Figuring out the macroeconomics

• Arnold's last budget needs 6.9bn from the fed for a 19.9bn deficit; previously printed 3bn of IOUs (15-Jul-09), at 3.75% - specifies 8.5bn of cuts; no new taxes
• New UK law: 50% tax on earnings over £150,000; companies are accelerating the payment of dividends
• Chinese exports rose (17.7%) for the first time in 14 months; brings new pressure to appreciate currency (year on year comparisons inflated due to previously low numbers). After consecutively good numbers, will most likely issue an appreciation
• Fri: 85,000 jobs lost; Eurozone hit 10% unemployment; S&P ended up 0.3%
• Dec Fed: moderate growth, tame inflation; contrasted to more bullish private sector. Most worried about commercial real estate, reluctance of companies to start hiring
• Fed has already purchased 1,700bn bonds; 10-yr treasury up to 3.9 from 3.2 as a reflection of Fed stopping purchasing; For 2010, the market will need to find a place for 2,000bn of new issuance
• Most likely won't end in March; if the Fed has to buy more it will make the eventual unraveling more troublesome