Train Notes 4/9/2010

Here are the Train Notes for Friday, April 10, 2010.

U.S. sovereign debt, the federal debt, is currently at 84% of national
output, or GDP, and still rising. Sovereign debt has not gone above
GDP since WWII, but is expected to be above 100% by 2014. Some
economist argue that debt levels above 90% will seriuosly hurt
economic growth. With that said, governments around the world are
taking notice of these issues and are likely considering appropriate
measures. Whether these measures are effective and implemented in time
is a very politically sensitive issue; especially with many developed
countries holding elections this year.

There is some positive news. The U.S. And China may be taking steps to
avoid further tensions. Treasury Secretary Tim Geither and Chinese
officials may have reached an agreement to let the Chinese currency,
called the Yuan or renimbi, to appreciate in value. This would ease
U.S. complaints that the currency is undervalued (although the renimbi
would still be undervalued by more than 15%). In a very small measure,
it would make U.S. products more competitive, but the effect would be
very small.

Other positive news includes retail sales, which were up about 9% in
March. Retail sales have been up for 6 of the past 13 months, with all
6 positive months coming in the past 7 months (Nobember being the
exception). This suggests that consumer purchases have stabilized.
Considering the shrinking consumer debt, this also suggests that
consumer spending is reflecting appropriate levels of consumption.

Sent from my iPhone