A New Bull Market?
This week I was compelled to respond to a vicious rumor that I'd turned bullish. I cannot refute that the market backdrop is today constructive for global risk asset inflation. Risk aversion has dissipated, and risk embracement and rank speculation have returned with a vengeance. Bulls and speculators alike have been emboldened, yet again. Bears have been pummeled into submission. Those that buy global risk assets on the premise that policymakers will backstop markets assuredly exclaim, "I told you so!" My analytical framework has always included the possibility for a climax "blow-off top" scenario that would doom the historic "global government finance Bubble." I guess I'm as bullish as Ludwig von Mises must have been when he coined the phrase "crack-up boom."
Market ebullience has evoked chatter of the emergence of a new bull market. From my perspective, there is little new here. The current environment remains consistent with market trading dynamics that saw major stock indices more than double in price from March 2009 lows. It was an historic rally incited by the unprecedented global fiscal and monetary response to the '08 crisis. More recently, it has been a powerful rally incited by an abrupt policy-induced market about face - one chiefly fueled by the reversal of hedges and short positions. It's evolved into one heck of a short squeeze.
I've lived through a number of abrupt policy-induced rallies going back to 1991. These "bull market" advances tended to last a couple years or so, building momentum until speculative excess finally sowed the seeds of their own demise. Bond market - and certainly MBS/mortgage derivatives - excesses in 1992/'93 ensured the 1994 fixed income rout. The 1995 Mexican bailout ushered in catastrophic speculative excesses in the emerging markets, especially among the "Asian Tigers," as well as in Russia, Argentina and elsewhere. The 1998 LTCM bailout incited "blow-off" technology Bubble excess. The post-tech Bubble policy bailout stoked much greater systemic excess; the global policy response to '08 even more so. Greek bailout I...
Now it's the December introduction of the ECB's Long-Term Refinancing Operations (LTRO) coupled with concerted global central bank liquidity operations and assurances. Finally, analysts trumpet, the type of policy resolve necessary for European debt crisis resolution. It's justifiable that market players today contemplate the possibility that policymakers have created a backdrop conducive for yet another couple year period of market exuberance.
There may be little new in the market backdrop, yet we must recognize that the policy backdrop has changed profoundly though, perhaps, subtly. The nature of policy responses has evolved and escalated; measures have become overwhelming, preemptive and essentially unbounded. The early '90s policy measures (largely rate cuts) were in response to large-scale bank and savings & loan failures. Other policy responses followed huge debt defaults, banking and Credit system failures, and widespread financial turmoil. The "Lehman moment" quickly elicited the policy bazooka. These days, global central bankers are determined to resort to the big guns before there is so much as a failure of a significant financial institution. If market expectations are met later this month with the second round of the ECB's LTRO facility, the ECB will have provided well over a Trillion euro of additional liquidity prior to the failure of a single major European bank. It has become systemic "too big to fail" - and the markets are keenly aware of policy ramifications.
And I'll tell you where the analysis has turned most tricky. In the past, these policy-induced market reversals emerged from a period of acute market illiquidity and associated systemic stress. A major loosening of financial conditions would unfold following a problematic period of risk aversion, tightened Credit and associated economic weakness. Corporate profits would be faltering and confidence in U.S. equities and risk assets would be strained. The U.S. Credit system would be fragile. This time is different.
It is worth noting that the worsening of European debt strains in 2011 actually engendered an important loosening of Credit conditions here in the U.S. Treasury and agency debt markets, the commanding source of system Credit expansion, experienced a near buyers' panic. Markets always fear the unknown. Suddenly, collapsing Treasury yields and Fed QE3 talk ensured that any fledgling momentum for Washington fiscal restraint was nipped in the bud. As such, the bulls were assured of ongoing massive fiscal support for spending, corporate profits and GDP expansion, without worry that economic momentum might have the Fed looking to shrink its balance sheet and tiptoe away from near-zero rates.
We are now into the fourth year of previously unimaginable stimulus. Considering zero rates, massive Federal Reserve monetization and unconscionable deficit spending, economic performance has been abysmal. There has been ample confirmation - economically and financially - to the secular bear thesis. And this fragility has virtually guaranteed ongoing fiscal and monetary largess. At the same time, the backdrop should engender sufficient economic momentum to support bullish sentiment. Today's ultra-loose financial conditions - especially in government and mortgage finance - should equate to decent GDP growth, seemingly solid corporate profits and, even, more than a faint pulse in housing. And this could suffice as support for the bull thesis. Of course, the stronger the markets the more positive the news flow and analysis - which can support a self-reinforcing boost in overall confidence.
But don't count me bullish. I see no holes in the analysis that this remains an ongoing slow train wreck - the unfolding worst-case-scenario. The European financial and economic crisis will not be resolved anytime soon (think post-Bubble Japan). Greece is an unmitigated disaster and, throughout Europe, economic structure now (in a post Credit boom backdrop) matters. I don't see how such dissimilar economic structures (and social and political systems), say between Italy and Germany, are consistent with a common currency. LTRO only buys time. China is, as well, an accident in the making.
Here at home, Treasury debt issuance is unsustainable. An incredible amount of finance is being mispriced, over-issued and misallocated. It may equate to GDP growth, but it won't amount to sustainable robust and balanced economic performance. Indeed, we should by now be familiar with the dynamic where the more prolonged the Bubble the greater the distortions and maladjustment to our already maligned economic structure. And surely the last thing our system needs at this point is another bout of destabilizing speculative excess in our stock and risk markets. It's a dangerous phase.
Yet these types of policy-induced market runs become the devil's playground for precarious Bubble excess. With the bears out of the way, stock prices become easily detached from underlying fundamentals. Markets become dislocated - and speculation runs roughshod. Markets will tend to climb walls of worry - and derivatives will tend to leverage market buying power. And a marketplace dominated by trend-following and performance chasing trading dynamics forces everyone in. It convinces most to disregard risk. Hedging is abandoned, and everyone gets comfortably positioned on the same side of the boat.
I look at the global backdrop and see all the makings for a major, major market top. It's just impossible to know how far away - both in time and price - we are from such an outcome. I don't envisage a new bull market - but instead see the same type of manic marketplace that brought us the 2010 "flash crash" and the 2011 10-day market shellacking.
For the Week:
The S&P500 rose 1.4% (up 8.2% y-t-d), and the Dow advanced 1.2% (up 6.0%). The Morgan Stanley Cyclicals added 1.2% (up 16.1%), while the Transports slipped 0.3% (up 4.4%). The Morgan Stanley Consumer index rose 1.6% (up 4.2%), and the Utilities gained 0.3% (down 3.3%). The Banks were 2.4% higher (up 15.8%), and the Broker/Dealers were up 2.6% (up 18.0%). The broader market plugged right along. The S&P 400 Mid-Caps rose 2.1% (up 12.0%), and the small cap Russell 2000 gained 1.9% (up 11.8%). The Nasdaq100 was up 1.4% (up 13.5%), and the Morgan Stanley High Tech index jumped 1.9% (up 16.7%). The Semiconductors rose 2.8% (up 18.5%). The InteractiveWeek Internet index increased 1.0% (up 12.2%). The Biotechs were about unchanged (up 24.3%). With bullion little changed, the HUI gold index slipped 0.6% (up 4.4%).
One-month Treasury bill rates ended the week at 3 bps and three-month bills closed at 8 bps. Two-year government yields increased 2 bps to 0.29%. Five-year T-note yields ended the week up 4 bps to 0.84%. Ten-year yields increased one basis point to 2.00%. Long bond yields ended up a basis point to 3.14%. Benchmark Fannie MBS yields jumped 8 bps to 2.87%. The spread between 10-year Treasury yields and benchmark MBS yields widened 7 bps to 87 bps. The implied yield on December 2012 eurodollar futures rose 4 bps to 0.57%. The two-year dollar swap spread increased 1.25 to 28.5 bps. The 10-year dollar swap spread was little changed at 8 bps. Corporate bond spreads ended the week little changed. An index of investment grade bond risk was about unchanged at 99 bps. An index of junk bond risk declined 3 bps to 571 bps.
Debt issuance slowed. Investment grade issuers included Bank of New York Mellon $2.25bn, Toyota Motor Credit $1.25bn, Corning $750 million, Boston Gas $500 million and Rock-Tenn $350 million.
Junk bond funds enjoyed inflows of $1.77bn (from Lipper). Junk issuers included Chesapeake Energy $1.3bn, JMC Steel Group $875 million, Servicemaster $600 million, Rite Aid $480 million, Clair's $400 million, Endeavour International $150 million, PSS World Medical $250 million, and Citycenter Holdings $240 million.
I saw no convertible issuance this week.
International dollar bond issuers included Canada Housing Trust $2.5bn, Total Capital International $2.0bn, Teck Resources $1.0bn, Macquarie Bank $750 million, Korea Development Bank $750 million, Listrindo Capital $500 million, and MMI International $300 million.
Ten-year Portuguese yields declined 21 bps to 11.81% (down 96bps y-t-d). Italian 10-yr yields ended the week down 3 bps to 5.56% (down 147bps). Spain's 10-year yields fell 4 bps to 5.23% (up 19bps). German bund yields increased 2 bps to 1.92% (up 10bps), and French yields rose 9 bps to 3.00% (down 14bps). The French to German 10-year bond spread widened 7 bps to 108bps. Greek two-year yields ended the week up 1,932 bps to 188.51% (up 6,297bps). Greek 10-year yields surged 79 bps to 32.09% (up 78bps). U.K. 10-year gilt yields rose 7 bps to 2.18% (up 21bps). Irish yields increased 2 bps to 6.85% (down 141bps).
The German DAX equities index gained another 2.3% (up 16.1% y-t-d). Japanese 10-year "JGB" yields declined 3 bps to 0.94% (down 4bps). Japan's Nikkei surged 4.9% (up 11.0%). Emerging markets were mostly higher. For the week, Brazil's Bovespa equities index jumped 3.4% (up 16.7%), while Mexico's Bolsa dipped 0.6% (up 2.3%). South Korea's Kospi index added 1.5% (up 10.8%). India's Sensex equities index jumped 3.0% (up 18.3%). China's Shanghai Exchange increased 0.2% (up 7.2%). Brazil's benchmark dollar bond yields rose 10 bps to 3.25%, and Mexico's dollar bond yields increased 2 bps to 3.43%.
Freddie Mac 30-year fixed mortgage rates were unchanged at 3.87 bps% (down 113bps y-o-y). Fifteen-year fixed rates were unchanged at 3.16% (down 111bps y-o-y). One-year ARMs were up 6 bps to 2.84% (down 55bps y-o-y). Bankrate's survey of jumbo mortgage borrowing costs had 30-yr fixed rates down 4 bps to 4.62% (down 97bps y-o-y).
Federal Reserve Credit expanded $4.6bn to $2.918 TN. Fed Credit was up $426bn from a year ago, or 17.1%. Elsewhere, Fed Foreign Holdings of Treasury, Agency Debt this past week (ended 2/15) surged $26.3bn to $3.447 TN. "Custody holdings" were up $63.5bn year-over-year, or 1.9%.
Global central bank "international reserve assets" (excluding gold) - as tallied by Bloomberg - were up $958bn y-o-y, or 10.3% to $10.250 TN. Over two years, reserves were $2.435 TN higher, for 31% growth.
M2 (narrow) "money" supply declined $7.4bn to $9.772 TN. "Narrow money" expanded 10.0% from a year ago. For the week, Currency increased $1.3bn. Demand and Checkable Deposits declined $1.5bn, and Savings Deposits slipped $0.8bn. Small Denominated Deposits declined $2.4bn. Retail Money Funds fell $4.0bn.
Total Money Fund assets increased $3.0bn to $2.659 TN. Money Fund assets were down $36bn y-t-d and $97bn over the past year, or 3.5%.
Total Commercial Paper outstanding declined $10.8bn to $962bn. CP was down $79bn from one year ago, or down 7.6%.
Global Credit Watch:
February 17 - Bloomberg (Brian Parkin and Maria Petrakis): "The Greek government is drawing up legislation that could be used to impose losses on investors who don't support the debt swap that's part of the country's new bailout package... The law may be introduced to parliament in Athens in the coming days, said one of the officials... Euro region finance ministers are prepared to back the use of so- called collective action clauses if a voluntary debt swap doesn't draw enough participation..."
February 17 - Bloomberg (Paul Dobson and Abigail Moses): "The European Central Bank's plan to shield its Greek bond holdings from a restructuring may hurt private investors while paving the way for debt insurance contracts to be triggered. The ECB will exchange its Greek debt for new bonds with an identical structure and nominal value, though they'll be exempt from so-called collective action clauses the government is reportedly planning. That implies senior status for the ECB over other investors, according to UBS AG, and the use of CACs may lead to credit-default swaps protecting $3.2 billion of Greek bonds being tripped."
February 17 - Bloomberg (Abigail Moses): "Credit-default swaps insuring Greek government debt may pay out because a proposed bond exchange by the European Central Bank paves the way for losses to be imposed on private investors. Greece will introduce legislation next week that may allow so-called collective action clauses that force bondholders to accept debt writedowns, Naftemporiki reported. The ECB's new bonds will have identical structure and nominal value to their current Greek notes, though they will be exempt from CACs... 'The probability of triggering CDS has increased because the ECB has protected itself,' said Padhraic Garvey, head of developed-market debt at ING Groep NV in Amsterdam, who says the probability of a credit event is still low."
February 14 - Bloomberg (Rainer Buergin): "German Finance Minister Wolfgang Schaeuble said Europe is better prepared for a Greek default than two years ago, jacking up pressure on Greece to hold to its pledges and find the savings needed to win a second bailout... 'We want to do everything to help Greece master this crisis,' Schaeuble said... 'What we're experiencing at the moment is much less bad than what may happen to Greece if the attempts to keep Greece in the euro zone failed.' Yet if everything fails, 'we're better prepared than two years ago,' he said. Germany, the largest contributor to euro-area bailouts, is losing patience with Greece as Europe's most indebted country threatens to drag the region's economy into recession more than two years after the sovereign debt crisis first emerged."
February 17 - Dow Jones (Hans Bentzien and Todd Buell): "The head of a prominent German economics institute said it is in the interests of the Greeks themselves to leave the euro zone, because only then can the country regain competitiveness and prosperity. Hans-Werner Sinn, the head of the Ifo Institute, also said the EUR130 billion proposed second bailout package for Greece would be better used to help the embattled country recapitalize its banking system, while re-introducing its former currency, the drachma. 'There is no way that Greece can become competitive in the euro zone... It would need to cut its prices by 31% to get them to the level of Turkey, and that would bring the country to the brink of a civil war... Sinn's fears over a breakdown in civil order aren't without foundation. In what has become a disturbingly frequent scene in recent years, Greek protesters fought with police and set fire to buildings as the country's parliament voted Sunday on a new package of austerity measures..."
February 14 - Bloomberg (Ben Livesey and Cordell Eddings): "Moody's... cut the debt ratings of six European countries including Italy, Spain and Portugal and said it may strip France and the U.K. of their top Aaa ratings, citing Europe's debt crisis... 'Policy makers have made steps forward but we do not think they have done enough to reassure the market that we are on a stable path,' said Alistair Wilson, chief credit officer for Europe at Moody's... 'What will guide long-term ratings is the clarity and the performance of policy makers and the macro picture.'"
February 13 - Bloomberg (Liam Vaughan and Gavin Finch): "Banks are benefiting from a European Central Bank subsidy that could reach 120 billion euros ($158bn), enough to pay every bonus at financial firms in London for the next 24 years at today's levels. Royal Bank of Scotland Group Plc, BNP Paribas SA and Societe Generale SA are among more than 500 banks that took 489 billion euros of three-year loans from the Frankfurt-based ECB at a December auction. The loans currently carry a 1% annual interest rate, less than a quarter of the 4.3% average yield on euro-denominated senior unsecured bank debt of all maturities in the past year, according to Commerzbank AG. With borrowing estimated to hit a record 1.2 trillion euros after a second auction later this month, banks may save 120 billion euros over three years."
February 16 - Bloomberg (Angeline Benoit): "Spain's economy may contract more in the first quarter than in the last three months of 2011, Deputy Economy Minister Fernando Jimenez Latorre said, as the economy edges towards its second recession in as many years. Spain's gross domestic product fell 0.3% in the fourth quarter..."
February 16 - Bloomberg (Angeline Benoit and Emma Ross-Thomas): "Spain's central government is in talks with cash-starved regions facing debt redemptions to ensure they have sufficient funds, Deputy Economy Minister Fernando Jimenez Latorre said. Spanish ministers approved a credit line of as much as 15 billion euros ($19bn) on Feb. 2 for regions to help them pay bills to suppliers and meet debt payments through June. The state-run Official Credit Institute, or ICO in Spanish, will organize the facility and offer a similar loan to municipalities."
February 17 - Bloomberg (Tim Catts): "Corporate bond sales in the U.S. fell to $15.4 billion this week, the lowest level of 2012, as evidence mounted that a credit market rally was losing momentum.... Issuance fell 61% from last week's $39.8 billion and the commercial paper market declined for the first time since the period ended Jan. 4... Returns on company debt have fallen to 0.02% in February, after a gain of 4.42% in the preceding two months..."
Global Bubble Watch:
February 7 - Bloomberg: "China's central bank pledged support for first-home buyers as a crackdown on real-estate speculation threatens to trigger a property slump in the world's second- biggest economy. Officials will increase support for construction of affordable housing and ensure that 'loan demand from first-home families' is met, the People's Bank of China said..."
February 16 - Bloomberg (Noah Buhayar): "Hedge funds are being spared punishment for their 2011 performance as insurers that suffered last year with lower-than-expected returns decide they won't be able to do much better in the bond market. Policyholder-owned insurer FM Global plans to boost the allocation to hedge funds in its $10.5 billion portfolio this year, after the bets 'didn't really deliver too well' in 2011, said Paul LaFleche, the company's senior vice president of investments... Overall, clients deposited a net $70.7 billion throughout 2011 in hedge funds as the investment vehicles lost an average of about 5% amid swings in global markets, Chicago-based Hedge Fund Research Inc. said..."
February 13 - Bloomberg (Catarina Saraiva): "In the $4 trillion-a-day currency market, traders calmed by a flood of central bank money are leaving safety for riskier bets against a background of Greece's potential default and threats of nuclear weapons in Iran. Borrowing in dollars or yen to buy high-yielding Brazilian reais and Mexican pesos has returned 5.5% this year, the best start on record, and reversing last year's 15% loss, the UBS AG V24 Carry Index shows."
February 14 - Bloomberg (Richard Bravo): "Over the past decade, only the record-breaking year of 2009 exceeds the gains posted by junk-rated U.S. corporate debt so far in 2012, sparking a flood of offerings from the neediest borrowers to refinance and extend maturities. High-yield debentures and leveraged loans... returned 3.84% and 3.37% as of yesterday... Sales of speculative-grade bonds totaled $43.6 billion this year, compared with $8.75 billion in the same period of 2009."
The dollar index gained 0.3% this week (down 1.1% y-t-d). On the upside, the New Zealand dollar increased 0.7%, the Norwegian krone 0.5%, the Brazilian real 0.5%, the British pound 0.5%, the Canadian dollar 0.5%, the Mexican peso 0.3%, the Australian dollar 0.3%, the Singapore dollar 0.2% and the South African rand 0.1%. On the downside, the Japanese yen declined 2.4%, the Swedish krona 1.0%, the Danish krone 0.4%, the euro 0.4%, the Swiss franc 0.4%, the South Korean won 0.2%, and the Taiwanese dollar 0.1%.
Commodities and Food Watch:
February 16 - Bloomberg: "China, the world's largest consumer of energy and base metals, is set to displace India this year as the biggest gold user... as surging incomes drive increased demand for jewelry and investments. Demand in China jumped 20% to 769.8 metric tons in 2011, while consumption in India fell 7% to 933.4 tons, according to...the producer-funded World Gold Council..."
The CRB index jumped 1.3% this week (up 4.0% y-t-d). The Goldman Sachs Commodities Index surged 2.3% (up 6.7%). Spot Gold added 0.1% to $1,723 (up 10.2%). Silver gained 1.1% to $33.67 (up 20.6%). March Crude jumped $4.57 to $103.24 (4.5%). March Gasoline gained 1.4% (up 13.5%), and March Natural Gas rallied 7.5% (down 10%). March Copper added 1.1% (up 8%). March Wheat gained 2.2% (down 1%), and March Corn rose 1.6% (down 1%).
February 13 - Bloomberg: "Chinese Premier Wen Jiabao said the nation needs to start 'fine-tuning' economic policies this quarter, the first indication of a timeframe for an adjustment he has pledged since October. Economic circumstances in January and the first quarter deserve attention, Wen told business executives... 'We have to make a proper judgment as early as possible when things happen and take quick action,' Wen was cited as saying... Wen's remarks may fuel speculation that the government will soon ease policy further..."
February 16 - Bloomberg: "China's commerce ministry said the outlook for foreign investment and trade is 'grim,' after slowing economic growth and Europe's debt crisis spurred the third monthly decline in spending by overseas companies. Foreign direct investment in China fell 0.3% in January from a year earlier to $9.997 billion... Exports last month fell for the first time in more than two years, a Feb. 10 customs bureau report showed."
February 13 - Bloomberg (Keiko Ujikane): "Japan's economy shrank an annualized 2.3% in the fourth quarter, more than economists estimated, as slumping exports undermine a recovery from last year's record earthquake."
February 14 - Bloomberg (Toru Fujioka and Keiko Ujikane): "Japan's central bank unexpectedly added 10 trillion yen ($128bn) to an asset-purchase program and set an inflation goal after an economic slide fueled criticism it has been slower to act than counterparts. An asset fund increased to 30 trillion yen, with a credit lending program staying at 35 trillion yen... The BOJ also said that it will target 1% inflation 'for the time being.' Stocks rose and the yen weakened against the dollar as the central bank expanded stimulus for the first time since October to revive an economy that shrank an annualized 2.3% last quarter."
February 17 - Bloomberg (Shikhar Balwani and Jeanette Rodrigues): "Investors are pumping the most money into Indian sovereign bond funds since September 2010 on speculation policy makers will cut borrowing costs as inflation slows."
Latin America Watch:
February 6 - Bloomberg (Andre Soliani and Maria Luiza Rabello): "Brazilian state-controlled banks are boosting credit four times faster than non-government lenders, making it harder for policy makers to lower interest rates while meeting the country's inflation target. Government-run banks including Banco do Brasil SA and Caixa Economica Federal, which accounted for almost half of all lending in December, boosted credit by 4% that month, compared with 1% for non-state lenders..."
February 16 - Bloomberg (Nacha Cattan): "Mexico's economy expanded at half the rate forecast by economists in the fourth quarter... Gross domestic product... rose 0.4% in the fourth quarter..."
Unbalanced Global Economy Watch:
February 14 - Bloomberg (Simone Meier): "European industrial production declined in December led by a slump in Germany, adding to signs the region may have slipped into its second recession in three years. Production in the 17-nation euro area fell 1.1% from November... From a year earlier, production decreased 2%."
Central Banking Watch:
February 14 - Bloomberg (Aki Ito and Caroline Salas Gage): "Federal Reserve Bank of San Francisco President John Williams said the U.S. central bank should keep trying to boost growth because it's missing its goals for employment and price stability... 'I'm sticking with my story that economic growth won't be that strong,' Williams told reporters... 'Going forward, it's about weighing the costs and benefits of doing more,' he said... The FOMC said last month borrowing costs will remain low at least through late 2014, pushing back an earlier date of mid-2013... 'It's vital that we keep the monetary policy throttle wide open... This will help lower unemployment and raise inflation back toward levels consistent with our mandates. And we want to do so quickly to minimize total economic damage.'"
February 17 - Bloomberg (Toru Fujioka): "Bank of Japan Governor Masaaki Shirakawa said that setting an inflation objective was a better policy option for Japan than following the Federal Reserve in crafting a time-frame for the end of policy stimulus. While the Fed pledged to keep exceptionally low rates through late 2014, it 'holds significant reservations with regard to such anticipation being subject to change depending on economic and price outlooks,' Shirakawa said... 'We judged it's more effective and credible to set an inflation goal rather than specifying the timing of an exit as Japan faces high uncertainties for the outlook of the economy and prices,' he said..."
U.S. Bubble Economy Watch:
February 9 - Bloomberg (Alex Kowalski and Tom Keene): "Nobel-prize winning economist Paul Krugman isn't paying enough attention to growing U.S. government debt as he promotes deficit spending, Columbia University professor Jeffrey Sachs said. 'Krugman has staked out a rather crude Keynesian position and unrelentingly so,' Sachs said... referring to John Maynard Keynes, the British economist who advocated government spending to spur economic growth during the Great Depression. Krugman 'knows one thing, which is stimulus, stimulus, stimulus and expand deficit spending,' Sachs said... Total federal debt held by the public has more than doubled as a share of gross domestic product in the last decade. It totaled 72% of GDP last year, compared with 35% in 2000...
Real Estate Watch:
February 13 - Bloomberg (Bob Willis): "Construction of multifamily units will lead the U.S. building industry again this year, allowing housing to contribute to growth for the first time in seven years, according to economists Michelle Meyer and Celia Chen. Work will begin on about 260,000 apartment buildings and townhouse developments in 2012, up 45% from last year and the most since 2008, according to Meyer, a senior economist at Bank of America... Chen, an economist at Moody's... is even more optimistic, projecting a record 74% jump to 310,000."
February 13 - Bloomberg (Frank Bass and Sharon L. Lynch): "President Barack Obama's budget today will outline his ideas for how the government may spend more than $3 trillion in the next fiscal year, starting Oct. 1. There's no similar document accounting for where taxpayers' money actually goes. At least three federal sources tally spending, each following its own rules to produce a different total. For the 15 Cabinet-level agencies and Social Security, the White House Office of Management and Budget put expenses at $3.18 trillion in fiscal 2010... Ask the Census Bureau, and the amount rises by $13.1 billion to $3.19 trillion. USASpending.gov... accounts for $2.23 trillion of spending. The nation's budget has more than doubled in the past decade, pushing the annual deficit to more than $1 trillion and the national debt to $15.2 trillion."