Posted on 03/05/2013 7:07:51 AM PST by blam
SocGen: This Will Be A Breakout Year For The US Economy, And A Watershed Moment In Markets Is About To Occur
Joe Weisenthal
March 5, 2013, 6:05 AM
Analysts at French bank Societe Generale have a big report out titled "The Return Of Yield: Preparing For Rising Long Term Rates."
The theme is very great-rotation-y in that they argue that the economy is turning the corner, and interest rates are about to rise.
Their language is strong and dramatic. A watershed moment for the U.S. economy is at hand, and the risk is that it will happen sooner rather than later.
We believe that 2013 will be a breakout year for the US economy. As this realisation sets in and markets begin to price the end of asset purchases and focus on the exit sequence, Treasury yields are likely to bottom out. There is a significant gap between current yield levels and fair values, and we believe that the end of the QE programme will have compressed the 10-year term premiums by perhaps as much as 140bp. The question is how quickly this compression will be unwound. Our central scenario assumes a 2.75% year-end target, but here we evaluate the possibility and implications of a more rapid correction to 3.50%.
It has been our longstanding view that 2013 will see an inflection point on growth. After sequential deleveraging of households, small businesses, state and local governments and now the federal government, the structural headwinds to growth are beginning to fade. (Admittedly, fiscal deleveraging is only beginning, but we believe that the modest drag will be offset by improving private sector fundamentals). Whereas we doubted previous growth spurts in US data, we believe that this time the improvement is
(snip)
This chart shows some possible trajectories for 10-year yields.
(Excerpt) Read more at businessinsider.com ...
Right.
Is my memory bad or is Business Insider a Democrat publication that shills for the current administration?
“This Will Be A Breakout Year For The US Economy, And A Watershed Moment In Markets Is About To Occur!”
Now imagine that said by a shriveled prne of a man sitting on a power wheels that has the battery removed.
He’s rocking back and forth while shouting “Wheee! I’m really moving now!”
I’m glad these guys know what is going to happen in the future. They’ll make a lot of money, right?
More inane happy talk from the perpetually hyper optimistic Joe Wiesenthal.
Green shoots!
Everyone in the pool, the water’s fine! See! No Sharks!
Eh....sure...
Whatever these mooks are smoking, I want some.
The market is a house of cards....
Some time ago I heard someone say, “Wallstreet climbs a wall of worry.” So as long as things look bad, the stock market goes up. And as soon as there’s ‘irrational exuberance’, you can expect a collapse. Looks like some folks are getting a bit exuberant.
I just knew my unicorn ranch would pay off someday.
Better get in on the ground floor FReepers. This offer won’t last.
The increase on interest rates will prevent any housing value increase because it will have a natural offset of increased interest rates and the consumer cannot absorb both. The housing market will also not raise in value because the market cannot afford any profit takers. It's a sit and hold situation in housing.
"Mission Accomplished" - With CNBC now lost for countdown-able targets (though 20,000 is so close), we leave it to none other than Jim Cramer to sum up where we stand (oh and the following list of remarkable then-and-now macro, micro, and market variables): "we all know it's going to end badly, but in the meantime we can make some money" - ZH translation: "just make sure to sell ahead of everyone else."
•Dow Jones Industrial Average: Then 14164.5; Now 14164.5
•Regular Gas Price: Then $2.75; Now $3.73
•GDP Growth: Then +2.5%; Now +1.6%
•Americans Unemployed (in Labor Force): Then 6.7 million; Now 13.2 million
•Americans On Food Stamps: Then 26.9 million; Now 47.69 million
•Size of Fed's Balance Sheet: Then $0.89 trillion; Now $3.01 trillion
•US Debt as a Percentage of GDP: Then ~38%; Now 74.2%
•US Deficit (LTM): Then $97 billion; Now $975.6 billion
•Total US Debt Oustanding: Then $9.008 trillion; Now $16.43 trillion
•US Household Debt: Then $13.5 trillion; Now 12.87 trillion
•Labor Force Particpation Rate: Then 65.8%; Now 63.6%•Consumer Confidence: Then 99.5; Now 69.6
•S&P Rating of the US: Then AAA; Now AA+
•VIX: Then 17.5%; Now 14%
•10 Year Treasury Yield: Then 4.64%; Now 1.89%
•EURUSD: Then 1.4145; Now 1.3050
•Gold: Then $748; Now $1583
•NYSE Average LTM Volume (per day): Then 1.3 billion shares; Now 545 million shares
One little problem.
When interest rates rise, the interest on the national debt will destroy any belief that it will ever be repaid, thus destroying US credit ratings.
Even with the runaway inflation will be a factor.
Yay! Recovery Summer is here! Please tell me more. I have no brain.
We’ve “turned the corner” on the Obama economy so many times that the economists are all dizzy and lost in the maze.
High equity and commodity prices are a reflection of the weakness of the dollar - not financial health.
The onanly thing propping up the fincial industry is the fiat money being churned out by the Obama/Bernanke printing presses.
When the presses stop, the bottom falls out.
Wat’s a mook? Love the word but don’t know what it means...
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