17 replies to this topic

[fib_1618]

The deficit has grown slower in 2005 and 2006.

Better said would be that the deficit has been getting smaller over the last two years.

Want to venture a guess as to the single most important reason why this is so?

Fib

[U.F.O.]

A worldwide trend out of US denominated assets into, primarily, EURO currency. Sell Treasuries and buy EUROs. Has a dramatic effect on UST and associative charts.

U.F.O.

Edited by U.F.O., 12 January 2007 - 09:01 PM.

[arbman]

The deficit has grown slower in 2005 and 2006.

Better said would be that the deficit has been getting smaller over the last two years.

Want to venture a guess as to the single most important reason why this is so?

Fib

The deficit is still growing as far as I know, it is just year over year increase that's decreasing, meaning increased tax receipts are offseting the gov't spending? However, if a slowdown happens and they don't cut down the spending, and logically they should not, then it will grow faster again. The chart I posted is about the yoy difference, not the absolute amount, the absolute amount is still growing, isn't it?

[U.F.O.]

Oil falling from mid 70's to mid 50's is the reason. Single biggest component of the trade deficit. U.F.O.

Edited by U.F.O., 12 January 2007 - 09:19 PM.

[arbman]

The gov't is not buying the oil, it is the private companies, the budget deficit has been improving for 2 yrs. OTOH, during this growth cycle, the real rates have been behind the inflation, I don't know the reason, but the Fed kept telling everyone so. Anyway, the treasuries are selling because the dollar weakened... But there isn't a whole lot reason to sell significantly more since the economic slowdown will destroy the credit and stabilize the USD all by itself, me thinks. It is obvious if you look at the RUT/SPX ratio, it has been doing pretty poorly for the kind of rally the indices had since the last summer...

[U.F.O.]

Are we talking budget deficit or trade deficit? U.F.O.

[fib_1618]

The deficit is still growing as far as I know, it is just year over year increase that's decreasing, meaning increased tax receipts are offsetting the gov't spending? However, if a slowdown happens and they don't cut down the spending, and logically they should not, then it will grow faster again. The chart I posted is about the yoy difference, not the absolute amount, the absolute amount is still growing, isn't it?

Correct, it's been the tax cuts of the last 4 years as they continue to "trickle down" through the system. And, yes, unless spending is curtailed, a slowdown in the economy would again increase the year over year figures, but this doesn't necessarily mean it would be have a direct impact on the equity markets as this is just a portion of a much larger picture of "global" influence.

Going back to the topic of this thread, the chart below shows the interest rate sensitive A/D lines as of Friday's close. If anything else, this information continues to suggest that any pullbacks in which might be going on right now should be used as buying opportunities.

The rest of the this week's cumulative data can be found over at Technical Watch.

Fib

[eminimee]

there is the chance UTIL has topped...unless 5 is 3...taking out the bottom TL would clinch it.

http://stockcharts.com/c-sc/sc?s=$UTIL&p=D&yr=3&mn=0&dy=0&i=p19088943522&a=88068608&r=2788.png