Friday, June 29, 2012

It's The Economy Stupid: What? Europe in the headlines again?

Before everyone gets together and sings Kumbaya over Europe solving their sovereign debt problem, let me remind you.  We’ve heard this song before, and the fat lady hasn’t sung yet, so it ain’t over. 

 

For instance, the latest European bailout fund is being characterized as a way for Euro countries to “borrow” from the proposed bailout fund “without increasing debt”.  HUH???   

 

Here’s my best advice:

 

1. Treasuries are the cleanest dirty shirt in the investment closet

2. Chose quality over yield

3. Chose optionality over long term maturities

 

Don’t try to predict what is going to happen in Europe or the U.S.  Vegas bookies have better track records than economists’.  Build liquidity into your investment portfolios so that you can take advantage of opportunities that come along.  We’ve been on a bumpy economic ride and it ain’t over yet.

 

Economic Stuff

 

Economic Event

Period

Economic Survey

Actual Reported

Original Prior

Revised Prior

Personal Income

MAY

0.2%

0.2%

0.2%

 

Personal Spending

MAY

0.0%

0.0%

0.3%

1.0%

PCE Deflator MoM

MAY

-0.2%

-0.2%

0.0%

 

PCE Deflator YoY

MAY

1.5%

1.5%

1.8%

1.9%

PCE Core MoM

MAY

0.2%

0.1%

0.1%

 

PCE Core YoY

MAY

1.8%

1.8%

1.9%

2.0%

 

Okay, I am not an economist, but I feel safe in saying the Personal Spending neither increased or decreased in May.

 

 

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“The Fed has gone about as if the problem is a shortage of liquidity.  That is not the basic problem.  The basic problem is uncertainty that the balance sheets of financial firms are credible.”

~ 2009, Anna Schwartz, Economist, 1915-2012

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John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

 

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