Italy to join deflation club? - (www.telegraph.co.uk) Jonathan Tepper from Variant Perception has a
scary note this morning on Italy's deflation risk, just in time for the ECB's
pitched battle today. Or at least one assumes that there will be blood on the
floor in Frankfurt as doves show their fangs (excuse the grotesque mixed
metaphor). If there is not a bloodbath given how far the ECB has undershot its
inflation and M3 targets, then why not? The first chart shows falling
inflation. The underlying rate after austerity taxes are stripped out is even
worse. The second shows the debt
trajectory. They are linked of course. One is a function of the other. When you
understood this elementary point, you understand the essence of the EMU crisis.
Berlin feigns not to understand it.
In
first month, the vast majority of Obamacare sign-ups are in Medicaid - (www.washingtonpost.com) The first
month of the new health law’s rollout reveals an unexpected pattern in several states:
a crush of people applying for an expansion of Medicaid and a trickle of
sign-ups for private insurance. This early imbalance — in some places, nine out
of 10 enrollees are in Medicaid — has taken some experts by surprise. The Affordable Care Act, which
expanded Medicaid to cover millions of the poorest Americans who couldn’t
otherwise afford coverage, envisions a more even split with an expanded, robust
private market. “When we first saw the numbers, everyone’s eyes kind of bugged
out,” said Matt Salo, who runs the National Association of Medicaid Directors.
“Of the people walking through the door, 90 percent are on Medicaid. We’re
thinking, what planet is this happening on?” The yawning gap between public and
private enrollment is handing Republicans yet another line of criticism against
President Obama’s health overhaul — that the law is primarily becoming an
expansion of a costly entitlement program.
Stand
by...a hefty drop's on the way: Nomura's Janjuah - (finance.yahoo.com) Global stock markets are set to peak in the
next few months but hungry investors should beware, according to Bob Janjuah,
Nomura's uber-bearish strategist, who believes a hefty dip in global stock
markets is just around the corner. The end of this quarter till the end of the
first quarter of 2014 is the buying window Janjuah sees as "the risk-on
top", he said in a client note on Tuesday. After that he predicts a 25
percent to 50 percent sell-off over the last three quarters of 2014. "While
my target for this high in the S&P over the next five months remains
anchored around 1,800, an 'extreme' upside target could see the S&P (^GSPC) trade up to
1,850," he said. "I am looking - as a proxy guide - for the VIX (CBOE
Volatility Index) index (^VIX) to trade
down at 10 between now and end (the first quarter of 2014) before I would
recommend large-scale positioning for a major risk reversal over the last three
quarters of 2014 and over 2015." As an extra cautionary measure, Janjuah
added that an interim sell-off could occur before the end of November due to
markets having priced in all the recent good news on growth. There's a possibly
a period of risk-off this month could take the the S&P from 1,775 to
perhaps 1,650/1,700, or even as low as the 1,600/1,650 area, he said.
Squeezed middle class looks to dollar stores - (money.cnn.com) With the economy recovering at only a snail's
pace, consumers are still feeling pinched and are on the hunt for the best
bargains. For many, that now means shopping at dollar stores. "Massive
unemployment and declining wages are squeezing people out of the middle
class," said Kristin Bentz, executive director at private equity firm PMG
Venture Group. "These people can't even afford Wal-Mart now and are
trading down to dollar stores." The decline of the middle class and its
impact on retailers was a hot topic at the Stocktoberfest conference last month
hosted by social investing site StockTwits. Bentz and Joseph Brusuelas, a
senior economist with Bloomberg Briefs, both spoke about the trend.
US Infrastructure Spending Collapse - (www.businessinsider.com) Well,
there it is, the collapse in infrastructure spending that everyone is talking
about. It's from BSA Research. The chart was first spotted by Cardiff Garcia at FT Alphaville. Yves Smith at Naked Capitalism is also
writing about it. The key thing, as Yves notes, is that the chart includes state
and local infrastructure spending, which explains why they were was such a
furious collapse right after the bust, as state and local governments furiously
slashed spending. The tragedy of course is that with inflation non-existent and
a huge surplus of excess labor, this would have made an incredibly good time to
spend like crazy on infrastructure, fixing everything and putting people to
work.
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