GDP fell 3.8% in 4Q 2008, but even that number is misleadingly high, as it includes inventory buildup from collapsing sales as +1.3% rather than a negative. Whack that off and you've got -5.1%, with sales down 5%, and non-farm output down 5.5%. Nonresidential investment plunged 19.1%, and residential investment cratered at a 23.6% rate. A lot of important components came in worse than expected. Some individual segments are surprising; DVD sales collapsed 32% in the 4th quarter. Everyone agrees it'll get worse before it gets better, but Dr. Roubini thinks most people are still being too optimistic. (I think the 3rd/4th quarter 2009 recovery idea is insane.)
FDIC Friday is picking up steam with three banks taken over, one of which will just be issuing refunds - they found no one even willing to take the assets, such as they were, and operate the branches.
I think Karl is drawing this triangle - which projects a target of 200 on the S&P 500 - too soon. At least, I sure as hell hope he is. But then, the US stock markets have now had their worst January ever. (Historically, January also has a 91.5% probability of predicting the trend for the remainder of the year.) Karl's saying that the bond market said on Thursday - if you missed the bond action this week, go here - that it will not tolerate US$4T in new government "bad-bank" debt, and that people had better listen. (That's Schumer's newest estimate, and probably about right. That's up from earlier numbers - you know, dim distant past numbers like Wednesday - of only $2T.) But it looks like the whole "bad bank" idea is in trouble, despite Wall Street support from some quarters, because again, "oh it's the same idea it's the same idea" and all that.
Think about it, though; 40% of notational "cash" has evaporated in five quarters, according to Steve Schwarzman of Blackstone at the World Economic Forum. Mish's take is here, noting that there simply isn't any way to reinflate these former valuations - at least, not without destroying the currency. In an amusing analogy, he notes that "Citigroup, Bank of America, Wells Fargo, etc are gigantic black holes that will suck in every dollar available. All taxpayers will get, if anything, are a few quarks that escape." Mmmmm, Hawking radiation.
Dr. Roubini at RGE Monitor has a new proposal on trying to prevent complete financial failure, which some would argue is a bit behind reality.
Weird shit is going on in the slosh - as in, the discount window is mostly unused now, except for sudden spike Thursday night. It's all being thrown out other windows instead, of course, but ones we can't see very well, if at all. But that was true in, say, December, too, and the window was still seeing regular large-scale utilisation. Now it's not. Have those borrowers all gone to the TARP's section $350B, favouring its complete lack of transparency? I don't know.
We're continuing to see small improvement in prices (and, by proxy, volume) in Panamax-class dry bulk shipping. That's good news for shippers. But air cargo dropped 22.6% in December. That's pretty big. Rail traffic dropped 14.6% last week, year to year. That's a lot too. Around 6% of all container ships are offline for lack of trade; the tonnage on standby has jumped 39% since one month ago.
"Appraisals Said Hurting Home Sales" is one of the laugh-because-it-hurts articles of the day; sale completion numbers are dropping because appraisals come in lower than contract price, which stops the sale, which lowers prices, crush kill destroy wash rinse repeat. Freddie Mac is going to rent some of its foreclosed properties - back to the people they've foreclosed against. So now if you're underwater or whatever and you stop paying, you get to live free six months to a year, and then you don't have to move.
NEC and Hitachi are laying off 27,000. Wildcat strikes are popping up across Britain against foreign workers. A rough tally on Layoff Daily looks like around 39,000 in announced layoffs/redundancies/etc on Friday.
Mish has a potpourri post of his own, here. You might read it.
Otherwise, enjoy the weekend, and good luck.