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from MacroScope:

ECB deflation risk denial has echoes of 2009

Euro zone policymakers like to talk. They often contradict each other at separate speaking engagements on the same day. But they have struck a chorus in recent weeks, asserting that deflation is not a threat.

Members of the ECB Governing Council have been particularly vocal, insisting they will not have to alter policy to counter falling prices.

Jan 9: Mario Draghi says the euro zone may "experience a prolonged period of low inflation" -- steering clear of even mentioning the word deflation.

Jan 21: ECB's Ewald Nowotny says "we neither see inflation nor do we see deflation in the euro zone".

from MacroScope:

The euro zone: choose your own adventure

Forecasts about the future for the euro zone economy are starting to resemble a multiple-choice novel. Are you an economist working for an Anglo-Saxon institution? Then turn to p.65 -- "Recession for the euro zone". A German bank? Go to p.80 -- "Happy days are here again!"

That simplifies the case slightly, but there's more than a grain of truth in it. We've noted repeatedly that predictions about the euro zone are coloured heavily by whether someone works for an employer based inside the currency union or not.

from MacroScope:

High-flying economic indicators

At a meeting of the National Association for Business Economics in Dallas,  discussions on the economic outlook turned so gloomy at one point that a  well-known economist was heard to say he’s inclined to sell everything and  “just buy a gun.”

Herb Kelleher, Southwest Airline’s co-founder and chairman emeritus,  offered a different view when he addressed the group on Monday. As it turns  out, although Kelleher majored in English (with a minor in philosophy), he has a favorite economic indicator too. Advance airline bookings, he said, say more about the economic outlook than is widely understood – in fact, he  said, for years the large department store companies used to call him in early  December to check on bookings so they could predict what kind of a Christmas selling season they might have. Asked what bookings look like today, he said:

from MacroScope:

The octopus and the economists

What do an eight-legged creature in an aquarium in Germany and 74 economists have in common? The consensus view that Spain would claim the World Cup -- until the economists, as they so often do, changed their minds.

worldcup.jpgIf World Cup 2010 goes down as one of the most unpredictable and exciting competitions in recent history, bringing underdogs Holland and Spain to the final showdown, what was hopelessly routine was watching so-called expert opinion converge around the safest bet. At least among financial professionals, who have done so well of late predicting the future.

from Shop Talk:

Check Out Line: Food companies serve up tasty results

hershey1Check out the better-than-expected results being served up by food companies.

Chocolate maker Hershey posted a quarterly profit above analysts' expectations, said it was on target to meet its 2010 earnings forecast and boosted its dividend. The company also said it would boost advertising to try to sell more candy, including Almond Joy and York peppermint patties.

Meanwhile, Archer Daniels Midland, one of the largest processors of corn and soybeans, saw its profit slip 2 percent, but the results still topped analysts' forecasts, and Pepsi Bottling also topped Wall Street's view as productivity improvements offset a dip in sales. Fruit and vegetable producer Dole Food reported a higher fourth-quarter profit and paid down debt.

from Shop Talk:

Check Out Line: Estee Lauder had a beautiful holiday season

Fabrizio FredaCheck out Estee Lauder's much better-than-expected end to 2009.

The cosmetics maker said fiscal second-quarter results, due next week, will fly past its forecast and Wall Street's predictions.  Sound familiar?  That's because the company did the same thing back in October, before it released results for the first quarter of its fiscal year.

Analysts noticed the similarity.  JP Morgan's John Faucher entitled his research note "Deja Vu" and many said with the stock's nice run already (up about 56 percent in 2009), big gains from here are likely limited.

from From Reuters.com:

Graphic: Hurricane Bill

from MacroScope:

How good are economists at forecasting CPI?

Market economists are taking a pasting worldwide for not predicting the global financial crisis. But how good is the profession at more bread-and-butter tasks, such as forecasting economic data?

 

In Australia, Reuters surveys 15-25 economists ahead of each quarterly CPI figure. A check back over analyst forecasts for the past 17 years shows:

from MacroScope:

Has Bernanke got it right?

"Don't fight the Fed" is an ingrained financial markets axiom and hence, when Federal Reserve Chairman Ben Bernanke speaks, investors, traders, analysts, economists and fund managers pay attention.

Bernanke testified in Congress on Tuesday and one key message was that the recession should end this year.

from Shop Talk:

Check Out LIne: Mixed profit outlooks

nordstrom.jpgCheck out retailer's different views on future profits.
 
Kohl's, the mid-priced department store, says it expects third quarter earnings to be better than expected, while upscale Nordstrom cut its forecast range.
 
That's not to say that Nordstrom's consumers are flocking to Kohl's as the U.S. economy suffers. Kohl's profit fell in the second quarter. But cutting inventory was enough for it raise its profit estimate for the full year. Deutsche Bank retail analyst William Dreher also said the company will be able to set itself apart with fresh merchandise because it cleaned out its inventory.
 
Nordstrom, meanwhile, cut its full-year profit outlook. But while its customers are spending less, the retail chain says they are not trading down.
 
And if they were, they certainly aren't trading down to J.C. Penney, which saw a 36 percent drop in profit and forecast third quarter earnings below analysts' estimates. Sales also fell 2.5 percent.
 
Also in the basket: 
 
H&M defies retail gloom as July sales top forecast
 
Swatch upbeat on H2 as Olympics boosts sales
 
Back-to-School discounts are deeper, more creative (N.Y.Times)

 (Photo: Reuters)

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