RSS Feed
Twitter
Facebook
Email
HomeIs The Economy Turning The Corner?
Posted by Larry Doyle on April 21st, 2009 7:05 AM |
Markets correct by price (both up and down) and time (extended). Despite the 3+% price declines in equity markets yesterday, the markets are up approximately 20% since the market lows seen on March 6th. Some analysts believe this upward move signals an improvement in the economy largely due to the fiscal and monetary stimulus provided by Uncle Sam. I am not in that camp.
A few emerging economies, specifically China, have improved. Can the rest of the world, including the U.S., expect those economies to be the engine for a global turnaround at this juncture? I do not think so. I still see the following issues on our domestic horizon:
1. continued deterioration in loan performance on bank books
2. a banking system woefully capital deficient
3. an automotive industry which must downsize
4. municipalities which are faced with the predicamant of capital shortfalls and underfunded pensions
5. commercial real estate just starting to experience real defaults
6. a housing market with increased foreclosures pressuring prices
7. an unemployment rate clearly headed toward double digits
Earnings reports for the first quarter have been mixed. I view the recently reported bank earnings as largely “managed” via accounting gimmicks. Meredith Whitney believes the earnings for major money center banks will turn negative in the 2nd quarter. The regional banks, without the benefit of large capital market activities but facing credit writedowns, report earnings today. Key Corp just reported a loss of $1.09 eps (earnings per share) versus an estimate of -.21. I suspect we will see losses from other regional banks of a similar magnitude. (more…)
United ‘Kingdom’ In Name Only
Posted by Larry Doyle on October 23rd, 2009 9:01 AM |
With the report, are we witnessing an acceleration in the demise of this ‘kingdom?’ I believe we are. The Wall Street Journal offers insights into the economy of this once proud and productive kingdom, in writing, The U.K’s Unbelievable Shrinking Economy:
The reaction to this report was an immediate decline in the value of the British pound. Analysts project the British government will have to engage in further quantitative easing and fiscal stimulus. The money needed to support those government initiatives is money the U.K does not have.
The WSJ adds further:
The U.K’s AAA-rating is nothing more than a joke at this point propagated by the rating agencies which have little credibility. I would venture that the UK has not been downgraded simply due to political pressures.
Long live the Queen, but given the current economic situation and projected ongoing fiscal deficits, the UK is a ‘kingdom’ in name only.
LD
Tags: British pound, deficit in United Kingdom, economic recession, fiscal stimulus in United Kingdom, Goldman Sachs comment on U.K. GDP, recession in U.K, sterling, The U.K.'s Unbelievable Shrinking Economy, U.K recession, UK GDP, UK remains in recession, United Kingdom GDP
Posted in Economy, General, United Kingdom | 1 Comment »