BarroMetrics Views: Governmental Intervention Bubble
In Stabilizing an Unstable Economy, Hyman Minsky, a self-confessed Keynesian, outlined five stages of a bubble:
It seems to me the current belief that ‘the government will bailout us the consequences of the sub-prime excesses’ has taken the form of stage 2. Little is attention is being paid to the adverse consequences of the bailout. Indeed, it’s sometimes a case of ‘bad news is good news’…….
….I was having coffee with a few trader friends last week. She jokingly put forward the idea that the Non-Farm would within consensus range but at the lower end of the range so as to make way for QE3! The consensus range for the number is 35k to 167k. So in her eyes, the number will be around 35K to 50k.
(I am expecting a number above consensus because both the ADP and the employment section of the ISM NON-MANUFACTURING SURVEY showed an better than expected increase – FIGURE 1 is a chart of the ISM employment survey since 2004).
It will be interesting to see if we do get the number I expect. If so, we should see more upside in the S&P.
FIGURE 1 ISM Employment