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Does the US Want a Devalued Dollar?


The quote du jour comes from someone who thinks so.

A snapshot of the week's US economic reports is provided below.

October 16

Widespread strength in factory report

October 15

Inflation remains a non-issue, for now

The quandary between initial claims and total continuing claims

October 14

Minutes of September 22-23 FOMC meeting -- more of the same

Third-quarter consumer spending expected jump likely, but muted growth in fourth quarter

Import prices are turning around

Restocking -- one of the conduits of economic growth in the months ahead

Further evidence that the recession that began in December 2007 has ended came from the Philly Fed report that was positive for the third straight month. According to Bespoke, "the last time this indicator was positive for three straight months was from September through November 2007, which was the last three months leading up to the start of the recession."

Dissecting the retail sales data shows that trends improved all over, with the exception of auto-related sales due to Cash for Clunkers. The chart below, courtesy of Clusterstock takes September's year-on-year sales change (September '09 versus September '08) and subtracts August's year-on-year sales change (August '09 versus August '08). It thus shows the change in the retail sales trend. "Yes, this matters: American retail trends have to become less negative before they go positive," said the report.

The minutes of the Federal Open Market Committee's (FOMC) September meeting indicated that most participants thought the recession was over. Although they expected the recovery to be weak initially, most members also upgraded their expectation for near-term growth.

Participants generally expected inflation to remain low in the near term. "The Fed is in the most favorable spot in the near term with regard to inflation because the excess capacity in the economy allows the Fed to maintain a focus on economic growth and leave inflation on the back burner, for now," said Asha Bangalore (Northern Trust).

Cautioning against bullish expectations, David Rosenberg said (via MoneyNews) that the economy was being held together by very strong tape and glue provided by the Fed, Treasury, and Congress, and that the recovery would be weak.

He predicted the economy would stagnate this quarter and then grow no more than 2% in 2010. The economy won't take on the V-shape of previous rebounds, Rosenberg said. "It's going to look like this whole string of lowercase Ws for the next five years."

Week's Economic Reports

Click here for the week's economy in pictures, courtesy of Jake of EconomPic Data. Click here for an economic calendar from Yahoo Finance.

US economic data reports for the week include the following:

October 20

Building permits

Housing starts


October 21

Fed's Beige Book

October 22

Initial jobless claims

Leading economic indicators

FHFA Housing Price index

October 23

Existing-home sales


The performance chart obtained from the Wall Street Journal Online shows how different global financial markets performed during the past week.

That's the way it looks from Cape Town (where we're blessed with balmy spring weather at the moment).

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