Rockies forest have been heavily damaged by insect diseases the last several years after the Sierra Club and other environmental groups claim it unnatural for the Forest service to spray for insects.  EPA moved to block the forest service and now the high elevation forests are a mess causing most of the wild fire problems of last summer.  These are the closest trees to this plant requiring a 250-350 mile one way trip.

 

http://www.denverpost.com/ci_17403961

 

Social engineering from eletists with tax dollars.  I do not think congress has done nothing.  In fact I wish they would stop doing nothing if that is what we call it.   Maybe it is time for new leadership ------- to give us a new department of government --- We can call it the Homeland Freedom of Economic Activity Agency or something with similar idiocy.   

Insanity in Mass.

Lets build a shrine to the Almighty Government ------- na cool it,  that's done already.

 

Anyway Lots of money down this rat hole already and still disfunctional.

 

 

 

 

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