Ed’s Daily Notes for July 31st   11 comments

Bloomberg: Economy in U.S. Probably Grew at Slower Pace in Second Quarter

The U.S. economy probably grew in the second quarter at a slower pace, held back by the effects of federal budget cutbacks and higher taxes, economists said before a report today.

Gross domestic product, the value of all goods and services produced in the U.S., rose at a 1 percent annualized rate after a 1.8 percent gain in the previous three months, according to the median forecast of 84 economists surveyed by Bloomberg. Consumer spending, the biggest part of the economy, probably also cooled.

…The Commerce Department will release the GDP figures at 8:30 a.m. in Washington. Economists’ estimates ranged from a 0.1 percent drop to a 1.8 percent increase.

Bloomberg: Summers at Fed Prompts Questions From Concerned Senators

The Senate’s second-ranking Democrat said he would “have a lot of questions” if former Treasury Secretary Lawrence Summers is chosen to replace Federal Reserve Chairman Ben S. Bernanke.

Senator Richard Durbin’s comments in an interview at the Capitol reflect anxiety within the Senate that President Barack Obama may nominate Summers. Durbin is among 19 Democratic senators and one independent who signed a July 26 letter to the White House praising Federal Reserve Vice Chairman Janet Yellen and urging Obama to nominate her to lead the central bank.

I am not a fan of either Yellen or Summers. If I had to pick one, as an investor, I suppose I would lean towards Yellen as the most positive for markets. Other than that, I see Yellen as a more dovish version of Bernanke, and I think that is bad for the country in the long run.

Bloomberg: Ebbing Market Risk Gives Fed the Option to Delay Tapering

Wishful thinking:

Federal Reserve policy makers have wrung out some risk in financial markets by signaling plans to wind down $85 billion in monthly bond purchases, buying time to press on with record stimulus should the economy need it.

A range of market risk measures have fallen since May 22, when Chairman Ben S. Bernanke said the Fed may consider tapering purchases “in the next few meetings” if the labor market shows signs of sustainable gains. The value of the largest leveraged loans has fallen 0.6 percent, and speculative-grade debt sold by companies has dropped by more than half since the start of June, compared with the prior two-month period.

Reduced risk-taking has probably eased concerns on the Federal Open Market Committee that bond buying known as quantitative easing may trigger financial-market instability, said Julia Coronado, chief economist for North America at BNP Paribas in New York.

Signs of investor caution will “quiet some of the discomfort with QE, and make some people on the FOMC more patient” about the timing of a reduction in purchases, said Coronado, a former economist at the Fed’s Division of Research and Statistics. San Francisco Fed President John Williams voiced relief last month that bond market “froth” was receding.

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Posted July 31, 2013 by edmcgon in Economy, Federal Reserve, News, Politics

11 responses to “Ed’s Daily Notes for July 31st

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  1. Sheila and Tom's friend
  2. I like this one. Anyone who still believes that the 4th Amendment protects them and that they have any privacy from our government is seriously delusional.

    http://www.zerohedge.com/contributed/2013-07-31/new-revelations-nsa-and-xkeyscore-program

    “The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.” It still amazes me that people can ignore or rationalize their rights being tossed away by their government. As if they are somehow better for it while at the same time railing against various aspects of said government. We are a seriously mentally unstable society…

    • I repeat the terrorist won the war. We as a nation have given up our freedom in the name of safety and security. How may Americans were killed in the last 12 months and what percentage is this of all American deaths that were murder or accidental? Heck, how about the last 36 months?

    • Systematic government spying on ordinary US citizens is the number one threat to our country. Forget “terrorists”, left or right, or anything else. We all need to let our legislators know how we feel and pull the plug on this nonsense. Immediately!

    • Unfortunately it doesn’t surprise me at all, in fact I have predicted how people will react quite accurately many, many times.

      When the US government was setup it was stated that it would not last, that no republic has lasted for very long.
      And they were right, it didn’t last. It lasted longer then they thought it would, but it clearly has gone away (or at least mostly gone away).

      For some reason people believe if there is no revolution and you don’t change the terms on the documents that a government is the same, but of course that is not true.

      Communism, Socialism, and Democracy, are more alike then different and all are evil, when that is all you have (they are all in fact mob rule).

      People want what is best for them, and don’t care much about others. In fact they take great pleasure in telling other people how they should live their lives. The more people you have for a given resources the more likely that the system they will have for their government will be geared to maximize “the greatest good for the greatest number” (with the most powerful having a extra big share of that).

      And as a refresher course for any that don’t know (I know everyone here does know, but I’m going to say it anyways).
      The things that were really different about the US over other countries of the time were.
      1) The individuals rights come first.
      2) The automatic caste system, that you will be what your father was no matter what, was removed (or at least you had a shot at it).
      3) We would not be a Britain or a Spain, that had “colonies” (really just conquered people), we would instead lead by example.

      Of the three above I can only say that #2 seems to be in place in this day and age.

    • BTW I think it is very naive to believe that all this is going to be little more then a bit of a black eye.
      The general population has already moved on to other concerns, they are already preparing to be completely surprised by the next time that is is shown that the government is using the powers they gave to them.

      • My bet is that there will be a couple of scape goats that take a little heat but by November, nobody will even recall what the NSA is. All that will be remembered is that Snowden is a traitor. Personally, I think that the people in the government who are knowingly violating the public’s constitutional rights are the real traitors. They are the people that are entrusted to preserve the rights of people. They should all go away for a very, very long time including all of the politicians who cover for them.

  3. Yesterday’s WSJ had a lead article on Doves and Hawks at the Fed. The Doves have been much better at forecasting economic activity in the last several years than the Hawks which leads one to believe maybe the Doves are correct on what the Fed is doing.

    • Latetom,
      I think of it like the “frog in boiling water” story. Unfortunately, the doves think they can make the water just a little warmer, without killing us. At least the hawks realize it is possible to boil us alive, even if they don’t realize when it will happen…

      • Time will tell, until then we all including the Fed are unsure exactly what will happen or when.

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