Despite the persistent Euro debt crisis coverage, there are other risks that we must bear in mind heading into 2012. In his latest client note David Rosenberg elaborated on 5 of the biggest risks heading into the new year. Aside from the EMU debacle, he cites oil prices and an ignorant American political charade as the greatest risks. I’d only add that a Chinese slow-down is still very much a risk to the global economy. Via Gluskin Sheff:
1. Despite the high hopes, there is no sign that the new technocratic political regimes in Greece and Italy (led by economists!) will prove to be any more effective in pushing through reforms than their predecessors, especially given the rapid weakening pace in economic activity.
2. Oil prices have soared 15% since the beginning of October (Brent is trading just below $115 a barrel), throwing a wrench into the one source of support for the “real” economy for the couple of months, which was the depressed deflator. Gasoline prices, which had gone down last month are not about to head up again. The problem is that Thanksgiving for retailers is just a tad more important than Halloween.
3. We may see confidence sapped yet again if the budget Super Committee fails to come up with any compromises ahead of the November 23rd deadline.
4. None, if any of the Obama jobs bill lives to see the light of day. If extended jobless benefits, payroll ta relief and bonus depreciation allowances are not permitted to expire, then we can expect to see anywhere from a two to three percentage point fiscal stimulus withdrawal out of GDP to kick off 2012. Right now, this is not on the investor radar screen.
5. While we are seeing governments topple in Greece and Italy and words turn into action at the parliamentary level in any event, the situation in Europe remains one of a show-me nature.
Source: Gluskin Sheff
- eurozone - global austerity - iran/israel/oil - slow down will impact China, local workers will be unhappy, if not crushed they’ll export inflation in austere countries full of unemployed people
Hey, the Christmas shopping season is just beginning. Can’t you give us a list of potential upside surprises that might drive the market higher?? Might we find any goodies in our stockings hung by the chimney?
http://www.thetrader.se/2011/11/15/live-debate-by-rosenbergkrugman-vs-summersbremmer/
I believe No. 4 needs modest correction: “If extended jobless benefits, payroll tax relief and bonus depreciation allowances are permitted to expire (delete the “not”)…” If we go ‘whole hog’ and eliminate marginal stimulus, we will see a contraction. Perhaps not as large as proffered, but it will happen. Ad in problems with China and Europe, and we could have a real fall-off.
There also seem to be a typo in No. 2. Gasoline prices are NOW about to go higher (currently reads NOT)…
Why isn’t gold pushing much higher? The Euro’s mid-term future is surely doomed at anywhere near current dollar/GBP/yen ratings; won’t Germany and France have to accept a 20-25% devaluation in order to secure the currency? Or will they be prepared to ditch Greece and Ireland and persuade the ECB to print another 3 trillion to prop up Italy and Spain? Is a $2500 per oz price for gold a reality within 6 months?
Why aren’t cowry shells headed up? Cowry shells are currency and we’ll returning to the cowry standard any day now…
Unemployment benefits not only benefit the receipients, but return double (actually 1.90 times) in the economy. I’ll take that kind of return all day long.
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© 2009 pragcap.com · Register for PC
Despite the persistent Euro debt crisis coverage, there are other risks that we must bear in mind heading into 2012. In his latest client note David Rosenberg elaborated on 5 of the biggest risks heading into the new year. Aside from the EMU debacle, he cites oil prices and an ignorant American political charade as the greatest risks. I’d only add that a Chinese slow-down is still very much a risk to the global economy. Via Gluskin Sheff:
1. Despite the high hopes, there is no sign that the new technocratic political regimes in Greece and Italy (led by economists!) will prove to be any more effective in pushing through reforms than their predecessors, especially given the rapid weakening pace in economic activity.
2. Oil prices have soared 15% since the beginning of October (Brent is trading just below $115 a barrel), throwing a wrench into the one source of support for the “real” economy for the couple of months, which was the depressed deflator. Gasoline prices, which had gone down last month are not about to head up again. The problem is that Thanksgiving for retailers is just a tad more important than Halloween.
3. We may see confidence sapped yet again if the budget Super Committee fails to come up with any compromises ahead of the November 23rd deadline.
4. None, if any of the Obama jobs bill lives to see the light of day. If extended jobless benefits, payroll ta relief and bonus depreciation allowances are not permitted to expire, then we can expect to see anywhere from a two to three percentage point fiscal stimulus withdrawal out of GDP to kick off 2012. Right now, this is not on the investor radar screen.
5. While we are seeing governments topple in Greece and Italy and words turn into action at the parliamentary level in any event, the situation in Europe remains one of a show-me nature.
Source: Gluskin Sheff
- eurozone - global austerity - iran/israel/oil - slow down will impact China, local workers will be unhappy, if not crushed they’ll export inflation in austere countries full of unemployed people
Hey, the Christmas shopping season is just beginning. Can’t you give us a list of potential upside surprises that might drive the market higher?? Might we find any goodies in our stockings hung by the chimney?
http://www.thetrader.se/2011/11/15/live-debate-by-rosenbergkrugman-vs-summersbremmer/
I believe No. 4 needs modest correction: “If extended jobless benefits, payroll tax relief and bonus depreciation allowances are permitted to expire (delete the “not”)…” If we go ‘whole hog’ and eliminate marginal stimulus, we will see a contraction. Perhaps not as large as proffered, but it will happen. Ad in problems with China and Europe, and we could have a real fall-off.
There also seem to be a typo in No. 2. Gasoline prices are NOW about to go higher (currently reads NOT)…
Why isn’t gold pushing much higher? The Euro’s mid-term future is surely doomed at anywhere near current dollar/GBP/yen ratings; won’t Germany and France have to accept a 20-25% devaluation in order to secure the currency? Or will they be prepared to ditch Greece and Ireland and persuade the ECB to print another 3 trillion to prop up Italy and Spain? Is a $2500 per oz price for gold a reality within 6 months?
Why aren’t cowry shells headed up? Cowry shells are currency and we’ll returning to the cowry standard any day now…
Unemployment benefits not only benefit the receipients, but return double (actually 1.90 times) in the economy. I’ll take that kind of return all day long.
Notify me of follow-up comments via e-mail
© 2009 pragcap.com · Register for PC
Despite the persistent Euro debt crisis coverage, there are other risks that we must bear in mind heading into 2012. In his latest client note David Rosenberg elaborated on 5 of the biggest risks heading into the new year. Aside from the EMU debacle, he cites oil prices and an ignorant American political charade as the greatest risks. I’d only add that a Chinese slow-down is still very much a risk to the global economy. Via Gluskin Sheff:
1. Despite the high hopes, there is no sign that the new technocratic political regimes in Greece and Italy (led by economists!) will prove to be any more effective in pushing through reforms than their predecessors, especially given the rapid weakening pace in economic activity.
2. Oil prices have soared 15% since the beginning of October (Brent is trading just below $115 a barrel), throwing a wrench into the one source of support for the “real” economy for the couple of months, which was the depressed deflator. Gasoline prices, which had gone down last month are not about to head up again. The problem is that Thanksgiving for retailers is just a tad more important than Halloween.
3. We may see confidence sapped yet again if the budget Super Committee fails to come up with any compromises ahead of the November 23rd deadline.
4. None, if any of the Obama jobs bill lives to see the light of day. If extended jobless benefits, payroll ta relief and bonus depreciation allowances are not permitted to expire, then we can expect to see anywhere from a two to three percentage point fiscal stimulus withdrawal out of GDP to kick off 2012. Right now, this is not on the investor radar screen.
5. While we are seeing governments topple in Greece and Italy and words turn into action at the parliamentary level in any event, the situation in Europe remains one of a show-me nature.
Source: Gluskin Sheff
- eurozone - global austerity - iran/israel/oil - slow down will impact China, local workers will be unhappy, if not crushed they’ll export inflation in austere countries full of unemployed people
Hey, the Christmas shopping season is just beginning. Can’t you give us a list of potential upside surprises that might drive the market higher?? Might we find any goodies in our stockings hung by the chimney?
http://www.thetrader.se/2011/11/15/live-debate-by-rosenbergkrugman-vs-summersbremmer/
I believe No. 4 needs modest correction: “If extended jobless benefits, payroll tax relief and bonus depreciation allowances are permitted to expire (delete the “not”)…” If we go ‘whole hog’ and eliminate marginal stimulus, we will see a contraction. Perhaps not as large as proffered, but it will happen. Ad in problems with China and Europe, and we could have a real fall-off.
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