“You feel that sting, big boy, huh?”
July 30th, 2012 - 12:19 pm
The Dallas Fed measure of business activity just took a dive:
With expectations for a muddle-through slight positive print, the headline Dallas Fed index just printed at -13.2 (exp. 1.9). This is its lowest level since September of last year and the biggest miss of expectations since May of last year. The headline index is teetering on the edge of its worst levels since 2009 as the month to month change in the general business activity index dropped a massive 19pts – its largest drop since April 2005. Specifically it appears the outlook for capital expenditures was among the largest sub-index to have its hope crushed.
We might be in the double dip already.
Listen for the fog horn of the good ship QE3 any time now.
To QE3 or not to QE3? It’s an increasingly pointless question. Helicopter Ben has already driven bond yields down to where you need a microscope to read them. All he’s succeeded in doing is to drive money into the stock market (for dividends) or into mattresses. No one wants to invest in plant, equipment, or production as long as regime uncertainly (Barack Obama) persists. Actual capital investments have a long lead time to pay off and are difficult/impossible to liquidate once you’ve started; it’s far easier to trade stocks (which are much more liquid) until the future becomes clear. Bernanke’s wasting his time. When and if it becomes clear Barack Obama is a one-termer, I think you’ll see a change you can believe in in the economic climate.