Archive - Blog entry

Surprisingly good earnings, 10%+ rise in share price, declining charge offs and 90 day late paying loans, lower loss provisioning, rosy review from the media and more BUY, BUY, BUY signals from the sell side - what more could one ask from an anointed 19 bank? Well, for starters, we could request that their non-performing assets stop increasing at unprecedented rates. If not that, then we can always ask why reduce loss provisioning in the face of climbing non-performing loans...

The rally in global stock markets has helped fuel the partial recovery in OECD pension assets but it will take years before these assets fully recover. Why? Because given the low bond yields throughout the developed world, it is unrealistic to expect stocks to continue rising at this blistering pace. Moreover, the fundamentals suggest the recovery will be more modest than what is currently priced in.

My criticism of the "public option" proposal urged by MoveOn spokesperson Heather Graham drew some jeers from the pack, so I thought I'd expound on the topic of national health care. This first article is about the experience of other countries. To come up with the best system possible, why not take a look at systems around the world that are run or sponsored by governments. Do some research and find out what works and what doesn’t. Also, we should be very skeptical of cost estimates for the proposed system.

In crazy times like today, all one could and actually should ask for is sanity. Yes, sanity – a clear mind free of noise to deal with the insanity that is thrust upon us by a volatile and noise-making machine also known as the stock market. We find ourselves glued to the computer screens or CNBC waiting to find out what the Dow’s next tick is going to be. Unfortunately, we are left with only a headache and wasted time. OK, what’s next? Here is my advice: read. Read books that will bring you sanity, the ones that will snap you back into the shell of investor and out of the sorry shell of nervous observer of the daily stock market melodrama. The following books are excellent choices and come with plenty of sanity and sage advice.

What economic system do we really have in America right now?

Project Mayhem, professor of Oligopoly Studies at NYU, sorts through the various squid tentacles of the past week.

Definitely some interesting articles in my weekly link fest. We’ve got inflation, deflation, oil, jobs and of course plenty of Goldman barbs. What more could you ask for?

Since the financial crisis last fall, currency markets have taken their cues mostly from stock markets. When stocks plunged in March of this year, investors rushed to the safety of U.S. government bonds, pushing the dollar index up to 89.62, the highest point this year. The value of the euro has risen by 79% in nine years since euro hit 0.84 in Oct. 2000. What's next for the U.S. Dollar, and its impact on the market?

Swine flu is killing teenagers more than any other age group. This sets up a big conflict with traditional users of ventilators. The experts have sorted this all out. Kind of.

Mr. Soros is absolutely right, if they want to take risks, let them do it managing a hedge fund on their own, not within a bank. This way, they have skin in the game and their bets go wrong, they feel the pain.

For the first time ever, there are as many women in the workforce as men.

Do you know why?

The big question is how will other nations respond to the symbiotic relationship between the U.S. and China? This week we saw Asian currencies declining on intervention speculation. Will we see intervention in the currency markets? I am not sure, but the current path is unsustainable and will require some sort of intervention as it poses serious risks to the global recovery.

Big time fraud in the Housing Tax Credit. The estimate is up to $600mm. This could be the kiss of death for this program. The backup plan relies on Fannie and Freddie. In other words, there is no plan.

There is some interesting new data out on how recessions affect people who come of age during distressed times. Not surpisingly, recessions can have a lasting impact on young people and literally alter the way they view the world going forward. Therefore, it makes sense for investors to understand exactly who the financial crisis will influence and what that will mean for companies and products.

I agree with Barry Eichengreen, reports of the U.S. dollar's demise are greatly exaggerated. The mighty greenback will come roaring back, perhaps sooner than you think.