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Old 12-30-2009, 07:55 AM   #33
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Join Date: Sep 2008
Location: Turtle Island
Posts: 2,776
Default Re: GOOD NEWS??? Bernanke says recession 'very likely over' LOL

Consumer Confidence - Better?

Tuesday, December 29. 2009
Posted by Karl Denninger

I love the headline from Bloomberg: U.S. Economy: Confidence Rises as Outlook Brightens
Dec. 29 (Bloomberg) -- Confidence among U.S. consumers rose in December for a second month as pessimism over the outlook for jobs diminished.
It did?
The share of consumers who said jobs are plentiful fell to 2.9 percent from 3.1 percent, according to the Conference Board. The proportion of people who said jobs are hard to get decreased to 48.6 percent from 49.2 percent.
Ok, so jobs are less "plentiful" but are "less hard to get"? That's improvement.... how? (By the way, 3% of people believing that jobs are "plentiful" is pretty-much indistinguishable from zero, no?)
The gauge of expectations for the next six months climbed to 75.6, the highest since the recession began two years ago, from 70.3 the prior month.
WHAT expectations? Oh, general expectations. Yes, yes, we know that the incessant media pumping makes people "feel" better. But...
The proportion of people who expect their incomes to rise over the next six months decreased to 10.3 percent from 10.9 percent. The share expecting more jobs improved to 16.2 percent from 15.8 percent.
So we expect more jobs (by a bit) but less income (by a bit.)

Hmmm... can you remind me again what drives consumer spending? It was home equity withdrawal but you can't do that any more. It was then (late 2007 and into 2008) credit cards, but those are being closed down and pared back too.

So let's see... that would be.... current income, right?

The FOMC has said:
“Deterioration in the labor market is abating,” the FOMC said in a statement Dec. 16 after meeting in Washington. “Household spending appears to be expanding at a moderate rate, though it remains constrained by a weak labor market, modest income growth, lower housing wealth, and tight credit.”
Modest income growth eh? Uh huh. Is that "income growth" all handouts from the government? That's pretty much a function of the government being able to continue to borrow and spend like a drunken sailor, yes?

How exactly is that going to work out with the bond market saying "bite me!" This is what the measured move off the current pattern in the TNX is saying lies in our reasonably-near-term future:

See CHART at link below...

That in turn completes this pattern, which targets ~6.1% on the ten year bond:

See CHART at link below...

That ought to be quite interesting - a roughly 60% increase in 10 year bond rates eh? Since the 10yr is the best proxy for mortgage rates (they tend to run about 100-150bps over 10s) this squares with the 30-year bond projection that would put mortgages up in the 7s.

Good luck on that "expected improvement" with that sort of move in the bond market, say much less what this will do to government borrowing costs and the government's ideas about borrowing another $1.7 trillion this fiscal year.

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