IS IT OVER YET

1
IS IT OVER YET?
Tennessee-Tombigbee Waterway Development
Council Annual Meeting August 2009 John
Robertson
2
IS IT OVER YET?
Depends on what the meaning of it is!
3
IS IT OVER YET?
If it equals Financial Armageddon, then its
definitely, probably, maybe, over.
4
BANKS ARE TRUSTING EACH OTHER AGAIN
Source Bloomberg and British Bankers Association
5
Consumer ABS IssuanceQuarterly, Billions
SECURITIZATION MARKETS ARE IMPROVING

• Source JPMorgan Bloomberg

Note Q3 observation is monthly data at quarterly
rate
6
FIRMS ARE ISSUING BONDS AGAIN
Source SIFMA Bloomberg
7
IS IT OVER YET?

• If it equals
• recession, then
• probably not, but
• getting there.

8
SPEED OF DECLINE IN MANUFACTURING IS SLOWING

• July 2009 ISM components
• PMI Composite 48.9
• New Orders 55.3
• Production 57.9
• Employment 45.6
• Inventories 33.5
• Supplier Deliveries 52.0

9
HOME SALES HAVE STABILIZED
10
IS IT OVER YET?

• If it equals headwinds.
• Theyll be with us for a
• while.

11
RECOVERY EXPECTED TO BE MODEST RELATIVE TO
MAGNITUDE OF THE RECESSION
Optimists
Consensus
Pessimists
Source BEA Blue Chip Economic Indicators,
August 10, 2009
12
THE RECOVERY MAY NOT FEEL GOOD
12
12
Source Bureau of Labor Statistics
13
SOME KEY ISSUES AHEAD
14

• FEDERAL RESERVE POLICY RESPONSE

If it isnt working, we whack it.
15
TOOLS OF FED POLICY
These are in your economics textbook
These things arent
16
FEDERAL RESERVE BALANCE SHEET - ASSETS
Source Federal Reserve Board
17
Should we worry about the Feds balance sheet
being this large?
18
THE TOOLS FOR EXIT

• Interest rate policy
• Natural unwinding of balance sheet as financial
  system recovers
• Actively eliminate excess liquidity
• Sell or lend assets

19
EXIT IS NOT EXPECTED SOON
The Committee will maintain the target range for
the federal funds rate at 0 to 1/4 percent and
continues to anticipate that economic conditions
are likely to warrant exceptionally low levels of
the federal funds rate for an extended period.
FOMC Statement, August 12, 2009
20
QUESTIONS?