Growth recession

- Macro viewpoint: Growth recession "The slowdown in the job market and the coming fiscal tightening suggest weak growth is here to stay. However, we still see only a 25% probability of an outright recession in the next year, which is slightly above the historical average."
- Fed watch: Hawks squawk, Big Ben tolls "The difference between Bernanke and the more hawkish regional Fed Presidents has to do with flexibility. The Chairman does not have a dogmatic leaning for or against asset purchases and his threshold to launch QE II, while high, is likely to be much lower than his more hawkish colleagues."
- Housing watch: On the brink "The June S&P Case Shiller home price report showed a gain in home prices in June, but it may be the last in awhile. Similar to Loan Performance and FHFA, we expect Case Shiller to turn lower amid a growing imbalance between housing demand and supply."
- The week ahead: Data takes a week off "It will be a relatively light week on the economic calendar. Markets are closed on Monday for the Labor Day holiday. The main event comes Wednesday, when the Fed releases their Beige Book. The report will provide us with anecdotal evidence on the state of the economy from the 12 regional Fed districts and should highlight the sluggishness of the economy. On the data front, we receive the July trade balance on Thursday and wholesale inventories on Friday."

Merrill Lynch US Economic Weekly 20100903

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