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The following is a guest post by a buy-side analyst working in a US asset management firm. The author’s comments are in italics. I welcome your feedback in the comments:
- Bernanke’s Friday speech at Jackson Hole was one of the most closely watched by any policy maker in months. The Fed Chairman warned monetary policy alone cannot fix the economy (a warning not to raise taxes?). He also promised more support for the economy if needed from a balance sheet expansion by the Fed and purchases of Treasuries or “other securities.” – FTN Financial
- Fed Jackson Hole Symposium – overall sanguine tone from the event – bankers overall think the recovery will stay on track; We’ll slog our way through this,” said Thomas Hoenig – WSJ
- ECB chief Trichet suggested it may be time to start tightening in Europe. Investor confidence rose again in Germany, where the economy is strong, but peripheral Europe is still in recession.
- The White House unveiled two new programs to prop up housing over the weekend. The first will provide loans for the unemployed to pay their mortgages. The second is an FHA refinancing program for delinquent borrowers. Shaun Donovan, HUD Secretary, said the Administration has not decided whether to revive the first time homebuyer tax credit.
- President Obama’s job approval rating slipped to 43% for the week of Aug. 16-22, down one point from the previous administration low point of a week ago. – Gallup
- RGE Analysis by Nouriel Roubini, Christian Menegatti and Prajakta Bhide: The tailwinds of H1 2010 will become headwinds in H2: The fiscal stimulus will turn into a fiscal drag; the inventory adjustment that boosted growth is done; and base effects and temporary Census hiring are gone. If growth were to remain at “stall” speed (1% or below) for long, the risk of a negative feedback loop from the real economy to the financial system and back to the real economy would become very high. Policy makers are running out of policy bullets: Monetary policy can do close to nothing for the real economy as more quantitative easing will not push banks to lend more, and there is neither political will nor room for additional fiscal stimulus. – RGE Monitor
- “Google to launch Facebook competitor very soon.” That line from Kevin Rose, the tech entrepreneur who founded the content-sharing site Digg, unleashed a sense that the online world as we know it was about to fundamentally change. – WP
- BP/Gulf – an internal BP report has found that the co’s engineers misinterpreted pressure data that signaled a blowout was imminent – Bloomberg
- Tax cuts – some senior Dems having second thoughts about allowing Bush tax cuts to expire for wealthy; some Democrats are pressing to have the Bush rates extended, at least for another year (Washington Post – note this article was out early on Fri).
- Analyst ratings - For the first time since at least 1997, fewer than 29 percent of ratings for stocks covered by brokerages worldwide are “Buys,” according to 159,919 recommendations compiled by Bloomberg. Analysts are turning more pessimistic – Bloomberg
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