A rundown of what we’ve been reading over the last week. J.P. Morgan Strategist David Kelly Not a Big Fan of Fed Policy, Charlie Henneman, CFA Institute Surging Student-Loan Debt Is Crushing the System, Scott Cohn, CNBC Corporate-Tax Reform Without Tears, Robert Pozen, Wall Street Journal State-Wrecked: The Corruption of Capitalism in America, David A. Stockman, New York Times How the Fed fueled an explosion in subprime auto loans, Carrick Mollenkamp, Reuters Obama administration pushes banks to make home loans to people with weaker credit, Zachary A. Goldfarb, Washington … [Read more...]
VIDEO: Fed Has Become ‘Serial Bubble Machine’: Stockman
April 1 (Bloomberg) -- David Stockman, former director of the Office of Management and Budget under President Ronald Reagan, talks about the impact of Federal Reserve policy on financial markets and the outlook for the U.S. economy. Stockman, author of “The Great Deformation: The Corruption of Capitalism in America,” speaks with Betty Liu on Bloomberg Television's "In the Loop." (Source: Bloomberg) … [Read more...]
Yield of Dreams
We are now over 1400 days after the official end of the Great Recession, and the Federal Reserve is still holding interest rates at historically low levels. Take a look at the chart below which includes the yield curves at the same number of days after the previous three recessions. At this point in the recovery period after the 1982 recession, investors were earning between 5 and 6% on short treasuries, and over 8% on 30 year treasuries. A similar but slightly flatter pattern existed in the recovery following the 1990 recession. During the recovery after the 2001 recession rates were … [Read more...]
Cyprus Depositors Get Robbed
By now you have probably heard that depositors with over 100,000 euros in banks in Cyprus will be involuntarily contributing to bailing out the banks where they have deposited their funds. By taking funds from depositors the banks Cyprus will qualify for bailout funds from the EU. Dutch Finance Minister Jeroen Dijsselbloem gave the market chest pains when he said, "If the bank can't do it, then we'll talk to the shareholders and bondholders, we'll ask them to contribute in recapitalizing the bank, and if necessary the uninsured deposit holders." If you read between the lines what … [Read more...]
What We’re Reading 3-22-13
Sudden Rise in Home Demand Takes Builders by Surprise, Catherine Rampell, New York Times Health Insurers Warn on Premiums, Mathews and Radnofsky, Wall Street Journal One Good Paper: A Stock Market Puzzle, Brendan Greeley, Bloomberg Fed's Crystal Ball Could Use Some Shining, Spencer Jakab, Wall Street Journal The Revenue Deficit From Progressive Tax Rates, Michael Solon, Wall Street Journal … [Read more...]
Stocks you can Trust Today
With the Dow soaring to record highs you have to wonder what you can trust in the stock market. Are gains in the market just an expression of Fed easy money policies, or should you jump in for a quick buck? … [Read more...]
VIDEO: Krugman Can’t Admit He Was Wrong on Austerity: Latvia PM
CNBC: Valdis Dombrovskis, prime minister of Latvia, said Paul Krugman is wrong in his criticism of Latvia's austerity measures and that his country will join the euro on January 1 next year. … [Read more...]
What We’re Reading 3-15-13
Headwind to Housing Recovery? Foreclosures Flare-Up Again, Diana Olick, CNBC Escape From Spending Hell, Daniel Henninger, Wall Street Journal The wealth effect might be shrinking, Annalyn Kurtz, CNNMoney Yes, We’re Confident, but Who Knows Why, Robert J. Shiller, New York Times Green Cars Have a Dirty Little Secret, Bjorn Lomborg, Wall Street Journal How to Shrink the 'Too-Big-to-Fail' Banks, Fisher and Rosenblum, Wall Street Journal … [Read more...]
VIDEO: Marc Faber: You Have to Look at the Economic Details
CNBC: Wed 13 Mar 13 | 09:05 PM ET Marc Faber, editor & publisher of The Gloom, Boom & Doom Report, says you have to look at the details of the economic numbers because what is published doesn't necessarily reflect reality. The Fed will not increase interest rates, he says, but the market may push them higher. … [Read more...]
Savings Spent. What Next?
Seasonally adjusted retail sales recorded a 1.1% increase in February. The problem with the increase is where the money came from. As you can see in the chart below, Americans drove their savings down to the lowest levels since November 2007 to finance their spending. In a recovery that has relied heavily on the consumer to pick up the slack, once those saving are spent, where will growth be generated? With lending standards still very strict it won’t be from borrowing. Lenders aren’t keen on handing out money at today’s low rates to borrowers who have less ability to repay. Perhaps if rates … [Read more...]
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