Friday, August 29, 2008


GDB-Gross Domestic Bogosity. Revised number almost double the initial reading on the strength of our exports which accounted for a mere 3.1% of the 3.3% improvement. How did this happen? Look no further than to China that when you lower the value of your currency to 0, people will buy your goods. Of course, the downside to that is unbelievable inflation, and when real incomes are diminishing, that hurts real bad. Consumer spending, backed by $100 billion in free money, rose 0.2%, wow. And now we see that things were so bad, that Japan had agreed to backstop the plummeting dollar by flooding the market with yen. Didn't tell us about that in March, did they?

Now let's look at July alone. Not so pretty. Rebate checks are gone. Consumer spending went down 0.4% and wages decreased 1.7%. Reality is here, people are broke. And inflation rose 2.4% to make matters worse. So bulls enjoy your 3-day ride. Auto sales get released next week, and living in Florida, I can tell you that we and New Orleans cannot afford any hurricane damage to hinder our already dead economies.

Volume will be back as well next week. Lehman is laying off 1,500 people. Goldman continues to have their earnings slashed by their competitors (probably overdone like last quarter). But where is the spending going to come from? If the dollar rises as all of Europe and Japan go into a recession, who's going to buy our tractors?

The world's largest shopping center owner saw its profits decline 35% in the first half. The catch? They're not a U.S. company, but it was their U.S. holdings that killed profits. Large American companies (such as GGP) will continue to get racked as the consumer has nothing left to spend.

Carteret Mortgage Corp., who just a few years ago wrote $4 billion in business and had 4,500 employees, is out of business. Add this to Wall St. layoffs, Big 3 cutbacks, and a sinking economy and it very much makes you question unemployment numbers.

Speaking of Wall St., you know, all that debt they refinanced wasn't for free. According to JPMorgan, Wachovia and Merrill "may cost them as much as $23 billion more in annual interest versus a year ago based on Merrill Lynch index data." Kind of tough foe 2 companies that just lost $9 billion each, isn't it.

This week has been a tough one. But enjoy the holiday weekend, and if you live in the Gulf or Florida be careful and safe, and I hope that the markets next week are much rougher than the weather.


Tiger Coach said...

Ax... the pendulum will swing back our way next week.

AX said...

I'm with you TC. Should be an interesting week with 2 approaching hurricanes and Putin threatening to pull the plug on Europe. Hope the only thing that crashes is the market, not my house! Unemployment numbers should start to get rough.