http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/http://www.fxstreet.com/fundamental/http://mediaserver.fxstreet.com/images/fxstreet-provider-logo1-en.gif7http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-11-05.htmlThe November 4 FOMC Policy Statement Revisited The economic threshold to bring about a tightening of monetary conditions, although always implicit, was made explicit in the policy statement of November 4 and this aspect needs further elaboration. “Low rates of resource utilization, subdued inflation trends, and stable inflation expectations” is the key phrase indicating what could trigger a change in monetary policy. Related to this backdrop is our comment of November 4, 2009 which includes aThu, 05 Nov 2009 22:54:25 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-11-05.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-11-04.htmlFed Retains Stance of September FOMC Meeting The FOMC policy statement following the meeting of November 3-4 retains roughly the stance that was conveyed in the September policy statement. In the November 4 policy statement, the Fed also left unchanged the much quoted phrase – “warrant exceptionally low levels of the federal funds rate for an extended period.” Essentially, the Fed is no rush to change its monetary policy stance. The financial media appears to have reacted prematurely after theWed, 04 Nov 2009 22:32:59 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-11-04.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-11-03.htmlWill Real GDP Growth in the First Year of Recovery Match Historical Norm? Real GDP grew at an annual rate of 3.5%in the third quarter. This is impressive but the pace of economic activity in the quarters ahead will be much more subdued until the final three months of 2010. In the September 9, 2009 commentary, it was noted that history tells us that real GDP has advanced at a rapid clip in the first four quarters of a recovering economy (see table 1). The median increase of real GDP in theTue, 03 Nov 2009 22:53:09 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-11-03.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-11-02.htmlFactory Sector Maintains Expansionary Trend The ISM manufacturing composite index rose to 55.7 in October, marking the third consecutive monthly reading that exceeds 50.0. Readings in excess of 50 denote an expanding factory sector. The new orders index (58.5 vs. 60.8 in September) edged down slightly in October implying that orders are growing but at a slower pace compared with the prior month. The sharp increase of the production index (+7.6 to 63.3) puts it at the highest in nearly fiveMon, 02 Nov 2009 23:08:09 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-11-02.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-11-01.htmlConsumer Spending – Mild Increase in Q4 The impact of the American Recovery and Reinvestment Act (ARRA) is visible in the third quarter GDP report and the President’s Council of Economic Advisers has estimated that the ARRA contributed between 3 and 4 percentage points to real GDP growth in the third quarter. The “Cash for Clunkers” program was not part of the original ARRA but was included by a supplemental bill and funds were reallocated. The purchase of cars under this program accounted forSun, 01 Nov 2009 23:05:02 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-11-01.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-29.htmlRecession is History, Economy Back in Business The recession is behind us. Real gross domestic product of the U.S. economy grew at an annual rate of 3.5% in the third quarter after a 0.75 drop in the prior quarter. This is the first increase of real GDP after a string of four quarterly declines. Real GDP has declined in five out of the six quarters of the recession. The Business Cycle Dating Committee of the National Bureau of Economic Research will make the official announcement after itThu, 29 Oct 2009 21:58:48 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-29.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-28.htmlSales of New Homes Decline, but Inventories and Prices remain Favorable Sales of new single-family homes fell 3.6% to an annual rate of 402,000 in September after a downwardly revised gain in August. Sales of new homes dropped in the South (-10%) and West (-10.6%) which more than offset the 34% gain in the Midwest. Sales of new homes held steady in the Northeast. Sales of new single-family have moved up 22% from the cycle low reading of 329,000 in January 2009. It appears that existing homesWed, 28 Oct 2009 22:01:01 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-28.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-27.htmlCase-Shiller Home Price Index – Further Improvement in Home Prices The Case-Shiller Home Price Index of 20-metro areas increased 1.0% in August, the third consecutive monthly gain. This favorable price picture and the improvement in home sales are supported by the $8000 first-time home buyer tax credit program and the low mortgage rate environment. At the same time, mortgage modification programs have also contributed to the stability of the housing market. The Case-Shiller Home Price Index onTue, 27 Oct 2009 21:55:51 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-27.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-26.htmlChicago National Activity Index – More Validation about Economic Recovery The Chicago Fed National Activity Index (CFNAI) slipped slightly in September to -0.81 from a revised -0.65 reading in August. However, the 3-month moving average improved to -0.63 in September from -0.96 in the prior month. According to the Chicago Fed, “when the 3-month moving average of the CFNAI moves below -0.70 following a period of expansion, there is an increasing likelihood that a recession has begun.” TheMon, 26 Oct 2009 22:04:45 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-26.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-25.v02.htmlExisting Homes: Sales, Inventories, and Prices Heading in the Desired Direction Sales of all existing homes rose 9.4% to annual rate of 5.57 million in September after a 2.9% drop in the previous month. Single-family existing home sales also advanced 9.4% to an annual rate of 4.89 million units. The level of single-family existing home sales is at the highest mark since August 2007 and it is nearly 21% higher than the cycle low recorded in January 2009 (4.05 million units). Sales of existingSun, 25 Oct 2009 21:58:29 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-25.v02.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-22.htmlIndex of Leading Indicators Confirms Forecast of Economic Recovery The Index of Leading Indicators increased 1.0% in September, marking the sixth consecutive monthly increase. This string of gains is convincing indication that an economic recovery is underway. On a quarterly basis, the index has moved 1.8% from a year ago, the first increase since the fourth quarter of 2006. Once again, the index has provided valuable guidance about the course of the economy. In September, with exception ofThu, 22 Oct 2009 21:56:00 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-22.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-21.v02.htmlHome Sales – A Preview Sales data of existing and new homes for the month of September will be published on October 23 and October 28, respectively. Market expectations are for gains in sales of both existing homes (+4.9% to 5.35 million units) and new homes (+2.5% to 440,000 units). These gains would translate into a 19% increase in sales of all existing homes from the bottom established in January 2009 (4.490 million units). The likely increase in sales of new homes in September would implyWed, 21 Oct 2009 21:58:47 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-21.v02.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-20.htmlHome Construction – Mild Improvement in September Starts for new homes rose 0.5% to an annual rate of 590,000 in September. Single-family starts registered gains (+3.9%) while that of multi-family units fell 15.2%. Although the September numbers appear to be lackluster, single-family starts have risen in six out of the first nine months of 2009 and have advanced 40% from the cycle low of 357,000 in January 2009 to 501,000 in September. On a regional basis, starts of new homes increased in theTue, 20 Oct 2009 21:54:54 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-20.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-19.htmlPublic Debt of the U.S., its Peers, and the Dollar Publicly held debt of the U.S. was 40.8% of GDP in 2008. The Congressional Budget Office estimates the ratio of debt to GDP ratio will peak by 2011 at 54.4% and start to taper down in the years ahead. The costs associated with the wars and the financial crisis has led to the sharp jump in the budget deficit in 2008 and 2009, which has consequently raised the ratio of debt to GDP. The other nations of the G-7 also have accumulated debt suchMon, 19 Oct 2009 21:57:40 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-19.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-18.htmlWidespread Strength in Factory Report Industrial production increased 0.7% in September, following an upwardly revised 1.2% gain in the prior month. The industrial production index hit the cycle low in June (see chart) and has since risen every month. In the third quarter, industrial production rose at an annual rate of 5.2%, the first increase since the first quarter of 2008. Production at the nation’s mines (0.7%) advanced while that of utilities (-0.7%) fell in September. Factory activity,Sun, 18 Oct 2009 21:59:54 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-18.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-15.htmlInflation Remains a Non-Issue, For Now The Consumer Price Index (CPI) increased 0.2% in September after a 0.4% increase in the prior month. In the third quarter, the CPI has increased 3.6% after a 1.3% gain in the second quarter. On a year-to-year basis, the CPI fell 1.3% in September. The food price index dropped 0.1% during September vs. a 0.1% increase in August. The energy price index moved up 0.6% in September compared with a 4.6% jump in the previous month. The core CPI, which excludesThu, 15 Oct 2009 22:21:33 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-15.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-14.htmlMinutes of September 22-23 FOMC Meeting – More of the Same The minutes of the September 22-23 FOMC meeting contain the typical pros and cons of Fed policy, with nothing standing out. The willingness of some members to enlarge the size of the mortgage-backed securities purchase plan could be raised to “reduce economic slack more quickly than in the baseline outlook.” At the same time, another member held the opinion that improvements underway implied a reduction of these purchases. TheWed, 14 Oct 2009 22:23:47 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-14.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-13.htmlIncrease Employment the Same Way You Increase Home Sales Every month in its survey of economists’ forecasts, the WSJ asks various inane questions. In its latest survey, one of the questions had to do with what the government could do to increase employment. Now that health-care “reform” appears to be on its way to being a done deal, the D.C. issue du jour is employment stimulus. Various kinds of employer-tax incentives are in the initial stages of being proposed. Of course, the editorial boardTue, 13 Oct 2009 22:13:06 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-13.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-11.htmlChairman Bernanke on Fed’s Exit Strategy The Chairman Bernanke presented a detailed explanation of the Fed’s balance sheet and exit strategy at yesterday’s Federal Reserve Board Conference on Key Developments in Monetary Policy in Washington. Bernanke noted that “accommodative policies will likely be warranted for an extended period. At some point, however, as economic recovery takes hold, we will need to tighten monetary policy to prevent the emergence of an inflation problem down the road.”Sun, 11 Oct 2009 22:10:03 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-11.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-08.htmlThe Inflation Story – What is the Evidence? There is a growing concern about an inflationary threat in the U.S. economy given the enormous monetary accommodation the Fed has put in place. As expected, there are differing opinions about this issue. Putting the available information in perspective, a strong case exists for inflation to be a few notches down on the Fed’s priority list in the short term. The important phrase here is “short term.” There are many compelling aspects in the recoveringThu, 08 Oct 2009 22:30:10 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-08.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-07.htmlThe Workweek in “Jobless Recoveries” The current upswing in economic activity is most likely to be the third “jobless recovery” following the 1991 and 2001 economic recoveries when employment growth was subpar for several months after the official recovery commenced. The reduction in the duration of the average workweek is standing out in recent employment reports. Historically, the workweek has shown a downward trend for several decades (see chart 1). In September 2009, the average workweekWed, 07 Oct 2009 22:16:09 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-07.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-06.htmlAustralia: Taking the Lead With Higher Rates, But Who Will Follow? In a move that surprised some analysts, the Reserve Bank of Australia (RBA) hiked its Overnight Call Rate by 25 basis points to 3.25%. After a spate of strong economic indicators, signs of recovery from Australia’s major trade partners and a moderation in price increases, the markets had priced in some monetary tightening before year-end. This hike confirms those expectations, and along with a few choice comments in the RBA’sTue, 06 Oct 2009 22:13:40 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-06.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-05.htmlISM Non-Manufacturing Survey – Mixed News The composite index of the ISM Non-manufacturing Survey rose to 50.9 in September, the first reading above 50 since September 2008. Indexes tracking new orders (54.2 vs. 49.9 in August) and overall business activity (55.1 vs. 51.3) moved up in addition to indexes tracking backlogs, imports, and supplier deliveries. The employment index increased to 44.3 in September from 43.5 in August, indicating that payrolls were falling less rapidly in SeptemberMon, 05 Oct 2009 22:01:26 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-05.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-04.htmlSeptember Employment Situation – Mixed Message Much Like Other Recent Economic Reports Civilian Unemployment Rate: 9.8% in September vs. 9.7% in August, cycle low is 4.4% in March 2007. Payroll Employment: -263,000 in September vs. -201,000 in August, net loss of 13,000 more jobs after revisions of payroll estimates for July and August. Hourly earnings: $18.67 in September vs. $18.66 in August, 2.5% yoy increase vs. 2.6% yoy increase in August, cycle high is 4.28% yoy increase in Dec. 2006.Sun, 04 Oct 2009 22:00:48 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-04.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-01.htmlStrength of Consumer Spending is Driver of Q3 GDP Growth Real consumer spending increased 0.9% in August after a 0.2% gain during the prior month. The ‘Cash for Clunkers’ program was the major reason for the sharp increase in consumer spending. A large part of this gain will be reversed in September as the program expired in August. Taking into consideration the likely drop of consumer spending in September and the July-August estimates, consumer spending is now projected to have risen 3.3%.Thu, 01 Oct 2009 21:58:22 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-10-01.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-09-30.htmlMany Nuggets of Information about Fed’s Exit Policies from Vice Chairman Kohn Vice Chairman Kohn’s preemptive stance (see excerpt below) on the timing of monetary policy is not surprising: “So we must begin to withdraw accommodation well before aggregate spending threatens to press against potential supply, and well before inflation as well as inflation expectations rise above levels consistent with price stability.” Hints about the degree of monetary policy tightening -- whether aggressive orWed, 30 Sep 2009 22:03:51 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-09-30.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-09-29.htmlHome Prices Post a Significant Improvement – Housing Market is Stabilizing The Case-Shiller Home Price Index rose 1.2% in July, the second straight monthly increase after a long stretch of declines which began in June 2006 (see chart 1). From a year ago, the Case-Shiller Home Price Index is down 13.3%, a noteworthy improvement after a record drop of 19% was reported for January 2009. This house price index has fallen 32% from the peak in May 2006 and has now reversed the trend and gained 2%Tue, 29 Sep 2009 22:02:46 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-09-29.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-09-28.htmlChicago Fed Index Slips in August – Employment Indicators Held Back Index The Chicago Fed National Activity Index (CFNAI) was -0.90 in August, down from the revised -0.56 reading in July. The 3-month moving average improved to -1.09 during August vs. -1.61 in July. Readings of the 3-month moving average of the CFNAI that are below -0.70 following a period of economic expansion point to a recessionary phase. The 3-month moving average of the CFNAI has improved from -3.63 in January 2009. InMon, 28 Sep 2009 21:57:37 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-09-28.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-09-27.htmlNew Homes Sales – Many Encouraging Details to Report Sales of new single-family homes increased slightly in August to an annual rate of 429,000 from 426,000 in July. On a regional basis, sales of new single family homes rose 12.2% in the West, fell in the Northeast (-16.3%) and Midwest (-5.8%), and was unchanged in the South. Sales of new single-family homes have risen 30.4% from the record low of 329,000 units in January 2009. The most noteworthy aspect of the report is that sales of newSun, 27 Sep 2009 22:02:53 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-09-27.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-09-24.htmlSales of Existing Homes are Stabilizing, although Headline Reading Fell in August Sales of all existing homes fell 2.7% to an annual rate of 5.1 million units during August, following a string of four monthly gains. Sales of new single-family homes fell 2.8% to an annual rate of 4.48 million units. The sales level of single-family existing homes is now up 10% from the record low of 4.050 million units in January. On a regional basis, sales of existing homes fell in the Northeast (-4.4%),Thu, 24 Sep 2009 22:25:03 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-09-24.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-09-23.htmlFOMC Policy Statement - Nature of Incoming Data Allow Fed to Wait and Watch The tone of the policy statement and details are largely close to expectations. The federal funds rate was left unchanged at 0%-0.25%. The statement reiterates Chairman Bernanke’s opinion that an economic recovery is underway, representing a significant departure from the August policy statement which noted that “economic activity is leveling out.” The outlook for inflation remains favorable in the Fed’s opinion due toWed, 23 Sep 2009 22:10:37 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-09-23.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-09-22.htmlFOMC Policy Statement - Preview The FOMC meeting is nearly certain to end without a change in the federal funds rate on September 23, 2009. Markets will be focused on the Fed’s purchase plan of mortgage-backed securities. Currently the program plans to purchase $1.25 trillion mortgage-backed securities by the end of the year; the Fed has bought two-thirds of the target amount. The $300 billion Treasury securities purchase program expires in October 2009; the Fed has on its books 94% of theTue, 22 Sep 2009 22:16:05 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-09-22.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-09-21.htmlIndex of Leading Economic Indicators – Confirms Economic Recovery is Underway Chairman Bernanke noted last week that a recovery is most likely underway. Our forecast is for a 2.5% increase in real GDP during the third quarter, which is slightly lower than the market consensus. The advance estimate of real GDP for the third quarter will be published on October 29. The Index of Leading Economic Indicators rose 0.6% in August, the fifth consecutive monthly increase of the index. On a year-to-yearMon, 21 Sep 2009 22:36:38 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-09-21.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-09-20.html“The Stimulus Didn’t Work” – An Overlooked Fact that Needs Mention In the Wall Street Journal of September 17, 2009 (John Cogan, John Taylor, and Volker Wieland: The Stimulus Didn’t Work - WSJ.com) the title is in past tense, implying the $787 billion package has been fully utilized and now we can determine the success or failure of this big bill. The merits and flaws of this opinion piece have been published and more will be written. I would like to add to one important fact which underscoresSun, 20 Sep 2009 21:58:03 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-09-20.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-09-17.htmlHousing Starts – Multi-family Units Led the Charge in August Starts of new homes increased 1.5% to an annual rate of 598,000 in August, with a 25% increase in starts of multi-family units accounting for all the gain. The level of housing starts is the highest since November 2008. The 3.0% drop in starts of single-family units (479,000 vs. 494,000 in July) is the first decline since January. On a year-to-year basis, starts of new homes have dropped nearly 28%, which is s noticeable decelerationThu, 17 Sep 2009 22:13:08 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-09-17.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-09-16.htmlThe Energy Price Index Lifts Consumer Price Index in August The Consumer Price Index (CPI) moved up 0.4% in August after holding steady in July. The 9.1% increase in gasoline prices accounted for the sharp increase in the headline number. Excluding energy, the CPI increased only 0.1% in August compared with no change in July. Food prices rose 0.1% in August following a 0.3% decline in the prior month. The energy price index recorded a 4.6% gain in August vs. a 0.4% decline in July. The declineWed, 16 Sep 2009 22:26:31 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-09-16.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-09-15.htmlAutos and Non-auto Components Lift Retail Sales in August The 2.7% jump in retail sales reflects a 1.1% increase in purchases of cars, a 5.1% gain in gasoline sales, and a 0.6% advance of retail sales excluding autos and gasoline. In other words, the strength in retail sales was widespread during August. The “cash for clunkers” program boosted auto sales in August, which should be followed by a partial reversal in the months ahead. The price-related hike in gasoline sales should show aTue, 15 Sep 2009 22:18:14 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-09-15.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-09-14.htmlA Perspective on Imports of the US Economy Amidst the heated discussion about the 35% tariffs imposed on tires imported from China, it is useful to step back and look at facts about imports of the United States. Let us start with the total import bill of the US economy in inflation adjusted dollars. In 2008, the US imported $2.123 trillion of goods and services; of which, imports of goods made up 83% of total imports ($1.767 trillion) of the US economy. Imports of goods and services were aboutMon, 14 Sep 2009 22:25:54 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-09-14.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-09-13.htmlMajor Components of Employment Job growth will be the key to the nature of the recovery in the months ahead. There is a growing consensus that this recovery will join the club of jobless recoveries of 1991 and 2001. As the economy recovers, employment gains are most likely to be seen in the service sector. Service sector employment (including government) makes up about 85% total employment (see chart 1). Factory employment is about 9% of total employment (see chart 2). Factory jobs haveSun, 13 Sep 2009 22:01:28 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-09-13.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-09-09.html“Jobless Recoveries” and Real GDP During the First Four Quarters of an Economic Recovery Real gross domestic product (GDP) is nearly certain to post an increase starting in the third quarter of 2009. Although each economic recession and recovery is different, it is nonetheless instructive to track the trail of economic history. The economic expansions which began in March 1991 and November of 2001 have been coined as “jobless recoveries” and it is entirely conceivable that the current recoveryWed, 09 Sep 2009 21:55:00 GMThttp://www.fxstreet.com/fundamental/analysis-reports/webmaster@ntrs.com (Northern Trust)http://www.fxstreet.com/fundamental/analysis-reports/daily-global-commentary/2009-09-09.html