Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
I've been calling this the "meh" economy for a long time – a mostly jobless recovery in the 1-2% GDP range which for many does not feel much different than a recession. Of course it is regional as the D.C. corridor, Manhattan, upper plains states and other areas feeling little of the effects (outside of Manhattan for a few quarters in 2008-2009). But a lot of course depends on where you are in the education strata, if you were a former (or current underwater) homeowner, what line of work you are in, etc. The Midwest actually has had some pickup here the past year as auto sales have rebounded from putrid to awful to simply bad. Unfortunately, this sector, like many others now require far few workers than even 10 years ago so when activity rebounds the labor market doesn't feel the same benefit as it once did.
Today's economic data continues the trend – slightly worse ADP employment, slightly worse weekly claims, and a revision downward in GDP below 2%. Funny how those revisions almost always are downward. So "meh" continues.
Treasuries dipped below 1.6% as we break another record and continue into a decade where it looks like rates will never be increased. [May 19, 2011: Prepare for a Rate Hike… in 2018. So Says Goldman Sachs] Equity futures were/are up for no good reason in particular other than I suppose no new headline out of Europe but Spanish yields are not improving measurably and the combination of Spanish, German, and U.S. yields all continue to point to risk off. Until we get our now yearly rescue/kick the can moment. Yada yada yada.
As for equity markets yesterday's losses wiped out all the "super cool" action of Tuesday – when we had hopes of Chinese stimuli and people pinning hopes on a random Greek poll. We continue to exist in a vacuum where most stocks trade together, and almost everything is inverse to U.S. Treasuries and the U.S. dollar. Barring a 6% rally today, it's going to be another "sell in May" notch in the belt, strangely the 3rd year in a row where we have had almost identical action. In a world of moral hazard everyone simply now waits around for central bankers to swoop in with the next program to "make this all go away" (at least for a few quarters).
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