retail sales data

Although erratic (continuation of the new normal!) it appears that we are experiencing a downward trend overall. This would be in line with recent data regarding the sluggish level of income growth we have been experiencing thus generating less disposable income for the average American. Additionally, regarding one of the 'bright spots' of retail sales - has the auto sales wave reached its peak?

With the continued reporting of volatile economic data it would appear that the FOMC has plenty of 'room' to continue its forward thrust with market assistance (IE: more QE).

For the community banking world that will provide a continuation of the operating atmosphere that we have been living/struggling with...slow asset growth, low yield on earning assets, continued margin compression.  

Yet, we must be ever mindful of (as the OCC has warned and continues to warn us) the possibility of extension risk - when reviewing and assessing your market risk make sure you are factoring in the 'probability zones' for outcomes that reflect erratic yield movement. 

Chart Of The Day

Interesting to ponder upon the NSA (not seasonally adjusted) retail sales numbers for the month of September over the last several years.....the NSA numbers reflect an even greater downward trending over the last four years.

QE: forever more......

Volatility rules in the new normal. 

Job growth: as one of the key QE continuation indicators/markers it would appear that the Fed will be empowered to keep printing through the end of the year, at least (or is it QE: forever more - especially with an unlimited debt ceiling window!), which should keep downward pressure on yields through the near term...

Margin compression - the unwanted gift from the FOMC that keeps on giving!

Chart Of The Day

fiscal misfeasance...

Fed's Fisher comments.....

Fisher said: "kicking the can down the road for a few months will not solve the pathology of fiscal misfeasance that undermines our economy and threatens our future.......No amount of bond-buying can "offset the rot that is destroying our fiscal house and the blight it spreads over our economy" 

http://www.reuters.com/article/2013/10/17/us-usa-fed-fisher-qe-idUSBRE99G0MP20131017?feedType=RSS&feedName=businessNews

total us debt breakdown

FYI: interesting graphic...

If Congress doesn't raise the debt ceiling soon, the U.S. government won't be able to pay its debts. Here's who the government owes money to — all the holders of U.S. Treasury debt, broken down by category and by how much government debt they hold.

http://www.npr.org/blogs/money/2013/10/10/230944425/everyone-the-u-s-government-owes-money-to-in-one-graph?ft=1&f=1001

Notes

The graph includes debt owed to the Social Security trust fund and other federal funds. These are sometimes excluded when calculating the debt for other purposes. For details, see this GAO report.

Source: Federal Reserve; FMS; GAO; Social Security Administration
Credit: Quoctrung Bui

great quote

Faith, hope, and central bank charity... 

that's all there is left in the new normal.

T. Durden