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    Daily Digest – July 2

    by Davos

    Thursday, July 2, 2009, 2:56 PM

  • Dennis Kneale "Recession…it is now over" ‘Real data?’ & ‘Gut feeling?’ ‘Digital Dic…., ‘Bloggers in mothers basement’ (Video)
  • ‘Fell zero point nine percent?’ (Chart 1)
  • ‘Fell zero point nine percent?’ (Chart 2)
  • June Economic Summary in Graphs
  • California IOU Update
  • REAL Jobless rate near Depression levels, Hyperinflation Coming: John Williams
  • Hotel RevPAR off 20.5 Percent
  • YoY Change in Jobs by Sector (Chart)
  • More Intentional Misdirection (H/T Fujisan)
  • Lowry’s Paul Desmond on a Substantial Correction (Video)
  • The credit bubble: the gift that keeps on giving
  • Personal Income (Chart, Chained (Adjusted) Dollars)
  • Yuneec Electric Aircraft Makes First Flight (Video)
  • Philly Fed State Conincident Indicators for May (1 state is green)
  • ISM: Is this the mother of all inventory corrections? (Chart on page)

Economy

Dennis Kneale "Recession…it is now over" ‘Real data?’ & ‘Gut feeling?’ ‘Digital Dic…., ‘Bloggers in mothers basement’ (Video)

‘Fell zero point nine percent?’ (Chart 1)

‘Fell zero point nine percent?’ (Chart 2)

June Economic Summary in Graphs

California IOU Update (The new de facto currency?)

Who will receive registered warrants?
The State in July will issue registered warrants, or IOUs, for all other payments, including those to private businesses, local governments, taxpayers receiving income tax refunds and owners of unclaimed property.

REAL Jobless rate near Depression levels, Hyperinflation Coming: John Williams

If Williams is right, unemployment is over 20%, gross domestic product is shrinking by 8% and consumer prices are jumping by nearly 7%. His forecasts border on apocalyptic. The government is creating so much new money, he says, that the all but inevitable result is hyperinflation, where “your highest denomination, the $100 bill, becomes worth more as toilet paper than money.” Buy physical gold, he advises.

Hotel RevPAR off 20.5 Percent

In year-over-year measurements, the industry’s occupancy fell 11.5 percent to end the week at 63.0 percent. Average daily rate dropped 10.1 percent to finish the week at US$96.78. Revenue per available room [RevPAR] for the week decreased 20.5 percent to finish at US$61.01.

The report also includes some hightlights on the performance for the top 25 markets. As an example, occupancy is off almost 20% in Dallas and Phoenix, and the Average daily rate (ADR) is off 30% and RevPAR off 35% in New York. Ouch.

YoY Change in Jobs by Sector (Chart)

More Intentional Misdirection (H/T Fujisan)

In a little-noticed switch on June 1, the Treasury changed the way it accounts for indirect bids, putting more buyers under that umbrella and boosting the portion of recent Treasury sales that the market perceived were being bought by foreigners.

The new definitions are deep in the arcane world of Treasury auctions. The change involves buyers who place orders through primary dealers. Those had been counted as direct buyers, but as of June 1 they were classified as indirect buyers, making that group larger than before. Because investors view that group as being dominated by foreign buyers, they assumed foreign demand was higher.

Lowry’s Paul Desmond on a Substantial Correction (Video)

The credit bubble: the gift that keeps on giving

Some firms [are negotiating extensions]. Others are issuing junk bonds or stock, using the cash raised to repay some of their loans well ahead of schedule.

The pre-emptive moves demonstrate rising concern about the massive bubble of lending that developed from 2005 to 2007. The looming credit problems are not just Option ARMs and CRE loans; there are about $75 billion in leveraged coming due in 2012, another $150 billion in 2013 and close to $215 billion in 2014.

Personal Income (Chart, Chained (Adjusted) Dollars)

Yuneec Electric Aircraft Makes First Flight (Video)

Philly Fed State Coinincident Indicators for May (1 state is green)

ISM: Is this the mother of all inventory corrections? (Chart on page)

But what bothers me is the uneven picture painted by the areas highlighted in red. They point to an increase in production which is no longer predicated on growth in new orders. In short, we may be seeing a huge inventory restocking – and that’s it. Notice how new orders are now contracting. Yet, inventories are considered too low. That has caused the manufacturing sector to crank up production to the point where production is now growing.

Translation: manufacturing and production are now adding to GDP instead of subtracting from it.

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