Horror for US Economy as Data Falls off Cliff
Published: Wednesday, 1 Jun 2011 | 2:09 PM ET
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By: Patrick Allen
CNBC EMEA Head of News
CNBC EMEA Head of News
The last month has been a horror show for the U.S. economy, with economic data falling off a cliff, according to Mike Riddell, a fund manager at M&G Investments in London.
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"It seems that almost every bit of data about the health of the US economy has disappointed expectations recently," said Riddell, in a note sent to CNBC on Wednesday.
"US house prices have fallen by more than 5 percent year on year, pending home sales have collapsed and existing home sales disappointed, the trend of improving jobless claims has arrested, first quarter GDP wasn’t revised upwards by the 0.4 percent forecast, durables goods orders shrank, manufacturing surveys from Philadelphia Fed, Richmond Fed and Chicago Fed were all very disappointing."
"And that’s just in the last week and a bit," said Riddell.
Pointing to the dramatic turnaround in the Citigroup "Economic Surprise Index" for the United States, Riddell said the tumble in a matter of months to negative from positive is almost as bad as the situation before the collapse of Lehman Brothers in 2008.
"The correlation between the economic surprise index and Treasury yields is very close, so the lesson is that whatever your long term macro views are regarding hyper inflation vs. deflation or the risk of the US defaulting, the reality is that if you want to have a view about government bond prices, the best thing you can do is look at the economic data to see what’s actually going on," said Riddell.
"And right now, the economic data is suggesting that however measly you may think a 3 percent yield is on a 10-year Treasury, the yield should probably be a fair bit lower given what’s going on in the US economy," said Riddell.
"You’ve also got to wonder at what point the markets for risky assets start noticing, too."
"QE3 anybody?" asks Riddell.
Stocks Plunge Amid Global Recovery Fears
Published: Wednesday, 1 Jun 2011 | 4:24 PM ET
Text Size Stocks sank more than 2 percent Wednesday, following several economic reports that confirmed a struggling recovery and after Moody's downgraded Greece's bond ratings deeper into junk status.
Major U.S. Indexes
ADP: U.S. Added Fewer Workers in May
By Timothy R. Homan - Jun 1, 2011 8:40 AM ET
Companies in the U.S. added 38,000 workers to payrolls in May, according to figures from ADP Employer Services. Photographer: Matthew Staver/Bloomberg
June 1 (Bloomberg) -- David Resler, chief economist at Nomura Securities International Inc., talks about data from ADP Employer Services indicating U.S. companies added fewer workers than forecast in May. Resler, speaking with Betty Liu on Bloomberg Television's "In the Loop," also discusses the housing market and the outlook for the economy. (Source: Bloomberg)
June 1 (Bloomberg) -- Companies in the U.S. added fewer workers than forecast in May, a sign that job growth is struggling to gain momentum, data from a private report based on payrolls showed today. Employment increased by 38,000 last month, the smallest increase since September, from a revised 177,000 in April, according to figures from ADP Employer Services. Michael McKee reports on Bloomberg Television's "In the Loop." (Source: Bloomberg)
May 31 (Bloomberg) -- Michael Feroli, chief U.S. economist at JPMorgan Chase & Co., talks about the performance of the U.S. economy. Consumer sentiment unexpectedly decreased in May to the lowest level in six months as Americans grew concerned over the outlook for jobs and the economy, while a measure of home prices dropped to a nine-year low. Feroli speaks with Mark Crumpton on Bloomberg Television's "Bottom Line." (Source: Bloomberg)
Companies in the U.S. added fewer workers than forecast in May, a sign that job growth is struggling to gain momentum, data from a private report based on payrolls showed today.
Employment increased by 38,000 last month, the smallest increase since September, from a revised 177,000 in April, according to figures from ADP Employer Services. The median estimate in the Bloomberg News survey called for a 175,000 advance for May.
The Dow Jones Industrial Average plunged 279.65 points.
Wall Street Baffled by Slowing Economy, Low Yields: Trader
Published: Wednesday, 1 Jun 2011 | 11:06 AM ET
Text Size By: Margo D. Beller
Special to CNBC.com
Special to CNBC.com
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Timothy A. Clary | AFP | Getty Images |
Wall Street is having a hard time figuring out what to do now that the U.S. economy appears to be sputtering and yields are so low, Peter Yastrow, market strategist for Yastrow Origer, told CNBC.
150 Economists Back US Republicans in Debt Fight
Published: Wednesday, 1 Jun 2011 | 6:26 AM ET
Text Size By: Reuters
More than 150 economists back U.S. House of Representatives Speaker John Boehner's call to match any increase in the debt limit with spending cuts of equal size, according to a letter released by the Republican leader's office Wednesday.
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The letter will give Boehner an important talking point as he and his fellow House Republicans meet with President Barack Obama at 10 a.m. to discuss the debt limit and other fiscal issues.
"An increase in the national debt limit that is not accompanied by significant spending cuts and budget reforms to address our government's spending addiction will harm private-sector job creation in America," the letter said.
Future Oil Supplies Can Lower Prices Today
We benefit now from more exploration, even if it takes years for new product to reach the market.
BY LUCIAN PUGLIARESI
Every time there's a run-up in gasoline prices, our policy makers respond with two measures: (1) investigations of market manipulation and (2) proposals to increase the tax take on oil and gas companies. Today is no exception. The political popularity of these tactics is hard to resist, but neither one will likely drive down prices or even increase revenues. The government has found no wrongdoing by the oil companies in any of the major oil price run-ups, and the effective tax rate on oil companies, 39.8% according to the Tax Foundation, is the highest among all industries.
There is, however, ...
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