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Here’s a pretty good data summary from Warren.  All in all the economy is still pretty weak despite the recent spat of good news.  I think we’re still in for a muddle through scenario and as oil prices surge the downside risks will return:

“Bernanke gives his latest Congressional testimony and takes Q&A at 10am tomorrow.

He’s unlikely to diverge much from the recent narrative and I expect him to focus more on the changes they made at the last FOMC meeting (easing via extending conditional commitment and new set of forecasts) than highlight more policy changes (QE3 or Twist 2). March/April a more likely time frame for next set of policy changes.

Today’s data backs up the view stated by the Fed in January and recent speeches:

  • House prices continue to fall. Case-Shiller HPI -1.1% in December and -4% y/y.
  • Core durable goods orders -4.5%. Even adjusted for new year effect (expiration of accelerated depreciation in December), still weak, with the 3m annual rate of change now -3.7% vs +1.7%.
  • Conference Board survey rises from 61.5 to 70.8, a 12mth high, with notable improvement in Labor Differential (Jobs Plentiful Less Jobs Hard To Get). But, Plans to Buy a Home in next 6mths drops 0.2, to lowest level since August 2011.

Fits in with the following from their last Statement (where they eased):

While indicators point to some further improvement in overall labor market conditions, the unemployment rate remains elevated. Household spending has continued to advance, but growth in business fixed investment has slowed, and the housing sector remains depressed.”


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