Recent data points like Philly, Fed, Richmond Fed and today’s Dallas Fed survey points to a garbagio economy. What can we expect next ?Comments »
Monthly Archives: July 2012
“Too many investors are convinced that when the economy sours, the Federal Reserve will intervene with monetary stimulus measures and save the day by pumping up stock prices, economist and fund manager John Hussman said.
Monetary tools like interest-rate cuts or liquidity injections aim to jolt the economy and steer it away from decline but don’t make fundamental improvements to the country that are needed for lasting growth, such as fiscal reform.
“So what do I worry about? I worry that investors forget how devastating a deep investment loss can be on a portfolio,” Hussman wrote in a letter to investors. “I worry that the constant hope for central bank action has given investors a false sense of security that recessions and deep market downturns can be made obsolete.”Comments »
“A proposal to give Europe’s bailout fund, the European Stability Mechanism, a banking license so it can borrow from the European Central Bank (ECB) to buy sovereign bonds from debt-weary nations is a dangerous thing, said Harvard economist Martin Feldstein.
Any bond buybacks should involve a basket of bonds that would include debt issued by healthier countries like France or Germany, as buying debt from troubled countries alone would give governments too much wiggle room to avoid tough-but-necessary fiscal reforms.
“While any central bank must be able to conduct open-market operations to manage liquidity in financial markets, selective purchases of individual country bonds that bear high interest rates because of current and past fiscal profligacy is both unnecessary and dangerous,” Feldstein wrote in a Project Syndicate column. ”Comments »
“It would be odd to suggest that one of the most scathing critiques of the ECB’s attempts to talk up the market on nothing but hope, promises and expectations would come from rating agency Moody’s, yet that is precisely what has happened. With Swiss, Dutch, Finnish, and German short-dated bonds once again hitting new record low (negative) rates (and Italian 10Y is weakening), it would appear that at least some of the market is not drinking the all-things-risk kool-aid.”Comments »
U.S. equities put investors to sleep with very little action to the upside or downside. Essentially investors are waiting for more information out of Europe and are waiting on two important data points; growth in Europe, (due 8/2/12) , and for this Friday’s employment report.
While U.S. equities are having a digesting day, Europe closed at the highs of the day as hopium rules the markets.Comments »
“FRANKFURT/PARIS (Reuters) – The European Central Bank is thinking the unthinkable to save the euro, including resuming its controversial bond-buying program and possibly even pursuing quantitative easing – in effect printing money.
Bold action is probably at least five weeks away, insiders say, though some more clues may come when the ECB reveals its latest interest rate decision on Thursday.
Several other pieces have to fall into place before the ECB will act decisively, insiders say. These include a request for assistance from Spain, which Madrid is still resisting, a decision by euro zone leaders to let their bailout fund buy bonds at auction, and a German court ruling on the legality of the euro zone’s permanent rescue fund, due on September 12.”
News came out overnight that Twitter has disallowed Instagram users from finding their friends who are already on Twitter and adding them as users on Instagram.
Twitter has confirmed this.
This is big news because it is a first step towards disallowing Instagram users from posting their pictures to Twitter, which almost certainly coming.
Read the rest here.Comments »
“$BBY founder Richard Schulze is recruiting an executive team as he seriously considers buying out the company, according to Bloomberg’s Chris Burritt and Jeffrey McCracken.Comments »
The only thing is, it’s not true — not even close. Yet it has been repeated so many times — on PBS and NPR, in the liberal blogosphere, on very-serious Op-Ed pages, in an Oscar-winning documentary — that whenever I give a talk to a group of college students about the financial crisis, the first question predictably is, “Yeah, isn’t it all really about the repeal of Glass-Steagall.”
Read the rest here.Comments »
“Sales of bonds tied to payments on subprime car loans are accelerating at the fastest pace in five years as investors seek high yields amid speculation the Federal Reserve will keep interest rates at record lows until mid-2015.
Led by Santander Consumer USA, issuance of $10 billion this year in asset-backed debt linked to vehicle loans to borrowers with spotty credit records compares with $8.2 billion in the same period of 2011, according to Barclays Plc. Top-ranked securities backed by the loans yield between 15 and 25 basis points more than benchmark swap rates, versus 5 to 8 basis points for similar debt of prime borrowers, Deutsche Bank AG data show.”Comments »
“Until about four months ago, JKMilne Asset Management invested at least half the money in its global fund outside the U.S. No more. With Europe’s debt crisis intensifying, the Fort Meyers, Florida-based firm with $1.8 billion under management has all its money in dollars.
“It’s been a winning strategy,” John Milne, chief executive officer, said July 26 in a telephone interview. “Given the magnitude of the problem, there was the realization that there was a contagion possibility.”Comments »