Friday, March 25, 2011


4th Quarter 2010 GDP was revised upward to a 3.10% annualized rate, perhaps putting an end to talk of the need for a third round of Quantitative Easing (QE3).

Thursday, March 24, 2011


Durable Goods Orders came in at -0.9% versus consensus economist expectations of +1.2%.  That’s a big miss.  Durables Ex Transportation was -0.6% versus consensus economist expectations of +2.0%.  Also a big miss.  Initial Jobless Claims were 382 Thousand which was in line with expectations and in line with previous unemployment data. 

So, taken all together with previous economic data, it looks like so far economic growth is coming in below what some economists have been predicting.  It’s positive growth, it certainly appears to be sustainable growth, but it’s not exactly robust growth just yet.

Tuesday, March 22, 2011

Stormy Monday

They call it stormy Moday, but Tuesday's just as bad

They call it stormy Moday, but Tuesday's just as bad
Wednesday's worse, and Thursday's also sad

Yes the eagle flies on Friday, and Saturday I go out to play
Eagle flies on Friday, and Saturday I go out to play
Sunday I go to church, then I kneel down and pray

Monday, March 21, 2011


PIMCO’s Mohamad El-Erian on QE2, Japan, Inflation:

QE2 likely to end in June
Cannot identify enough buyers to absorb Fed QE2 sales
It is not clear who will step in after June 30th when QE2 formally ends
Do not see sufficient demand coming in to offset what the Fed has been buying
Expect the Treasury to continue with its heavy issuance program
Japan ripple effects will likely go on for awhile
Japan likely to purchase less Treasuries
Headline inflation likely to remain high for some time
Likely effect places upward pressures on the existing level of US Treasuries yields.

Friday, March 18, 2011

Oil & Gas Myths

President Obama held a press conference today to discuss rising gasoline and oil prices. Gasoline at the pump now costs an average of $3.50 per gallon nationwide, and experts project prices to eclipse $4 per gallon this year, possibly by the beginning of the summer driving season.

There is no question that President Obama is a gifted orator.  But instead of providing fresh ideas that most of America is looking for, President Obama recycled statements and arguments that have all been thoroughly debunked, but that have been repeated often enough that many people just blindly accept them as being fact.  Perhaps the President is one of them.

Here are the three biggest myths from President Obama’s remarks:

■“We can’t escape the fact that we control only 2% of the world’s oil.” This is a common refrain among anti-drilling Democrats and environmentalists, and it’s repeated enough that many people accept it as true. In reality, it’s 100% false. The number comes from a highly conservative estimate from the Energy Information Administration totaling America’s proven reserves where we are already drilling. It does not include the 10 billion barrels available in the Arctic National Wildlife Refuge. It does not include most of the 86 billion barrels available offshore in the Outer Continental Shelf, most of which President Obama has placed under an executive drilling ban. And it does not include the 800 billion barrels of oil we have locked in shale in Wyoming, Utah, and Colorado. Those shale resources alone are actually three times larger than the proven reserves of Saudi Arabia, so the claim that the U.S. only has 2% of the world’s oil is clearly false.

■“Industry holds leases on tens of millions of acres both offshore and on land where they aren’t producing a thing.” President Obama adds to this whopper by saying he wants to “encourage companies to produce [on] the leases they hold.” While this sounds like a common sense fix, it’s actually just blind rhetoric reserved only for people with a shocking ignorance of drilling. You can read more about this here and here, but it basically boils down to this: A lease is for exploration and production, not just production, and because oil is not equally distributed across the globe, one parcel of leased acreage may not hold any oil. Moreover, due to the circuitous and needlessly complicated permitting process, it can take years for companies who own a lease to complete their exploration activities. To get to the production phase, it could take as long as ten years. Ironically, President Obama wants to tax companies for not producing on their leases, even if the federal government’s refusal to grant permits is the reason why those companies are not drilling.

■“Last year…our oil production reached its highest level in 7 years.” This is pure spin. President Obama is deliberately trying to take credit for actions unrelated to his policies. The increased level of production is due to the actions of previous administrations and production in the Dakotas where most drilling is occurring on private land. By contrast, the Energy Information Administration projects that there will be a decline in production of 220,000 barrels of domestic oil per day in 2011, and in 2012 America will produce 150 million fewer barrels in the Gulf of Mexico, all because of President Obama’s policies to discourage or ban domestic drilling. In addition, President Obama’s drilling moratorium (and subsequent refusal to issue drilling permits) has forced at least 7 rigs to leave the Gulf and sign contracts in other countries, taking much needed jobs and revenue with them.

The sad truth is that our nation’s energy policy is a joke.  We subsidize corn based ethanol in a manner that guarantees we will inflate the price of food and energy and completely ignore sugarcane based ethanol that has proven to be more economical in large scale operations in Brazil.  We drive high paying oil & gas exploration, production and service jobs out of the country.  We allow natural resources on Federal land in the west to be exploited for little or no money, and do everything in our power to prevent exploration offshore everywhere but the Gulf of Mexico.  We embrace alternative energy, but don’t seem to want to make the hard choices on prioritizing our bets so that we get the most bang for our buck.  I am not a big Boone Pickens fan, but at least Boone puts his money where his mouth is, while the Federal government seems to put its money where its influential members of congress are.

I am not an Obama hater.  I really do think that he is an extremely gifted speaker.  And yes, he can propose new initiatives.  But he cannot appropriate a dime.  The President only proposes a budget.  Congress spends the money.

Einstein & Interest Rates

Interest Rates

Einstein dies and goes to heaven only to be informed that his room is not yet ready. "I hope you will not mind waiting in a dormitory. We are very sorry, but it's the best we can do and you will have to share the room with others" he is told by the doorman.
Einstein says that this is no problem at all and that there is no need to make such a great fuss. So the doorman leads him to the dorm. They enter and Albert is introduced to all of the present inhabitants.

"See, Here is your first roommate. He has an IQ of 180!"
"Why that's wonderful!" Says Albert. "We can discuss mathematics!"

"And here is your second roommate. His IQ is 150!"
"Why that's wonderful!" Says Albert. "We can discuss physics!"

"And here is your third roommate. His IQ is 100!"
"That's Wonderful! We can discuss the latest plays at the theater!"

Just then, another man moves out to capture Albert's hand and shakes it. "I'm your last roommate and I'm sorry but my IQ is only 80."
Albert smiles back at him and says, "So, where do you think interest rates are headed?"

Fed Intervens Versus Yen

Fed confirms intervening in Japanese Yen forex markets.  Great.  Now maybe they will support the dollar versus the Euro.

Why Inflation Hurts More Now Than 30 Years Ago

Associated Press
Friday, March 18, 2011

WASHINGTON – Inflation spooked the nation in the early 1980s. It surged and kept rising until it topped 13 percent.

These days, inflation is much lower. Yet to many Americans, it feels worse now. And for a good reason: Their income has been even flatter than inflation.

Back in the '80's, the money people made typically more than made up for high inflation. In 1981, banks would pay nearly 16 percent on a six-month CD. And workers typically got pay raises to match their higher living costs.

No more.

Over the 12 months that ended in February, consumer prices increased just 2.1 percent. Yet wages for many people have risen even less — if they're not actually frozen.

Social Security recipients have gone two straight years with no increase in benefits. Money market rates? You need a magnifying glass to find them.

That's why even moderate inflation hurts more now. And it's why if food and gas prices lift inflation even slightly above current rates, consumer spending could weaken and slow the economy.

"It feels far more painful now than in the '80s," says Judy Bates, who lives near Birmingham, Ala. "Money in the bank was growing like crazy because interest rates were high. My husband had a union job at a steel company and was getting cost-of-living raises and working overtime galore."

Bates, 58, makes her living writing and speaking about how people can stretch their dollars. Her husband, 61, is retired. They've paid off their mortgage and have no car payments. But they're facing higher prices for food, gas, utilities, insurance and health care, while fetching measly returns on their savings.

"You want to weep," Bates says.

Consumer inflation did pick up in February, rising 0.5 percent, because of costlier food and gas. Still, looked at over the past 12 months, price increases have remained low. Problem is, these days any inflation tends to hurt.

Not that everyone has been squeezed the same. It depends on personal circumstances. Some families with low expenses or generous pay increases have been little affected.

Others who are heavy users of items whose prices have jumped — tuition, medical care, gasoline — have been hurt badly. But almost everyone is being pinched because nationally, income has stagnated.

The median U.S. inflation-adjusted household income — wages and investment income — fell to $49,777 in 2009, the most recent year for which figures are available, the Census Bureau says. That was 0.7 percent less than in 2008.

Incomes probably dipped last year to $49,650, estimates Lynn Reaser, chief economist at Point Loma Nazarene University in San Diego and a board member of the National Association for Business Economics. That would mark a 0.3 percent drop from 2009. And incomes are likely to fall again this year — to $49,300, she says.

Significant pay raises are rare during periods of high unemployment because workers have little bargaining power to demand them.

They surely aren't making it up at the bank. Last year, the average nationwide rate on a six-month CD was 0.44 percent. The rate on a money market account was even lower: 0.21 percent.

Now go back three decades, a time of galloping inflation, interest rates and bond yields. When Paul Volcker took over the Federal Reserve in 1979, consumer inflation was 13.3 percent, the highest since 1946. To shrink inflation, Volcker raised interest rates to levels not seen since the Civil War.

As interest rates soared, CD and money-market rates did, too. The average rate on money market accounts topped 9 percent. Treasury yields surged, pushing up rates on consumer and business loans. The 10-year Treasury note yielded more than 13 percent; today, it's 3.5 percent.

By 1984, consumers were enjoying a sweet spot: Lower prices but rising incomes and still-historically high rates on CDs and other savings investments. Consumer inflation had slid to 3.9 percent. Yet you could still get 10.7 percent on a six-month CD.

Even after accounting for inflation, the median income rose 3.1 percent from 1983 to 1984. At the time, workers were demanding — and receiving — higher wages.

More than 20 percent of U.S. workers belonged to a union in 1983. Labor contracts typically provided cost-of-living adjustments tied to inflation. And competition for workers meant those union pay increases helped push up income for non-union workers, too.

Last year, just 12 percent of U.S. workers belonged to unions. And among union members, a majority now work for the government, not private companies. Wages of government workers are under assault as state governments and the federal government seek to cut spending and narrow gaping budget deficits.

Workers' average weekly wages, adjusted for inflation, fell in February to $351.89. It was the third drop in four months.

The result is that even historically low inflation feels high. So "when you mention low inflation to real people on the street, they immediately roll their eyes," says Greg McBride, senior financial analyst at

Falling behind inflation is something many people hadn't experienced much in their working careers until now. In the 1990s and 2000s, for instance, most Americans kept ahead of rising prices. Inflation averaged under 3 percent.

And inflation-adjusted incomes rose steadily from 1994 to 1999. Once the 2001 recession hit, incomes did falter. But after that, they resumed their growth, rising each year until the most recent recession hit in December 2007.

Rates on six-month CDs were also much higher than they are now: They averaged 5.4 percent from 1990 to 1999 and 3.3 percent from 2000 to 2009.

These days, though, Americans face the certainty of higher prices ahead.

Whirlpool, Kraft, McDonald's, Clorox, Kellogg, and clothing companies such as Wrangler jeans maker VF Corp., J.C. Penney Co., and Nike say they plan to raise prices. Whirlpool, which makes Maytag and KitchenAid appliances, says it's raising prices in response to higher raw material costs.

Kellogg, which makes Frosted Flakes and Pop Tarts, is increasing prices on some products to offset costlier ingredients. Kellogg is responding to soaring costs for commodities including wheat, corn, sugar, cotton, beef and pork.

Vickens Moscova, a self-employed marketer in Elizabeth, N.J., says he's paying more for staples like cereal, bread, eggs and public transportation. Yet he's making little from his savings.

"It is a huge pinch," says Moscova, 25.

Though higher gasoline and food prices may lift the inflation rate in coming months, the Fed says it doesn't think inflation will pose a long-term threat to the economy. The central bank projects that inflation won't exceed 1.7 percent this year.

But if oil prices, now around $101 a barrel, were to go much higher, economists say heavier fuel bills would cause people and consumers to cut back spending on cars, appliances and other items.

Another recession would be possible if prices began to approach $150 a barrel. Back in 1983, a barrel of oil cost just $29.40 — or $65 in today's prices, adjusted for inflation.

All that said, today's consumers are fortunate that today's lower rates mean one major household cost remains far lower than in the 1980s: a mortgage.

Thanks, in part, to the Fed's efforts to push down loan rates starting with the financial crisis, the average rate on a 30 year fixed mortgage is below 5 percent.

The comparable rate in 1981? 18 percent.

Thursday, March 17, 2011

FW: Irish Jokes on St. Patrick's Day

HA!  Here's a few more:

Paddy was driving down the street in a sweat because he had an important meeting and couldn't find a parking place. Looking up to heaven he said, "Lord take pity on me. If you find me a parking place I will go to Mass every Sunday for the rest of me life and give up me Irish Whiskey!"

Miraculously, a parking place appeared.
Paddy looked up again and said, "Never mind, I found one."


Father Murphy walks into a pub in Donegal, and says to the first man he meets, "Do you want to go to heaven

The man said, "I do, Father."
The priest replied, "Then stand over there against the wall."
Then the priest asked the second man, "Do you want to go to heaven?"
"Certainly, Father," was the man's reply.
"Then stand over there against the wall," said the priest.

Father Murphy then walked up to O'Toole and said, "Do you want to go to heaven?"

O'Toole said, "No, I don't Father."

The priest said, "I don't believe this. You mean to tell me that when you die you don't want to go to heaven?"

O'Toole said, "Oh, when I die, yes. I thought you were getting a group together right now."

Mary Clancy goes up to Father O’Grady after his Sunday morning service, and she’s in tears.
He says, “So what’s bothering you, Mary my dear?”
She says, “Oh, Father, I’ve got terrible news. Me husband passed away last night.”
The priest says, “Oh, Mary, that’s terrible. Tell me, did he have any last requests?”
She says, “That he did, Father…”
The priest says, “What did he ask, Mary?”
She says, “He said, “Please Mary, put down that damn gun.”


An Irishman moved into a tiny hamlet in County Kerry.
He walks into the local pub, orders three pints of Guinness takes them to a table and proceeds to drink them taking his time.
He repeats this two times and then leaves the pub.

A few nights later he returns to the pub, orders three pints of Guinness, takes them to a table and drinks them taking his time. He repeats this two times and leaves the pub. He continues this for several weeks.
Soon the entire town is talking about the “Three Pint Man.”

Finally, one day the pub owner on behalf of the entire town broaches the subject to the man. “I don’t mean to pry, but folks are quite curious why you order three pints each time you come in .”
The man replied, “I have two brothers – one in America and one in Australia. When we parted ways we all promised that each time we had a drink, we would order an extra two pints as a way of keeping up with each other.”
The pub owner and the entire town thought this was wonderful and were pleased that the brothers meant so much to each other. “The Three Pint Man” became a celebrity not only to the town but to the surrounding area.
One day the man came into the pub and orders only two pints of Guinness. The pub owner poured them with a heavy heart knowing in his soul that something dreadful must have happened. The news spreads around town and people are offering prays for the “Three Pint Man.”
This went on for a few weeks and the pub owner says to the man, “I want to offer our condolences due to death of your brother. We are all heart broken. You know the two pints and all.”
The man ponders this for a few minutes and replies, “You will be glad to hear that my brothers are alive and well. It’s just that I, meself, have decided to give up Guinness for Lent.”

Irish Jokes on St. Patrick's Day



An Irishman, by the name of O'Malley proposed to his girl on St. Patrick's Day. He gave her a ring with a synthetic diamond. The excited young lass showed it to her father, a jeweller. He took one look at it and saw it wasn't real.


The young lass on learning it wasn't real returned to her future husband. She protested vehemently about his cheapness.


'It was in honour of St. Patrick's Day.' he smiled.  'I gave you a sham rock.’





A Irishman walked into the local welfare office to pick up his cheque. He marched straight up to the counter and said,


"Hi. You know, I just HATE drawing welfare. I'd really rather have a job."


The social worker behind the counter said, 'Your timing is excellent. We just got a job opening from a very wealthy old man who wants a Chauffeur and bodyguard for his beautiful daughter. You'll have to drive around in his 2009 Mercedes-Benz CL, and he will supply all of your clothes. Because of the long hours, meals will be provided. You'll also be expected to escort the daughter on her overseas holiday trips. The daughter is in her mid-20's and has a rather strong sex drive.


The Irishman, just plain wide-eyed, said, 'You're bullshittin' me!'


The social worker said, 'Yeah, well, YOU started it.’



La Fheile Padraig Sona Duit!  (Happy St. Patrick’s Day!)

Éirinn go brách!  (Ireland forever!)


Sean O'Broussard


aka John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

Ph:  225-342-0013

Fx:  225-342-9721



Tuesday, March 15, 2011

'I Can't Eat an iPad'

The Wall Street Journal.
Review & Outlook
March 15, 2011

'I Can't Eat an iPad'

The Federal Reserve bombs in Queens.

The Federal Reserve has been on a media campaign to sell its monetary policy to average Americans, but this hasn't always gone smoothly. Witness last week's visit to Queens, New York, by New York Fed President William Dudley, who got a street-corner education in the cost of living.

The former Goldman Sachs chief economist gave a speech explaining the economy's progress and the Fed's successes, but come question time the main thing the crowd wanted to know was why they're paying so much more for food and gas. Keep in mind the Fed doesn't think food and gas prices matter to its policy calculations because they aren't part of "core" inflation.

So Mr. Dudley tried to explain that other prices are falling. "Today you can buy an iPad 2 that costs the same as an iPad 1 that is twice as powerful," he said. "You have to look at the prices of all things."

Reuters reports that this "prompted guffaws and widespread murmuring from the audience," with someone quipping, "I can't eat an iPad." Another attendee asked, "When was the last time, sir, that you went grocery shopping?"

Mr. Dudley has been one of the leading proponents of negative real interest rates and quantitative easing, so this common-man razzing is a case of rough justice. If Mr. Dudley were wise, he'd take it to heart and understand that Americans aren't buying the Fed's line that rising commodity prices are no big deal. Unlike banks and hedge funds, they can't borrow at near-zero interest rates, and most of them don't have big stock portfolios. Wall Street and Congress may love the Fed's free-money policy, but Mr. Dudley and Chairman Ben Bernanke ought to worry about losing the confidence of the middle class.


Okay, for me Mardi Gras is the begining of Spring. It's the begining of festival season, although I really only go to two festivals: The French Quarter Festival and Jazz Fest. French Quarter Fest is like the best free music festival ever. And Jazz Fest is the best music festival ever.