Soaring long bond yields have pushed the PIMCO 25+ Year Zero Coupon U.S. Treasury Index ETF down 26% from its August high. Investors who bought the PIMCO ETF in August have now lost more than 7 years interest. Compare that to the PIMCO 1-3 Year Treasury ETF which is down only 0.65% from its 2010 high. You may not like the yields on short bonds today, but loading up on long bonds to pick up yield can quickly decimate a portfolio. … [Read more...]
Small Business Confidence Rises
The NFIB Index of Small Business Optimism hit a three year high in November. Small business confidence is finally beginning to improve. While still at recessionary levels, the NFIB index has made a decided move up. Even more encouraging for the millions of unemployed folk among us, is the improvement in the hiring plans index which reached a post recession high in November. About 70% of new jobs are created by small businesses. If small businesses follow through with their hiring plans we should begin to see the unemployment rate move down. There … [Read more...]
Printing Money
The Daily Show With Jon Stewart Mon - Thurs 11p / 10c The Big Bank Theory www.thedailyshow.com Daily Show Full Episodes Political Humor & Satire Blog</a> The Daily Show on Facebook … [Read more...]
Firms, Funds Feel Squeeze of Low Rates
Firms, Funds Feel Squeeze of Low Rates By Liz Rappaport, Michael Corkery and Leslie Scism, Wall Street Journal More evidence that the Fed’s ultra-loose monetary policy is distorting the economy. Historically low interest rates are starting to take a toll throughout the financial industry, presenting a potential downside to the Federal Reserve's aggressive efforts to reignite growth in the sluggish economy. Rock-bottom rates are squeezing profit margins at banks that rely on the gap between what they charge borrowers and pay depositors. They also are hurting returns at pension funds … [Read more...]
Interest Rates Surge
Long-term interest rates are surging. After falling below 2.40% in October, the ten year T-note yield has risen to 3.26%--an increase of 86 basis points. An investor who purchased long bonds at their yield low is down almost 7% in only two months. That’s almost 3 years worth of interest. … [Read more...]
Mounting Debts by States Stoke Fears of Crisis
Mounting Debts by States Stoke Fears of Crisis By Michael Cooper and Mary Williams Walsh The New York Times “Their fear is that even when the economy recovers, the shortfalls will not disappear, because many state and local governments have so much debt - several trillion dollars' worth, with much of it off the books and largely hidden from view - that it could overwhelm them in the next few years…But the finances of some state and local governments are so distressed that some analysts say they are reminded of the run-up to the subprime mortgage meltdown or of the debt crisis hitting nations … [Read more...]
China’s ETF Move Pushes Up Gold
China's ETF Move Pushes Up Gold By Chris Oliver And Matt Whittaker, Wall Street Journal “HONG KONG—China's securities regulators are allowing mainland Chinese to invest in foreign exchange-traded gold funds for the first time, unleashing the full buying power of the world's second-biggest economy on funds that already own more gold than most central banks… Lion Fund Management Co. received permission to invest in exchange-traded gold funds outside the country, making the fund the first of its kind for mainland China, according to a statement posted on the Shenzhen fund provider's website.” … [Read more...]
Employment Picture Worsening
Household employment tends to lead the headline non-farm payrolls survey at turning points in the economy. According to the Household Survey, employment has fallen in 5 out of the last seven months. Not exactly a bullish signal for the economy. … [Read more...]
Federal Reserve President James Bullard on Fed’s Dual Mandate
James Bullard comments on the Fed’s dual mandate. Mr. Bullard has been a proponent of quantitative easing 2.0. One may wonder why he favors another round of money printing after hearing him rightly explain that the Fed cannot create jobs. I repeat the Fed cannot create jobs. The only thing the Fed can do is provide price stability. With inflation near zero, what exactly is the purpose of injecting another $600 billion in high powered money into the banking system? Watch the latest video at video.foxbusiness.com … [Read more...]
The Real Risk in Europe
The Irish bailout has been all over the news this week, but the real risk in Europe doesn’t lie in Ireland, or Greece, and not even in Portugal. Spain is the real risk. Spain is much larger than Ireland and may in fact be too large for the E.U. to bailout. Investors are becoming increasingly nervous about the prospect of a default in Spain as evidenced by the record wide spreads in Spanish government bonds relative to German government bonds. … [Read more...]
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