MBA Mortgage Applications

Composite Index - W/W Change	-1.2 %	-3.7 %
Purchase Index - W/W Change	-2.0 %	-3.0 %
Refinance Index - W/W Change	1.0 %	-4.0 %

A roughly 1 percentage point rise in mortgage rates the last three months, a rise that reflects expectations for Federal Reserve tapering of asset purchases, is a major factor holding down home sales right now, reflected in Monday's surprise decline in pending home sales. The first set of housing data to signal the rate effect way back in May was the Mortgage Bankers Association's weekly mortgage application report where the purchase index is down another 3.0 percent in the July 26 week. The index is up only 5.0 percent year-on-year compared to a 15 percent year-on-year pace for existing home sales and a nearly 40 percent pace for new home sales. At least these were the year-on-year readings as of June with purchase application data pointing to a slowing ahead for these year-on-year sales rates.

Source Bloomberg

U.S. GDP Q2 Growth at 1.7%. Better than expected.

Gross domestic product grew at a 1.7 percent annual rate, the Commerce Department said on Wednesday, stepping up from the first-quarter's downwardly revised 1.1 percent expansion pace.

Economists polled by Reuters had forecast the economy growing at a 1.0 percent pace after a previously reported 1.8 percent advance in the first three months of the year.

A rebound in business spending, export growth and a sharp moderation in the pace of decline in government outlays boosted economic growth in the April-June period, offsetting a slowdown in consumer spending and a steady rate of inventory accumulation.

The government has implemented some changes in how it calculates GDP. For example, research and development spending will now be treated as investment, and defined benefit pension plans will be measured on an accrual basis, rather than as cash.(Read Previous Post)

Other details of the report showed exports rebounded, showing the largest percentage gain since the third quarter of 2011, even as demand weakened in Europe and China. But the increase was not enough to offset a rise in imports, leaving a trade deficit that weighed on growth.

There was good news from the housing sector, with double-digit growth for spending on residential construction. Housing, which triggered the 2007-09 recession, is growing strongly, helping to keep the economic recovery anchored.

Source   Reuters

Once again. Blackstone Group LP and Deutsche Bank plan a Bond guaranteed by a flow of rentals

The Wall Street Journal published an article today about negotiations between Blackstone Group and
Deutsche bank "to create and sell the world's first bond backed by home-rental payments, people familiar with the matter say".
 The private-equity giant is among the firms that have spent billions buying homes out of foreclosure, an investment strategy that has helped to bolster demand and strengthen the U.S. housing market. 
"The creation of a new type of security shows that Wall Street's financial engineering, blamed for deepening the financial crisis, is becoming more active.

Some investors and analysts have said they are wary of a bond backed by rental payments, citing the dearth of long-term data on how often tenants living in previously foreclosed homes pay their rent on time.

Also, some investors and analysts have raised concerns about how quickly firms have purchased thousands of homes, and whether they have the management track record and expertise to oversee the maintenance of properties scattered across the country".

"Blackstone has emerged as the biggest investor in single-family rental homes, spending more than $5.5 billion since the beginning of last year to acquire about 32,000 homes.Other companies, such as American Homes 4 Rent, Colony Capital LLC and Waypoint Real Estate Group LLC also have been buying thousands of foreclosed homes, revamping them and renting them out".

"The investment strategy often is known as buy-to-rent,has been an institutional investment strategy that has helped to boost home prices in cities across the U.S". 

Precious Metals Prices

Gold Prices     3months Futures       US$  1,332.03

Silver Prices   3months Futures       US$      19.85

Larry Summers is skeptical of QE but see few side effects

According to an article published in the Wall Street Journal today "Lawrence Summers a leading
candidate to be next Fed Chairman, likely would not make a rapid ending of the bond buying
program,that Fed Chairman Bernanke introduced.
Mr Summers has been skeptical of the benefits of Quantative Easing,but also has said he sees few
side effects from this policy.
Both Mr Summers and Janet Yellen his apparent chief rival for the Fed nomination have said the government, in general,should do more to support the current weak economy.  
Mr. Summers has been an outspoken advocate of more federal spending now, particularly on infrastructure, to boost growth. His views on monetary policy are more nuanced "there is less efficacy from quantitative easing than is supposed," Mr Summers thoughts are that "if QE won't

have a large effect on demand, it will not have a large effect on inflation either. So this is not a compelling argument against QE." He believes that  "tax-and-spending stimulus would have more impact on the economy than monetary policy".

Mortgages and Car Loan rates

 Mortgages and  Car Loan Rates
                                                                                                  Change in
                                                 Last       Wk       52 - week       PCT  Points
                                                              Ago       Hi       Low   52-wk   3-year

30-year mortgage, fixed	4.50	4.45	4.78	3.54	0.78	-0.16
15-year mortgage, fixed	3.61	3.60	3.84	2.80	0.50	-0.52
Jumbo mortgages, $417,000-plus	4.78	4.72	5.11	3.97	0.48	-0.84
Five-year adj mortgage (ARM)	3.68	3.73	4.06	2.80	0.57	-0.19
New-car loan, 48-month	2.63	2.64	3.72	2.42	-0.47	-3.61

  Source:  WSJ

Marc Faber Thoughts on Money Printing and its end.

Asked if money printing will end?

Yes, until the system breaks down. My view would be that there will be money printing, and the problem with money printing is always that you don’t control where it goes to. Ideally, it would go into higher incomes of the middle class and of the working class, but this hasn’t really happened. The real weight is for the typical household or the medium household, they are going down. What is going up is basically selected asset markets, like the real estate market has recovered. In some areas, we’ve hit new highs. The stock market has gone up. But as you know, only very few people own stocks in the United States, so it doesn’t impact the wealth of the majority of people.

U.S. Home prices rose 5.8% in June YoY,headwinds build

The Wall Street Journal has published today an article that shows " U.S. home prices have posted
an increase of  5.8% in June from one year ago, according to Zillow Inc., the real-estate website, the largest gain since 2006.But rising mortgage rates and the potential for more supply could eventually slow the run-up".
  "Gains have been fueled  by strong demand from foreigners, record-low mortgage rates, and a slowly improving economy that has released pent-up demand and strong appetites from investors converting homes into rentals".
A separate and widely watched index released Tuesday showed that home prices in 20 major U.S. cities rose by 12.2% in May from one year earlier. The Standard & Poor's/Case-Shiller index shows that home prices are now down from their 2006 peak by 24.4%, compared to a peak-to-trough decline of 35.1% in March 2012.

"For now, inventories remain extremely tight in a majority of the nation's major housing markets. The Wall Street Journal's survey of quarterly housing-market conditions in 28 metro areas found that Phoenix, Seattle, Denver, and Sacramento, Calif., had less than a 2.5-month supply of homes for sale at the current sales pace. Dallas, Los Angeles, San Diego, Washington, D.C., and Orlando, Fla., had less than three months of supply, according to data compiled by John Burns Real Estate Consulting in Irvine, Calif.

Typically, real-estate agents consider a balanced market to have a six-month supply. Nationally, the supply of existing homes for sale stood at five months at the end of June, according to the National Association Realtors".

One question now is whether recent price gains can be sustained amid mortgage rates that have jumped by a full percentage point since May. Rising mortgage rates are most likely to squeeze prices in more expensive housing markets across coastal California and in cities such as New York and Boston.

Rising home prices could also encourage more homeowners  to sell. 

There are signs inventory declines will ease as price gains increase. In Sacramento, Calif., the number of homes for sale in June stood 7.5% above the level of a year ago, while inventories in Atlanta rose 9.7%. Both cities have witnessed large declines in homes available for sale as investors have scooped up large numbers of cheap properties".

UEA leads MENA region in contracts awarded in oil and gas sector.

"According to Arab News: The UAE leads the Middle East &North Africa region in value of contracts awarded in the oil and gas sector, with Zakum Development Company  awarding a  $3.7 billion contract on the development of the offshore Upper Zakum field.
The contract is more than 50 percent of the total $ 6.7 billion worth of engineering, procurement and construction  deals awarded so far in the region in the second quarter of 2013. The ground-breaking Upper Zakum Field Development project has a total budget of around $15.6 billion.

These developments mark a critical stage in the UAE’s push to expand its offshore output to new fields. Equally important, however, is the country’s push to optimize oil production, sustainability and innovation through successful integration of new and expanding projects.

The UAE is likely to award two more major contracts in the second quarter — both on the Umm Al-Lulu offshore oilfield development — which combined are worth in excess of $2 billion.

The only other billion-dollar-plus contract in the MENA region so far in the second quarter was Qatar Petroleum  awarding a deal to Taiwan’s CTCI and Japan-based Chiyoda Corporation. This was for the $1.2 billion expansion of its Ras Laffan refinery".

Japan's Prime Minister Shinzo Abe double face

 "Japanese Vice Foreign Minister Akitaka Saiki is wrapping up a two-day visit to China on Tuesday, the latest move taken by Tokyo to mend its strained ties with Beijing.

The senior diplomat was believed to be working for a possible summit between Chinese and Japanese leaders, for which Japanese Prime Minister Shinzo Abe has made repeated calls recently.

It seems that Japan, intends to repair its relations with China, which soured due to a heightened territorial dispute over the Diaoyu Islands in the East China Sea and Tokyo's unapologetic attitude toward historical issues.

By playing the good guy, Japan is trying to gain international support and sympathy, but the good-will gesture is just one face of Abe.

During his visit to Singapore on Friday, Abe voiced his desire for an unconditional summit with the Chinese leader as soon as possible.

However, a hawkish Abe wasted no time in pledging coast guard patrol boats to the Philippines when he was in Manila one day later. Philippines has also a territorial dispute with China. 

This is in line with Abe's hardline position on the Diaoyu Islands. Despite the fact that the uninhabited islands are inherent part of China as proved by history, Abe has been flatly denying the existence of a dispute with China, effectively shutting the door for any candid talks.

What is more disturbing is the ongoing push by Abe to revise Japan's pacifist constitution to allow for full-fledged military buildup.

All these aggressive moves exposed the other face of Abe, which may lead to a dangerous path of confrontation and raises doubt about the sincerity of his good-will for a candid dialogue.                      

Without sincerity, the repeated calls for dialogue are nothing but empty talks".

Source: Xinhua

Chinese mainland's trade with Hong Kong 206.65 billion US dollars in H1

"The Chinese mainland's trade with Hong Kong totaled 206.65 billion U.S. dollars in the first half of the year, surging 40.2 percent year on year, the Ministry of Commerce revealed on Tuesday.

The figure accounted for 10.3 percent of the mainland's total foreign trade in the first half, according to statistics from the Department of Taiwan, Hong Kong and Macao Affairs under the ministry.

The mainland's exports to Hong Kong hit 198.75 billion U.S. dollars, a sharp year-on-year increase of 42.7 percent, while the mainland's imports from Hong Kong dropped by 2.3 percent to 7.9 billion U.S. dollars, the statistics showed.

In June, trade between the mainland and Hong Kong stood at 26.74 billion U.S. dollars, declining by 8.8 percent from May.

Hong Kong is the mainland's third-largest trade partner and one of its major export markets".

Source: Xinhua

China CPC: China´s economy will mantain steady growth in H2

´´China's economy will maintain steady growth in the second half of this year amid "extremely complicated domestic and international conditions," according to the Political Bureau of the Communist Party of China (CPC) Central Committee.

The central authorities will continue to coordinate the tasks of stabilizing growth, restructuring the economy and promoting reforms, according to a statement released Tuesday after a meeting held by the Political Bureau of the CPC Central Committee.

The meeting was presided over by General Secretary of the CPC Central Committee Xi Jinping.

"Macro policy should be stable, micro policy should be flexible and social policy should support the bottom line. All of them should be coordinated," read the statement.

The direction, intensity and pace of the macro regulation should be managed well. The proactive fiscal policy and prudent monetary policy will remain, it said. 

The IMF in its latest Country report of China reccommended fiscal strong support if the economy fell more than anticipated.

Source  Xinhua

Government Bonds quotes

Government Bonds

                                                                                          Price          Yield
                                                                                          Change        %

U.S. 2 Year			0/32	0.321
U.S. 5 Year			3/32	1.375
U.S. 10 Year			5/32	2.586
U.S. 30 Year			11/32	3.654
Germany 2 Year			0/32	0.167
Germany 10 Year			0/32	1.668
Italy 2 Year			1/32	2.023
Italy 10 Year			11/32	4.407
Japan 2 Year			1/32	0.122
Japan 10 Year			0/32	0.796
Spain 2 Year			0/32	1.916
Spain 10 Year			1/32	4.662
U.K. 2 Year			-1/32	0.314
U.K. 10 Year			2/32	2.313

Saudi Arabia: Dispute over future oil production.

In an article published today in the Wall Street Journal it says that"Saudi billionaire Prince Alwaleed bin Talal has warned that the kingdom's oil-dependent economy is increasingly vulnerable to rising U.S. energy production, breaking ranks with oil officials in Riyadh who have played down its impact.
 He warned that the boom in U.S. shale oil and gas will reduce demand for crude from members of the Organization of the Petroleum Exporting Countries".
 In contrast the Saudi oil Minister has  played down the significance of rising shale-oil production. "At an OPEC meeting in late May, he said it wasn't the first time OPEC has had to compete with a surge in output from countries outside the group"
 "In April, Prince Turki al-Faisal, a former Saudi intelligence chief and ambassador, said the kingdom needs to increase its crude production capacity to 15 million barrels a day by 2020 in order to meet rising domestic consumption and maintain its export capacity. Mr. Naimi has ruled out increasing Saudi Arabia's capacity until at least 2030 or 2040".

EU Indicators

German GfK Consumer Confidence Index rose to 7.0 for August-the highest since September 2007-from 6.8 in July, and compared to the 6.9 level that economists had expected.
  Spain reported a -0.1% quarter-over-quarter contraction in 2Q GDP, matching expectations, eurozone economic confidence improved in July, and German consumer prices index rose 1.8%. And German consumer
price index Harmonised rose 0.1% MoM in July market expected an increase of 0.3%

Source 4-Traders

China: Reform of the rail freight to market-oriented system

In an article published on Sunday  the Beijing Review writes about "one of the last few monopoly industries in China. According to the China Railway Corp. (CR), reforms of China's rail transport industry will begin with freight. The company says the aim of freight reform is to make the industry more market-oriented and efficient, in a bid to establish a "door-to-door" modern logistics network".

Reform of the sector is the first such reform launched by the CR, which was founded in March. Zhao Jian, a professor with the School of Economics and Management at Beijing Jiaotong University, thinks changes are significant to the company's move toward full market-oriented reform". 

It scraps the previous system where clients had to go through a number of procedures at different counters to clear their goods, and now they only have to process them at a single counter.And the minimum freight requirement of 60 tons has been eliminated, a rule that slowed the transport of goods.

"Zhao says that before the reform measures, freight transport was little concerned with the needs of cargo owners. The changes now shift the industry toward a more market-oriented bent, one that saves on energy and better protects the environment.

Therefore advancing reform of railway freight transport is crucial to accelerate the development of the railway industry, and it is also an urgent need to raise the economic returns of the railway industry," Zhao said.

He thinks the newly established CR has made reforms a top priority. The groundbreaking reforms will allow for larger transport volume, low prices and all-weather services so as to transform the CR into a modern enterprise through market competition".

Source: Beijing Review

I

Saudi Arabia: Multibillion dollar contract for Western Consortiums

"L'Arabie saoudite a accordé a trois consortiums internationaux la réalisation du métro de Riyad, un mégaprojet d'environ 17 milliards d'euros, impliquant des groupes français dont le groupe Alstom. Un consortium conduit par le géant américain Bechtel Corp s'est vu attribuer la réalisation de deux lignes du métro pour environ 7,1 milliards d'euros.

Un deuxième consortium, dirigé par la compagnie espagnole de construction FCC et impliquant des groupes français, sud-coréen et néerlandais notamment, doit réaliser trois lignes du métro pour 5,9 milliards d'euros. Une ligne d'un coût de 3,9 milliards d'euros a été confiée à un troisième consortium conduit par l'italien Ansaldo".

Le projet de métro de six lignes, prévu sur 176 kilomètres, vise à "faciliter la vie"dans la capitale dont le nombre d'habitants devra augmenter de 6 millions à 8,5 millions "dans dix ans", a déclaré le gouverneur de Riyad, le prince Khaled ben Bandar ben Abdel Aziz, lors d'une cérémonie d'attribution des contrats organisée dans la nuit de dimanche à lundi.

Le Monde

Changement dans la méthodologie pour "mieux" évaluer le PIB américain

Deux jours avant d'annoncer les chiffres de la croissance au deuxième trimestre, qui devraient être décevant si l'on en croit les prévisions mitigées du FMI, le Bureau d'analyse économique (BEA) américain,équivalent de l'Insee,va annoncer un changement de taille dans sa méthodologie.

Pour "mieux" évaluer le PIB américain, les statisticiens ont en effet planché sur des nouvelles façons d'inclure l'apport de la production intellectuelle dans l'économie nationale. Cette nouvelle méthode entrera en vigueur le 31 juillet, à la faveur d'une révision, qui intervient tous les cinq ans, de la comptabilité nationale, et doit être rendue publique et détaillée lors d'une conférence de presse, lundi 29 juillet. Il s'agit du plus important changement méthodologique concernant l'économie américaine depuis 1929.

Ce changement de cap comptable, recommandé par les Nations Unies en 2008, commence tout juste à être mis en oeuvre de par le monde. Pour l'instant, seuls l'Australie et le Canada sont passés aux nouvelles normes, l'Europe devrait quant à elle s'y mettre en 2014.

Cette nouvelle méthode est simple, elle consiste juste à "reconnaître les dépenses en recherche et développement, au divertissement, à la création littéraire et artistique comme des investissements à part entière", explique le BEA.

Autre modification, moins impressionnante : le BEA compte modifier la comptabilité des retraites, en prenant en compte les versements effectués par les fonds de pension au fil de l'eau, et non plus en une seule fois, comme c'était le cas avant.

L'une dans l'autre, ces deux modifications opéreront un changement profond sur la taille du PIB américain : en ajoutant des inputs "équivalents au PIB de la Belgique", elles pourraient le faire grimper de 3 %, estime le Financial Times. Les dépenses purement "créatives" compteront pour 0,5 % de l'économie américaine.

Mieux, écrit le quotidien britannique, ces nouveaux calculs feront baisser la part des dépenses fédérales dans le PIB de 0,5 %, et la part de la dette publique de 2 %, des arguments utiles face aux Républicains, qui dénoncent un budget fédéral "hors de contrôle".

Le Monde

Guandong Province has fiscal revenue growth of 16% y/y

Guangdong Province, south China's economic powerhouse, posted fiscal revenue growth of 16 percent year on year on the back of booming business taxes and land transfer fees in the real estate sector, according to a government report.

The figure is double the 7.5-percent fiscal revenue growth reported by the entire country in the first half of the year.

The province's total fiscal revenue stood at 348 billion yuan (56.4 billion U.S. dollars) in the first six months, according to  government officials.

China eyes Japan's buying of assets in Southeast Asia with a lack of confidence.

"Japanese companies have buying assets at a record pace in Southeast Asia this year, a sign that Chinese experts said should be watched with caution to see if a political agenda is behind the buying spree".

Japan's growing interest could either boost regional economic development or further damage Sino-Japanese relations, depending on Tokyo's economic intensions, experts said.

According to an AFP report, Japanese firms have spent a staggering $8.2 billion on mergers and acquisitions in Southeast Asia so far in 2013, already a record with five months to go and well above the $614 million at the same time in 2012, data provider Dealogic said.

The figure easily outstrips the previous full-year best of $7.6 billion in 2006, it added.

Toru Nishihama, an economist at Dai-Ichi Life Research Institute, said Japan has a reason to invest so heavily so fast.

"Japanese companies have been searching for places to invest in addition to China," Nishihama was quoted by AFP as saying. "This trend is likely to continue for the next five to 10 years.

"The Japanese government is very proactive about it," Nishihama said. "It has become enticing for Japanese businesses to invest in Southeast Asia, with government-affiliated financial institutions."

Meanwhile, the increase in Japanese investment in China has been slowing in the past two and a half years, from 76.3 percent in 2011, 16.3 percent in 2012, to 14.4 percent in the first half of 2013, according to the Ministry of Commerce and the Japanese Chamber of Commerce and Industry in China.

Zhang Jifeng, a researcher at the Chinese Academy of Social Sciences, said political tension between China and Japan fueled by territorial rows have been damaging the two countries' economic ties.

"However, if Japanese Prime Minister Shinzo Abe wanted to gain more political support from Southeast Asian countries that have territorial disputes with China at the moment through economic measures, the new competition between China and Southeast Asian countries, incited by Japan, will not be good for the region's development," Zhang said.

Both China's and Japan's exports increased in the first half of this year, and the global economy generally turned better in the same period, but Sino-Japanese economic ties did not improve, Zhang said.

"We can see that China-Japan political relations have a strong impact on the two countries' economic cooperation. Since China is Japan's largest trading partner and Japan's investment is also important for China's economic development, both governments should pay more attention to avoid the negative consequences from political tensions," Zhang added.

Source: China Daily

China's local government liabilities to be audited

The National Audit Office declared on Sunday that it will start a nationwide assessment of local government liabilities, which will address concerns about rising debt from overambitious development projects.

The announcement was made following Chinese media reports that the State Council has made the audit campaign one of its "urgent" tasks, and that all government auditors are being given crash training so they can start the audit as early as next week.

Their work is expected to update China's local government debt figures, which stood at 10.7 trillion yuan ($1.75 trillion) by the end of 2010.

By comparison, China's GDP was close to 52 trillion yuan in 2012.

But an estimate by the International Monetary Fund last month put China's total government liability, including government-led infrastructure development projects, in excess of 45 percent of the country's GDP.

If the results turn out to be good, he said, new policies could loosen local government financing, as the economy still yearns for capital to restore growth.

"But given local government debt conditions in recent years, the results are unlikely to be promising," he said.

Japan supports Philppines with concessional loan. Both share policy of containment to China.

Japan's Prime Minister Shinzo Abe has promised support for Philippine maritime forces as both countries confront China in separate territorial disputes.

Following a meeting with Philippine President Benigno Aquino on Saturday, Abe announced Japan would provide a concessional loan to build 10 coast guard patrol boats for the Philippines.Aquino says the two reviewed security challenges both countries are facing and promised to co-operate to push for what he calls responsible action from international players in a reference to China.

Source: NewsOnJapan

China's state-owned enterprises increase profits in H1

China's 113 state-owned enterprises (SOEs) administered by the State-owned Assets Supervision and Administration Commission (SASAC), or central SOEs, posted a net profit increase of 18.2 percent year on year in the first half of 2013.

The net profits of central SOEs totaled 631.5 billion yuan (102.3 billion U.S. dollars) during the period.

Jiang Jiemin, head of the SASAC, revealed the figures at a seminar attended by senior executives of central SOEs and heads of local SASAC agencies on July 25 to 26, according to an online statement issued by the SASAC on Monday.

He said the total revenues of central SOEs during the first six months of 2013 rose 9 percent year on year to hit 11.4 trillion yuan.

During the period, the SOEs had 1 trillion yuan payable in taxes and fees, up 3.4 percent from last year, according to the SASAC statement.

Source: Xinhua

China's Real State Improved in H1

China's building materials sector regained steam in the first half, with real estate investment picking up speed, according to the latest data from the country's top economic planner.

Cement output rose 9.7 percent year on year to 1.1 billion tonnes in the first half, compared with 5.5 percent recorded in the same period of 2012, according to data issued by the National Development and Reform Commission (NDRC).

The output of flat glass grew 10.8 percent year on year to 389.9 million weight boxes in the first six months, compared to a 3.1-percent decline in the first half of 2012, according to NDRC data.

A major consumer of cement and flat glass, the property sector rebounded with mounting investment in the April-June period, according to a report published by the Ministry of Land and Resources on Sunday.

Prices for cement and flat glass headed in different directions in June. The factory price of cement slid 1.1 percent from May to an average of 339 yuan (54.9 U.S. dollars) per tonne at major building material manufacturers. The wholesale price of flat glass rebounded 2.2 percent from May to 63.8 yuan per weight box.

 The combined profits of the building materials industry rose 19.9 percent year on year to 132.15 billion yuan in the first five months, compared with a 9.7-percent decline recorded in the same period of 2012.

Source: Xinhua

IMF report for the U.S. economy Part I

The latest IMF report for the U.S. economy says that the recovery has been weak,with GDP
growth of 2% in 2012,legacy of the financial crisis,the budget deficit reduction,a weak external
environment in China the EU and other developed economies.
"While policymakers in Congress averted the fiscal cliff at the beginning of 2013, the expiration of the payroll tax cut and implementation of across-the-board spending cuts  are weighing significantly on growth this year, with growth in the first quarter of 2013 at 1.8 percent and indicators suggesting slower growth in the second quarter"
Despite these powerful headwinds, there are a few bright spots in the economy "equity valuations have soared in 2013 and house prices have increased by more than 10 percent over the last 12 months, strengthening household balance sheets and supporting private demand. At the same time, residential construction has accelerated and labor market conditions have improved"
 To a large extent this owes to a extremely accommodative monetary policy. Since mid-may after the
FMOC meeting where Fed Chairman said that in the near future, the central bank would start to scale
back its bonds buying,financial conditions have somewhat tightened,but monetary policy still remains extremely accommodative.
 Because of the rapid consolidation of the fiscal budget growth will kept subdued to a 1.7% rate 
in 2013. The IMF expects economic growth to accelerate to 2.7 percent next year as the fiscal drag subsides and the side-effects of financial crisis wane further. The unemployment rate is expected to remain  stable in 2013,  and to gradually fall in 2014. Inflation is expected to pick up somewhat but to remain below the Fed long-run objective of 2%.

The IMF report says "risks to the outlook appear modestly tilted to the downside. Economic activity could be lower than in our baseline scenario in the presence of a stronger-than-projected impact of fiscal consolidation, a faster-than-expected increase in interest rates, a weaker external environment, or higher structural unemployment"
 It agrees wih the Fed Board in mantaining a very accommodative monetary policy,for a considerable
time after the economy strengthens, and that the pace and composition of its asset purchases will depend on the evolution of economic conditions. 
 It also says that bank conditions have improved substantially over the year up to date but there signs of emerging vulnerabilities in the financial sector from persistently low interest rates