Insurance companies manage risk—their own risk. When it comes to insuring new-issue muni bonds, the only game in town is Assured Guaranty Ltd. They’re staring down the barrel of a ratings downgrade by Moody’s Investors Service. Risky muni-bond investing is about to get riskier. Check out The Wall Street Journal’s For Muni Bonds, Less Assurance: The last remaining insurer of new municipal-bond issues is bracing for a fall that could bring its industry to a new low—and possibly increase borrowing costs for some small local governments. Moody’s Investors Service warned in late March that it … [Read more...]
Archives for May 2012
VIDEO: Time to Break Up Big Banks?
CNBC: Regulators should encourage big banks to restructure themselves, says Sheila Bair, Pew Charitable Trusts and former FDIC chair, explaining why she sees the U.S. banking system as "vulnerable." … [Read more...]
VIDEO: Marc Faber on U.S. Equities, Economy, Euro Zone
May 10 (Bloomberg) -- Marc Faber, publisher of the Gloom, Boom & Doom report, talks about U.S. stocks and economy. Faber, speaking with Betty Liu on Bloomberg Television's "In the Loop," also discusses his view on the euro and the euro zone. (Source: Bloomberg) … [Read more...]
VIDEO: Lakshman Achuthan on Renewed U.S. Recession Call
May 9 (Bloomberg) -- Lakshman Achuthan, chief operations officer of the Economic Cycle Research Institute, talks about his renewed call for the U.S. to enter another recession this year. Achuthan speaks with Tom Keene on Bloomberg Television's "Surveillance Midday." (Source: Bloomberg) … [Read more...]
What We’re Reading 5-11-12
Of Course 70% Tax Rates Are Counterproductive, Alan Reynolds, The Wall Street Journal Estimize, an Earnings Crowd That Beats the Street, Ira Boudway, Businessweek Stimulus Spending Keeps Failing, Robert J. Barro, The Wall Street Journal It’s too late for Germany to save the euro, Jeremy Warner, The Telegraph … [Read more...]
Income Investors Beware: This Asset Class is a Guaranteed Loser
Yesterday, Bloomberg reported that the U.S. Treasury sold $24 billion of 10-year notes at a record low auction yield. The bonds were sold at a yield of 1.85% which is lower than the 1.9% yield on 10-year notes sold in January. What investor would willingly lend the federal government money for ten years at a 1.85% interest rate? Aren’t these folks aware that this is the same federal government that has racked up trillion dollar deficits for three consecutive years and promises at least one more year of the same? On a fundamental basis, long treasury bonds are one of the world’s most … [Read more...]
NFIB Index of Small Business Optimism Highest Since 2007
The Index of Small Business Optimism from NFIB rose 2 points in April to 94.5, the highest index value since 2007. This is the second time the index has reached 94.5 since 2007, reaching it once before in February of 2011. Despite the improvement in the index, overall index levels are not cause for optimism. The NFIB commentary on the index states: “The Index continues to hold at the higher values of what would be considered recession level readings. Optimism has been unable to break out into expansion mode for years, producing a few false starts with no follow through.” The … [Read more...]
The First U.S. Pension Fund Bankruptcy
The Northern Mariana Islands pension has filed for bankruptcy protection. Since it’s a U.S. territory, it technically is the first U.S. public pension to seek bankruptcy protection. The fund reached this point by offering exceedingly generous benefits and not receiving adequate contributions from employees or the government. The fund suffered huge losses in 2007. It had 75% of its assets invested in stocks. Most pensions have around 60% in stocks. If it were my pension, I’d have even less in stocks. The fund got into this position because it started reaching for better performance. Too much … [Read more...]
VIDEO: Do Earnings Surprises Matter?
See also, "The Quarterly Earnings Con Job." … [Read more...]
What We’re Reading 5-4-12
The Fed's Jelly Donut Policy, David Einhorn, The Huffington Post Gold Standard for All, From Nuts to Paul Krugman, Amity Shlaes, Bloomberg Our central bankers are intellectually bankrupt, Ron Paul, Financial Times The True Lessons of the Recession, Raghuram G. Rajan, Foreign Affairs HBO History Makers Series with Erskine Bowles, Matthew Winkler, Council on Foreign Relations See what we’re reading throughout the week by following us on Twitter! Click here! … [Read more...]