Risk takers will be inclined to “take less” as a result of Obama’s inaugural speech. This speech was a reminder that planners are still all the rage in Obama’s Washington. Part of this can of course be explained by Obama’s ignorance of the world of commerce; the rest is pure intent. The masses are bored with things economic so Obama was gifted with the opportunity for an end run.
From Stephen Hayes of the Weekly Standard, “Strikingly, Obama’s allusions to the nation’s asphyxiating debt and the entitlement programs driving it accounted for just 94 words of the 2,142 he spoke in his second inaugural – less than one percent of the speech. (Obama’s section on climate change was twice as long.) Both times the president spoke of entitlements and deficits, Obama defended the programs but gave no hint at the steps he would take to address the rising debt.”
For potential job-creators, for the consumer, there can be nothing good come of this.
Short of a rescue from more sober quarters we will now begin the final leg of the journey to a European-style social democracy – a continuing “dumbing-down” of the US meritocracy that last existed in the 80’s and 90’s; at least, and key - that will be the growing view.
What then can we expect just ahead from the US real sector?
We had earlier told clients to look for corporate financial commitments to shrink; that is, corporations would reduce spending on industrial equipment, computers and software. That is exactly the result for Q3 and will be the result for Q4 and H1, especially now that corporate strategists understand there to be no end in sight. Indeed, from the Philly Fed print last week we saw that the boom in capital equipment investment that so many predicted for Q4 was a fairy tale.
Part of this is due to weakness offshore, but only a small part. The answer to the lack of corporate interest in investing in the future, this tendency to remain at the sidelines is to be found by the example of an activist administration and the threat of four more years of a failed experiment.
Translation for the strategist, for the desk FI operation is to look for less, not more from key sectors. It is easy to cherry pick. With that in mind, it is true that recent Retail Sales and Claims prints have not fit our view – both through consensus. There will be misses, but for Q1 we expect that the trend in job creation and consumer activity, if placed on a graph, would be well below the line representing that which is now built into most Street models.
Set your trades accordingly. For purposes of this blog we generally illustrate with the term structure. Jan/9 we recommended clients look to sell (S-L) this spread, 5-10 then 110, 2-30, 285. If not short the spread already, look to get that way, or, set trades with this dynamic in mind.
Robert Craven
From Stephen Hayes of the Weekly Standard, “Strikingly, Obama’s allusions to the nation’s asphyxiating debt and the entitlement programs driving it accounted for just 94 words of the 2,142 he spoke in his second inaugural – less than one percent of the speech. (Obama’s section on climate change was twice as long.) Both times the president spoke of entitlements and deficits, Obama defended the programs but gave no hint at the steps he would take to address the rising debt.”
For potential job-creators, for the consumer, there can be nothing good come of this.
Short of a rescue from more sober quarters we will now begin the final leg of the journey to a European-style social democracy – a continuing “dumbing-down” of the US meritocracy that last existed in the 80’s and 90’s; at least, and key - that will be the growing view.
What then can we expect just ahead from the US real sector?
We had earlier told clients to look for corporate financial commitments to shrink; that is, corporations would reduce spending on industrial equipment, computers and software. That is exactly the result for Q3 and will be the result for Q4 and H1, especially now that corporate strategists understand there to be no end in sight. Indeed, from the Philly Fed print last week we saw that the boom in capital equipment investment that so many predicted for Q4 was a fairy tale.
Part of this is due to weakness offshore, but only a small part. The answer to the lack of corporate interest in investing in the future, this tendency to remain at the sidelines is to be found by the example of an activist administration and the threat of four more years of a failed experiment.
Translation for the strategist, for the desk FI operation is to look for less, not more from key sectors. It is easy to cherry pick. With that in mind, it is true that recent Retail Sales and Claims prints have not fit our view – both through consensus. There will be misses, but for Q1 we expect that the trend in job creation and consumer activity, if placed on a graph, would be well below the line representing that which is now built into most Street models.
Set your trades accordingly. For purposes of this blog we generally illustrate with the term structure. Jan/9 we recommended clients look to sell (S-L) this spread, 5-10 then 110, 2-30, 285. If not short the spread already, look to get that way, or, set trades with this dynamic in mind.
Robert Craven
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