Macro signs: Eying Europe’s bad news

A traffic light is pictured beside the Wall Street road sign in the financial district of New York September 19, 2008. REUTERS/Lucas Jackson

President Obama’s latest stimulus plan involved some big numbers but it did little to lift the mood of investors.

Instead, investor attention shifted to Europe where a WSJ report said “stress tests”, published more than a month ago, underestimated some lenders’ holdings of potentially risky government debt.

Concern over the European banking sector was further aggravated by Germany’s banking association saying the country’s 10 biggest banks may need 105 billion euros of additional capital under Basel III.

In a light week for macroeconomic data it seems bad news overseas is translating into investors taking their money off the table at home.

More gloom comes from Nouriel Roubini, a professor at New York University. At the annual Ambrosetti conference on Lake Como he said the U.S. has run out of bullets in its arsenal to fight off a recession, writes the Telegraph.

Macro signs: The 1, 2, and 3s of the economic recovery

A construction worker stands atop one of a number of new single family homes being built in a subdivision outside San Diego March 8, 2010. REUTERS/Mike Blake  A daily look at the macroeconomic news and its impact on the mood of investors and the direction of the economy. Are we heading for a double-dip recession?

The August jobs numbers released today were better-than-expected. Do they put to rest the fears of a double-dip recession? According to an analysis by Emily Kaiser, the numbers suggest we are not just in a recovery but in phase two of it. The first part of the recovery was led by the manufacturing sector, which ramped up producing and hiring to restock store shelves. The August employment report now indicates the long-suffering segments such as construction are perking up after a long hibernation.

At the NYT, David Leonhardt uses the same Phase One, Phase Two approach but suggests that the economy has moved on to Phase Three, a long slog.