In The News Of Late...

('Click' on the highlighted items to go to the cited articles)

We're starting with a series of stories out of CNNMoney this time...
...lately they have been taking a decidedly positive view on,..well,...
everything...the task at hand may be one of sorting the mixed
messages being received and deciding what is fleeting versus
tangible and sustaining... After having cut rates and infused
$1+Trillion into the flagging economy, the Fed forecasts no increase
in economic activity in '09 while coincidentally seeing "...modest
signs the pace of economic decline was easing.." ; the source being
eight districts reporting 'slight' home sales improvement.

...continuing with CNN, and in modest support of the foregoing,
Home Depot is a bit more bullish on their own forecast for the
balance of the year... although expecting earnings to be flat, their
CEO tells analysts that "economic indicators are signaling...the
worst of the housing downturn is over...".

...in another corner, the Labor Department said today that weekly
initial jobless claims are down almost 4% from the previous week
and are better than anticipated. But, continuing claims are up, as
expected, leaving the US at 9.4% unemployment and headed
inexorably for double digits... in real terms that's 2.9 million jobs
lost this year.

...CNN continues the upbeat approach citing Thursday's
Commerce Department report...retail sales in May were up
50bps from April...and the revised numbers for April indicate
less of a decline than had previously been reported. In fact,
May numbers met economists' expectations.

...a bit more mixed news portrayed as 'good' in CNNMoney;
REOs are up (reportedly related to many different State
moratoria), but on the bright side fewer foreclosure notices
were filed in May than in April. California and Florida still
top the list for number of filings but Nevada has the record
now for total filings to number of households.

...in moving away from the CNN outlook, we find that
TIME echoes the sentiment we touched upon last time
regarding the amount of back-and-forth, good-then-bad
reporting...does this tend to obscure the more relevant
points behind the news? In this article the writer refers to
the "Great Consumer Retrenchment"...this being the still
incredible levels of consumer debt in the US. The Fed
reported that consumer debt-to-income was at 130% at
EOY 2008 and that the expectation is for the imminently
due newer numbers to be lower, but not by much. People
are paying off debt, incurring less new debt and granting
themselves 'forgiveness' on some of their debt (e.g. refusing
to pay their credit cards). How much deleveraging is enough?
And what is the 'right' level for debt-to-income?

...back to CNNMoney again and still on the subject of consumer
spending... what happens when oil exceeds the $60/barrel
target that analysts declared in May to be a possible ceiling
(and consider that on 6/11 the price was $72+) ?
World-wide demand is not increasing at the moment and
reportedly there is surplus capability to produce... so... is
Wall Street the 'culprit' in that more and more investors are
leaving other investments for the crude oil market? Does the
movement to oil and riskier stocks indicate economic upturn,
as the article cites, or does it take us further away from recovery
on the 'economic clock' ? If, as suggested in the article, $80
is the recession-break-point for the price of oil, will the current
run-up be the harbinger of the 'double-dip' Reuters spoke to
a couple of weeks ago (see May 26 edition) ?

...and how does $60+B in support for the US Automakers figure
into the overall scheme of good versus bad economic news?
With no plan for extricating US Taxpayers from the stakes
taken in the Automakers (early withdrawal "could disrupt
markets..."), and acknowledgment by a senior administration
official that there are no guarantees of repayment - add this
to Auto Company mergers, the specter of impending additional
layoffs and increasing numbers of advertisements for low/no
interest or down-payment auto financing, job loss support,
deferred payment and rebates...makes one think again on that
TIME article about the fragility of the current situation...that
$3 to $5Trillion in consumer debt needs to be shed to achieve
a 100% debt-to-income ratio and that savings needs to double
to 10% as well if that is to happen...and that the economic
debility of the 1930's lingered for a decade... The 'double-dip',
as postulated by Reuters, could be precipitated by very little.

...proponents of the current 'recovery' see positive signs
everywhere while others see many still very fundamental flaws
and broken cogs in the system. The EIU reports that a majority
of financial managers surveyed believe that current Risk Culture
is in need of overhaul. Basic changes in controllership and
governance, the added availability and quality of data and the
depth to which risk principles are ingrained within institutions...
these, and more, all need to be part of the reformation in Risk.
And while not all those surveyed are in the midst of reviewing
and reconstructing their Risk Management programs, an
alarming 60% of them agreed that Risk is not universally
implicit within their organizations.

...so...do we then return to the TIME suggestion that the current
news cycle hinders an appreciation for the larger questions...
that the basics are obscured and that there is insufficient
movement toward re-establishment of 'the basics' where these
are needed? Now is the time to begin this rebuild...the EIU
survey says that 53% of those executives polled are planning
to do just that...the problem may be that it is only 53% who
said this and that maybe all they do is plan? Hopefully those
plans become more than just that...where do you fit in?