That, as you probably know, is the famous slogan which appears in a box on the top left of the front page of the New York Times (NYT) every day. It is certainly true that the NYT prints "news" by the bucketful. Whether it is fit to print is the decision of the owners and editors of the paper, and ultimately of its readership.
Well, as far as the markets are concerned, the NYT is becoming disgruntled, calling these markets (not only US markets but all the world markets) "the dullest in years". Looking at the raw figures, it is easy to agree. The $US itself, for example, as measured by the $US index, is up a mere 0.05% on the year. The Dow is down 3.0%. Gold, in $US terms, is down 2.24%. We cover fifteen stock market indices on a weekly basis on our Subscribers' Pages, including the "big three" indices in the US (Dow, Nasdaq, SP500). Only one of these markets has moved more than 10% so far this year, and that is the Thailand stock market which is down 16.3%. The biggest gainer is the Indonesian market, up 9.3%. The SP500, Dow, and Nasdaq are down 1%, 3%, and 6% respectively.
US bond markets are not overly inspiring either. On the year to date, the yields on most maturities are up (and prices down), but not by much. With the official (Fed Funds) US rate having recently been hiked by 0.25%, the biggest rise in yield so far this year has been the six-month paper - up from 1.01% to 1.65%. The longer the maturity, the smaller the move. Out at the long end, yields have been all but stationary. The Treasury ten-year bond yield is down 0.03% (3 basis points) since the start of the year and the (no longer issued) 30-year bond is down 0.05%.
So, markets aren't doing much, but PRICES certainly are. All over the world, consumer prices are on the rise, not too much according to the statisticians but a WHOLE lot according to anyone who actually buys things. In the US, the "headline" price leaps of 2004 so far have come in oil and its by products and in residential real estate. In June, Los Angeles home prices staged their biggest leap in 15 years with the median price (half above - half below) surging almost one-third (32.3%). Prices in Phoenix were up 11.1% year-on-year in June 2004. House prices in Baltimore were up more than 20% in June, their third 20% plus rise in a row.
Ominously, two-thirds (66.7%) of California house purchases in May were made using adjustable-rate mortgages (ARMs). These offer lower initial monthly payments, but unlike fixed-rate mortgages, they are at the mercy of future (very likely higher) interest rates.
At the same time as this is going on, reported average US wage rises are woefully inadequate to even keep up with the "kind and gentle" US government price inflation numbers. Consumer confidence is waning and, a dangerous development in a nation where an acknowledged 70% of economic "growth" comes from consumer spending, retail sales are tailing off too. The NYT may see the markets as being "dull" now, but they will be hard pressed to stay that way too much longer.
In the lead up to the Fed's rate rise on June 30, the Fed Governors from Mr Greenspan on down were out en masse telling the world that price inflation was not a problem and that the US real estate market (see the figures above) was not a "bubble". When the rate hike was announced, the FOMC assured the world that while "inflation data are somewhat elevated" - it was no problem, being "due to transitory factors.".
In the lead up to the Fed's rate rise, Wall Street never tired of telling us that the rise was simply necessary to reflect the robust growth being enjoyed by the US economy and that it would result in a strengthening of that growth along with a stronger US Dollar.
Of course, in fact, ever since the rate rise was announced the data illustrating a slowdown in US economic growth has been piling up. As for the US Dollar, it has been going down with hardly a break ever since the end of June. On Friday, July 16 alone, this slide accelerated with the $US index down 0.90 points on the day to 87.30, its lowest spot future close since February 24.
Gold is down $US 1.10 this week in $US terms. It is down in terms of almost everything else too, with the $US index down 0.37 points this week. Gold remains above its 200-day (40 week) moving average but it is still just over $US 20 below its 2004 spot future high close of $US 427.80 set on April 1.
Next week, Mr Greenspan testifies to Congress. The week after that, the Democratic convention convenes in Boston. The week after that, we will be in August, halfway through the traditional US "Summer doldrums" - the period between Independence Day and Labor Day. We will also be past the starting gates in the REAL presidential election period, a Presidential election which exhibits at the same time the biggest issues faced by US voters in living memory coupled with a lack of choice between candidates and platforms which is also the biggest in living memory.
Bush and Kerry. Skull and bones. Tweedledum and Deedletwee. Mutt and Jeff. You get the picture. Have you ever noticed that the bigger and more important the potential issues to be decided at an election, the more the candidates (and platforms) of the main parties resemble each other? That's democracy in action. You get to pick the winner, but you DON'T get to pick the players.
How long the REAL state of the US and world financial situation can remain unmentioned by either party in the upcoming US elections, or by the mainstream media covering the upcoming elections, will be fascinating to watch. The one potential "fly in the ointment", excluding the Department of Homeland Security which has announced that it is on the alert for any "terrorist threat" which might force a postponement of the election, is the US Treasury. This week, it came out in public to inform all who would listen that it thinks it will need the present debt ceiling (of $US 7.384 TRILLION) raised - by October.
THAT would certainly liven things up a bit. In the meantime, we will watch to see if the present shaky edifice of financial "business as usual" can continue to stand upright in the face of the news that isn't deemed "fit to print" - the REAL news which daily paints an ever starker picture of a financial world strained to the breaking point by a pile of debt which just keeps on growing.