China Moving Closer to Official Tightening
Li Daokui, a monetary policy committee adviser of the People's Bank of China, was quoted by the China Business news as saying conditions necessitated a start to policy tightening. Should the PBoC decide to officially enter a tightening mode, watch oil and copper...
As I noted a few weeks ago ... keep an eye on China
Small Biz a little better
The National Federation of Independent Business Index of Small Business Optimism gained 3.8 points in April, rising to 90.6 and ending seven straight quarters of under 90 readings. The persistence of Index readings below 90 is unprecedented in survey history. Nine of the 10 Index components rose, particularly the outlook for general business conditions and sales, and one was unchanged. Still, job measures barely moved and capital expenditure plans were flat.
TUESDAY, MAY 11, 2010
Money Supply in Freefall, Part Deux
M3 growth is now -5% y/y, the lowest since records began in 1960. The magnitude of that fall is huge and probably the real reason for the dollar strength; it is no wonder the dollar swap lines are having to be issued. In Europe, Germany’s chancellor Angela Merkel was adamant that the ECB would not increase money supply to buy state bonds as part of the emergency package to stabilise pressures within the euro. “Additional money supply will not be created to buy government bonds, rather money supply will be kept within limits existing today”. European M3 growth was last reported in March down 0.2% y/y. Chinese M2 money supply growth was reported up 21.5% y/y. Whilst this is clearly a strong figure, it is the lowest level for a year. Looking at a simple average of the 3 combined, money supply growth has slowed from about 12% last September to just 5% now; the hoped for private sector loan growth has not yet materialised.
MONDAY, MAY 10, 2010
Don't look now, but you (the taxpayer) just bought another home!!!
The combined REO (Real Estate Owned) inventory for Fannie, Freddie and the FHA increased by 22% in Q1 2010 from Q4 2009. The REO inventory (foreclosed homes) increased 59% compared to Q1 2009 (year-over-year comparison).
Click on graph for larger image in
Click on graph for larger image in 
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