Big news today as the minutes for the latest FOMC meeting that occurred on August 9th came out and show that QE3 may not be too far away. Here are the highlights via Zerohedge:
While talk of QE3 is predictable, a total of 3 dissenters clearly shows a lack of a complete consensus on where the Fed is going from here. Of course the money printing will continue, it just depends on what rate. We are already at a 9% annual growth as far as money supply goes, it's only a matter of time before it starts entering the real economy. I just watched a news report on some high-tech manufacturer in Michigan that is struggling to fill positions. Clearly they are going to have to bid up their offering wage/salary to attract workers (which will probably lure some who are on unemployment) which means that whatever boom the business is seeing may be short lived if it is based on funny money printing alone. As for the 2 day meeting, Tyler Cowen has an interesting thought:
- Some participants noted that additional asset purchases could be used to provide more accommodation by lowering longer-term interest rates.
- Others suggested that increasing the average maturity of the System’s portfolio—perhaps by selling securities with relatively short remaining maturities and purchasing securities with relatively long remaining maturities—could have a similar effect onlonger-term interest rates.
- A few participants noted that a reduction in the interest rate paid on excess reserve balances could also be helpful in easingfinancial conditions.
- A few members felt that recent economic developments justified a more substantial move at this meeting, but they were willing to accept the stronger forward guidance as a step in the direction of additional accommodation. Three members dissented because they preferred to retain the forward guidance language employed in the June statement.
Two-day Fed meeting is a way of setting up the skeptics to take a tumble, a blocking coalition never wants a longer meeting.Judging by that and this new report on consumer confidence, it's almost a given that Bernanke will try something at the FOMC's September 20-21st meeting:
As for home prices:Confidence among U.S. consumers plunged to the lowest level in more than two years as Americans’ outlooks for employment and incomes soured.The Conference Board’s index slumped to 44.5, the weakest since April 2009, from a revised 59.2 reading in July, figures from the New York-based research group showed today. It was the biggest point drop since October 2008. A separate report showed home prices declined for a ninth month.
Nationally, Home Prices Went Up in the Second Quarter of 2011Now Mish says this data isn't seasonally adjusted so it's incorrect. I say we will have to wait and see with Bernanke's chaotic money printing but Mish is a professional and I write intellectual property articles on a show about high school kids in a competitive show choir group, so pick your side wisely.
According to the S&P/Case-Shiller Home Price Indices
New York, August 30, 2011 – Data through June 2011, released today by S&P Indices for its
S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, show that the U.S.
National Home Price Index increased by 3.6% in the second quarter of 2011, after having fallen 4.1% in
the first quarter of 2011. With the second quarter’s data, the National Index recovered from its first
quarter low, but still posted an annual decline of 5.9% versus the second quarter of 2010. Nationally,
home prices are back to their early 2003 levels.
Walter Block and Stever Berger have an interesting article out at LRC on who Ron Paul's potential vice presidential candidate should be. My vote goes for Dennis Kucinich, just because I want to see the media shit a brick, but Block and Berger have some interesting selections:
Doug French. The president of the Mises Institute, and a former banker (and former football player as well). A long shot. He is the "favorite son" of no particular state, having spent time in Nevada (getting his masters degree under the tutelage of Murray N. Rothbard), played college football in Kansas and now residing in Alabama. He would, then, be unlikely to be selected as Vice President by any of the ordinary Republican candidates. However, we are now discussing the choices of Congressman Ron Paul, someone likely to judge a VP candidate on his merits. And, here, there is little question: under a French Presidency, we would have peace abroad and economic tranquility at home. That is to say, Mr. French would faithfully follow the Ron Paul philosophy.Other selections include Rand Paul, Judge Napolitano, Gary Johnson, Lew Rockwell, Tom Sowell, John Stewart, John Stossel, Michelle Bachmann, and Mitch Daniels. Now if Paul wanted to go full fledged for the mainstream vote, Daniels would be a good choice. If it were up to me from this list, I would definitely pick Jim Grant, though Tom Sowell would be good too if it wasn't for his war hawkishness. And of course Doug French and Lew Rockwell would be great selections though I have a feeling Rockwell would have more verbal gaffes than Joe Biden (which isn't a bad thing of course). By far the best quote of the article came at the beginning however:
Jim Grant, former Barron’s columnist, founder and editor of Grants Interest Rate Observer, author of Money of the Mind, a history of credit booms and busts in the United States, and a frequent guest on Bloomberg and CNBC, is well known for his florid and witty literary style and trenchant criticism of the Federal Reserve and Keynesian economic policies. Jim is an ardent backer of hard money and is admired by legions of investors for his intellectual honesty and wit. He would be a compelling proponent for a return to free market money and for repeal of the Dodd-Frank financial strangulation bill.
Politico has focused on the Vice Presidential sweepstakes, and who are we to demur? Of course, this organization does not mention Congressman Ron Paul as a viable candidate, and, on this, we agree. Dr. Paul will, instead, become President of the United States in 2012, so he will just not be available to be anyone else’s Vice President.I should also mention this great pick for Paul's veep:
"My vote is for Walter Williams," says Gary North. "We need a secessionist."I will end with Barry Ritholtz's interesting article on Apple's complete destruction of its competitors.
One of the things that seems to have gotten lost in the avalanche of Steve Jobs coverage has been the impact he has had on technology investors. I refer not to the entire technology sector as an investable asset, but rather, the utterly crushing effect Apple has had on specific competitors as Jobs remade entire industries.
It is creative destruction writ large.
DestroyedRitholtz has other columns for Damaged, Challenged, and Benefited but the analysis on who Apple took down a few notches is a good read.
• HP: The printer business may still have some ink left, but the iPad has gutted HP’s PC operations. It has reached the point the company is considering selling the $40 billion revenue division and leaving the PC industry. HP’s tablet entry, the $499 Touchpad, was a disaster — Best Buy was sitting on over 200,000 unsold units. None were selling until the priced was slashed 80% to $99. (Sure, they may lose $200 on each one, but HP makes it up in volume!)
• Dell: About Apple, founder Michael Dell once famously stated “What would I do? I’d shut it down and give the money back to the shareholders.” When Apple’s market cap passed Dell’s back in 2006, Steve Jobs reminded employees of that barb via email. Today, Apple’s profits ($29B) alone are actually larger than Dell’s entire market capitalization.
• Motorola: See Google, below
• Research in Motion/Blackberry: For a very long time, RIMM “owned” the enterprise market for mobile email and text messaging via their “Crackberry.” They are an instructive example of how a leader can get toppled by an innovative competitor. Topping out at $144 per share in 2008, the RIMM now trades in the $20s, with no solid answer to the iPhone. The NYT’s David Pogue just called their latest entry, the BlackBerry Bold 9900, too little, too late.
• Nokia: Not too long ago, Nokia had better than a 50% market share in the mobile phone market. Today? Just 15%, and forced to abandon their own OS in favor of Microsoft’s also ran Mobile OS.
• Ericsson: I’m sorry, but the name doesn’t ring a bell.