BloggingStocks

Bernanke: Failure to Raise Debt Ceiling Could Be 'Catastrophic'

Joseph Lazzaro — Sun, 06 Feb 2011 10:40:00 EST

Filed under: Forecasts, Federal Reserve, Financial Crisis

The past week's data-point-of-consequence for investors was delivered by none other than the head of the world's most powerful central bank. U.S. Federal Reserve Chairman Ben Bernanke underscored the nation's need to raise the debt ceiling.

Speaking at a National Press Club luncheon in Washington Thursday, Bernanke said delays in raising the debt ceiling limit, currently $14.3 trillion, could have "catastrophic" consequences, Reuters reported.

Continue reading Bernanke: Failure to Raise Debt Ceiling Could Be 'Catastrophic'

Bernanke: Failure to Raise Debt Ceiling Could Be 'Catastrophic' originally appeared on BloggingStocks on Sun, 06 Feb 2011 10:40:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

Is Now a Good Time to Invest in a Home?

Joseph Lazzaro — Wed, 08 Dec 2010 17:00:00 EST

Filed under: Forecasts, Housing

A frequent question voiced in dinner party circles in this neck of the woods (the metropolitan New York City area) is, 'Is now a good time to consider buying or investing in a home?'

Well, the latest S&P Case Shiller home price index suggests that home prices are likely to remaining sluggish -- selected, niche market gains, with flattish prices in most other markets -- through at least mid-2011. Hence, from a home price standpoint, the bias in tipped toward waiting a quarter or two, if you do not have to purchase a home.

Continue reading Is Now a Good Time to Invest in a Home?

Is Now a Good Time to Invest in a Home? originally appeared on BloggingStocks on Wed, 08 Dec 2010 17:00:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

Why Would Any Country Buy U.S. Treasuries?

Connie Madon — Sun, 03 Oct 2010 11:40:00 EST

Filed under: Market Matters, Economic Data, Federal Reserve

The world of international finance is a complex web. The U.S. is still the powerhouse when it comes to gross domestic product. Yet, while perched on top of the heap, the U.S. faces major problems with high-level debt and unemployment.

The U.S. Federal Reserve is faced with having to issue massive amounts of debt just to keep pace with the growing deficits. Now the Fed is planning another round of stimulus by buying more treasuries, dubbed QE2.

Continue reading Why Would Any Country Buy U.S. Treasuries?

Why Would Any Country Buy U.S. Treasuries? originally appeared on BloggingStocks on Sun, 03 Oct 2010 11:40:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

The 2001 Bush Income Tax Cut: A Major Policy Mistake

Joseph Lazzaro — Thu, 09 Sep 2010 18:00:00 EST

Filed under: Politics

The 2001 Bush income tax cut is one of those issues whose fate has been sealed by objective economic conditions.

Simply, if the U.S. economy had registered robust growth during the final two years of the Bush administration, and no other negative economic events occurred, the tax cut, which will increase the deficit by $336 billion this fiscal year, $295 billion in fiscal 2011, and by more than $320 billion per year through fiscal 2019, perhaps would have had a chance of being extended.

Continue reading The 2001 Bush Income Tax Cut: A Major Policy Mistake

The 2001 Bush Income Tax Cut: A Major Policy Mistake originally appeared on BloggingStocks on Thu, 09 Sep 2010 18:00:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

Will Greece Be Able to Pay Back Its Debt?

Joseph Lazzaro — Fri, 20 Aug 2010 14:00:00 EST

Filed under: Forecasts, Financial Crisis

Will Greece be able to pay an estimated €340 billion or $431 billion in debt in 2013, post intervention, up from the current €270 billion or $342 billion today?

The calculation here is that Greece, which is presently dependent on International Monetary Fund assistance to meet its obligations, will be able to do it, but it will be a close call.

Investors presently demand about 10.6% from Greece to borrow money for 10 years, while fellow eurozone nation Germany, obviously in a magnitude better fiscal position, pays 3.35%. In contrast, the United States pays just 2.56%.

Continue reading Will Greece Be Able to Pay Back Its Debt?

Will Greece Be Able to Pay Back Its Debt? originally appeared on BloggingStocks on Fri, 20 Aug 2010 14:00:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

Ray of Light: Risk Appetite Has Increased

Joseph Lazzaro — Thu, 29 Jul 2010 14:00:00 EST

Filed under: Financial Crisis

Experienced investors know that even the most-sobering economic reports can contain 'gems' or small-but-significant, positive data points.

The U.S. Federal Reserve's latest Beige Book report on the economy is a classic example. The Fed confirmed that the U.S. economic recovery had slowed in the second quarter, with regions reporting uneven levels of growth.

The gem? The recovery, although in low gear, nevertheless remains fast enough for commercial borrowers to service their debt, and this is helping to stabilize the commercial debt market.

Continue reading Ray of Light: Risk Appetite Has Increased

Ray of Light: Risk Appetite Has Increased originally appeared on BloggingStocks on Thu, 29 Jul 2010 14:00:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

Has the Euro Passed Its Own Stress Test?

Joseph Lazzaro — Thu, 22 Jul 2010 16:30:00 EST

Filed under: Currency

On the cusp of stress tests for Europe's banks, the continent may have already passed a major stress test -- one for the euro currency, Bloomberg News reported Thursday. A scant two months ago, the dominant concern among institutional investors was not the return on their investment in European government bonds, but the return of their investment.

Institutional investors drove up interest rates for debt-plagued nations Greece, Spain, Portugal, Italy, and Ireland, and banker-to-banker distrust increased.

Continue reading Has the Euro Passed Its Own Stress Test?

Has the Euro Passed Its Own Stress Test? originally appeared on BloggingStocks on Thu, 22 Jul 2010 16:30:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

U.S. 10-Year Yield Falls to 3.14% on Flight-to-Safety

Joseph Lazzaro — Tue, 25 May 2010 17:20:00 EST

Filed under: Financial Crisis

Another day of concerns for investors, and another day that short-term U.S. interest rates fall. U.S. Treasury prices jumped Tuesday, sending the yield on the 10-year note down six basis points to a paltry 3.14% -- the lowest interest rate in more than a year.

It's a classic flight-to-safety response by investors, who are exiting higher-risk positions in emerging markets and commodities, and piling in to the dollar and dollar-denominated investments, and Japan's yen.

Continue reading U.S. 10-Year Yield Falls to 3.14% on Flight-to-Safety

U.S. 10-Year Yield Falls to 3.14% on Flight-to-Safety originally appeared on BloggingStocks on Tue, 25 May 2010 17:20:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

Investors Demand Higher Yields on U.S. Treasuries

Connie Madon — Thu, 01 Apr 2010 10:50:00 EST

Filed under: Market Matters, Financial Crisis

They call themselves bond vigilantes. They are investors who are demanding higher yields at U.S. Treasury auctions.

Treasury auctions were going along quite smoothly until last week. Inflation is low, the housing market is in a slump and unemployment is at near record levels. All of this mixture is the stuff that low interest rates are made of.

Last week, the Greek debt crisis brought the problem of too much debt front and center. Now, investors are looking at the U.S. and see a mountain of fiscal debt that needs financing. The huge U.S. debt, $1.7 trillion, is making investors reappraise the yields on U.S. treasuries.

Continue reading Investors Demand Higher Yields on U.S. Treasuries

Investors Demand Higher Yields on U.S. Treasuries originally appeared on BloggingStocks on Thu, 01 Apr 2010 10:50:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments

Bermuda Stock Exchange Tries to Forget 2009

Tom Johansmeyer — Mon, 18 Jan 2010 14:30:00 EST

Filed under: International Markets, Market Matters, Financial Crisis

The Bermuda Stock Exchange is looking for a comeback this year. For 2009, the shares traded on the BSX were off close to 40%, reflecting the brutality of the financial crisis on the island known primarily for its insurance business (oh, and people go on vacation there, too ... and not just insurance people). In 2010, the BSX sees catastrophe bonds and other insurance-linked securities as fundamental to a strong year. A BSX statement reads, "The BSX's listing business has remained buoyant and the BSX has made continued progress in entering and supporting the insurance linked security space." With the 2009 Insurance Amendment Act approved last October, Bermuda hopes to lure cat bond listings away from the Cayman Islands Stock Exchange.

Continue reading Bermuda Stock Exchange Tries to Forget 2009

Bermuda Stock Exchange Tries to Forget 2009 originally appeared on BloggingStocks on Mon, 18 Jan 2010 14:30:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments

Divergence Between Stock and Bond Returns Puts Pressure on the Bond Market

Connie Madon — Mon, 04 Jan 2010 11:15:00 EST

Filed under: Forecasts, Market Matters, Economic Data, Federal Reserve, Recession

Last year saw one of the biggest stock rallies in history. Last year also saw bond yields fall by 3.72% on average. Investors who ran to the bond market for safety in 2008 and early 2009 saw their investments drop, while the risk takers who bought stocks are sitting pretty.

All of this was happening while the Federal Reserve sold $2.11 trillion of notes and bonds. The market was supported by the Fed's purchase of $300 billion of the $2.11 trillion in notes, bonds and inflated-related securities. Foreign demand was strong. Indirect bidders, who include foreign buyers, bought 45% of $1.1917 trillion in U.S. notes and bonds, up 29% from last year.

Continue reading Divergence Between Stock and Bond Returns Puts Pressure on the Bond Market

Divergence Between Stock and Bond Returns Puts Pressure on the Bond Market originally appeared on BloggingStocks on Mon, 04 Jan 2010 11:15:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments

High yield bond funds take a break

John Jagerson — Fri, 18 Sep 2009 16:30:00 EST

Filed under: Other Issues, Market Matters

High yield is a nice way of saying "junk" when talking about bonds. These bonds are issued by firms who must pay a higher interest rate when raising capital than those companies that issue bonds that qualify as investment grade. Those higher interest rates are attractive to investors and lately demand for high yield bonds has led to a very nice rally in junk bond funds like the iShares High Yield Corporate Bond Fund (HYG).

Today, HYG is finally pausing in its uptrend as investors take some profits off the table across the bond market. Investors are concerned about the fact that the Treasury plans to flood the $112 billion worth of new debt into the market next week. That will be a record auction amount and could put temporary downward pressure on bond prices.

Continue reading High yield bond funds take a break

High yield bond funds take a break originally appeared on BloggingStocks on Fri, 18 Sep 2009 16:30:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

Bad news triggers a rally in the bond market

Connie Madon — Fri, 03 Jul 2009 14:00:00 EST

Filed under: Bad News, Market Matters, Recession

Unlike the stock market, the bond market thrives on "bad" news. Why is this? The main reason is the money trail. Investors are quick to move their money from stocks into bonds when something bad happens.

Yesterday we had plenty of bad news. The U.S. job market lost 467,000 jobs, a 26-year high. Now to add fuel to the fire, wages are dropping due to layoffs and shortened work weeks (WSJ subscription required). Fewer people are working, which means less money that consumers have to spend. That signals a slower economy.

Continue reading Bad news triggers a rally in the bond market

Bad news triggers a rally in the bond market originally appeared on BloggingStocks on Fri, 03 Jul 2009 14:00:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

Bonds drop as the Philly Fed index rises

Connie Madon — Thu, 18 Jun 2009 15:00:00 EST

Filed under: Market Matters, Economic Data

What is the Philadelphia Federal Reserve index? First we should say that the Philly Fed Index, as it is called, measures business activity for the Mid-Atlantic region. During the recent financial crisis, the index has been solidly in the minus column with a reading of -22.6 in May and a median forecast of -17.0. Minus readings indicate a contraction in business activity, while plus readings indicate that business activity is picking up.

Surprise! The most recent reading came in at -2.2. While this is still a minus reading, its a big jump from the consensus reading of the median -17.0. This means that, while business activity is still weak, it is picking up at a more rapid pace than analysts had expected.

Continue reading Bonds drop as the Philly Fed index rises

Bonds drop as the Philly Fed index rises originally appeared on BloggingStocks on Thu, 18 Jun 2009 15:00:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

Inaction and a financial crisis don't mix

Joseph Lazzaro — Wed, 18 Mar 2009 16:40:00 EST

Filed under: Forecasts, Ford Motor (F), Citigroup Inc. (C), Bank of America (BAC), Federal Natl Mtge (FNM), Amer Intl Group (AIG), Politics, Recession, Financial Crisis

Investor Jim Rogers, noted for his expertise in commodities, is someone Wall Street professionals, business executives, and economists alike pay close attention to, as he's frequently been ahead-of-the-curve regarding market and investment trends.

Still, that's not to say that Rogers sometimes can't overdo it a bit and/or does not get it wrong.

A recent chat Rogers had with Bloomberg News is an example of the latter, as the talk yielded more rhetoric, half-truths, and flat out absurd statements and not a whole not of illumination.

Continue reading Inaction and a financial crisis don't mix

Inaction and a financial crisis don't mix originally appeared on BloggingStocks on Wed, 18 Mar 2009 16:40:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

Soros says world is witnessing end of pure, unregulated capitalism model

Joseph Lazzaro — Mon, 23 Feb 2009 15:00:00 EST

Filed under: International Markets, Forecasts, Politics, Recession, Financial Crisis

You might say that a key investor, one of the exemplars, is no longer bullish on the pure bulls. Or on the unregulated bulls. Or on the totally free market bulls.

Billionaire investor George Soros told Bloomberg News that the current global financial crisis originated during the deregulation of the 1980s, and signals the end of the free market model that has dominated capitalist countries, and indeed much of the developed world, since the the end of the Cold War with the break-up of the Soviet Union in 1991.

Continue reading Soros says world is witnessing end of pure, unregulated capitalism model

Soros says world is witnessing end of pure, unregulated capitalism model originally appeared on BloggingStocks on Mon, 23 Feb 2009 15:00:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

Federal Reserve starts buying mortgage backed securities

Joseph Lazzaro — Mon, 05 Jan 2009 13:42:00 EST

Filed under: Forecasts, Federal Reserve, Financial Crisis

U.S. policy makers are putting all hands on deck. All engines are being used to pull this train out of the station. In this case, nearly every cliché applies.

The Federal Reserve Bank of New York announced Monday it has started buying mortgage backed securities (MBS), as part of its $500 billion program to improve credit market liquidity and jump-start the housing market.

The Fed said it began buying MBS guaranteed by Fannie Mae (NYSE: FNM), Freddie Mac (NYSE: FRE), and Ginnie Mae. Purchase amounts will be published on the Fed's web site beginning January 8 and will be updated each Thursday.

Goldman Sachs Asset Management (NYSE: GS), Pacific Investment Management Co., and Wellington Management Co. will manage the $500 billion in MBS the Fed expects to purchase by June.

Continue reading Federal Reserve starts buying mortgage backed securities

Federal Reserve starts buying mortgage backed securities originally appeared on BloggingStocks on Mon, 05 Jan 2009 13:42:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

Stabilized credit markets could hit more bumps in road in 2009, economist says

Joseph Lazzaro — Fri, 19 Dec 2008 15:51:00 EST

Filed under: International Markets, Forecasts, Recession, Financial Crisis

Global credit markets have recovered and stabilized following a brush with a global financial meltdown in September, but those markets have not normalized and a tough stretch of road remains ahead, so says an economist.

"We are on 'a great, long, slow journey' to use a Chinese saying," economist David H. Wang told BloggingStocks. "We have to be prepared for more bumps in the road ahead in 2009. We must be both proactive and also take corrective action in the credit markets."

Short-term interests have fallen considerably in the past three months, with the London rate for three-month loans in dollars (LIBOR) declining Friday to 1.50% from 4.82% earlier this fall, Bloomberg News reported, primarily on the strength of $8.4 trillion in liquidity-oriented interventions by the U.S. Federal Reserve and the other, major central banks.

The LIBOR is particularly important because it determines rates for $360 trillion of financial products worldwide, from home loans to derivatives.

Central banks: on the watch for credit stress signs

What could represent one of those 'bumps,' i.e. a re-igniting of short-term rates, in Wang's view? Another wave of home mortgage foreclosures, which would lead to another batch of toxic-bonds, write-offs, and financial institution stress, he said. The aforementioned "underscores the urgency of the Obama Administration and Congress passing a major home mortgage refinance plan for preventable foreclosures," Wang said. "If we stem the rise in mortgage foreclosures, we will make progress on the road leading to economic recovery."

Continue reading Stabilized credit markets could hit more bumps in road in 2009, economist says

Stabilized credit markets could hit more bumps in road in 2009, economist says originally appeared on BloggingStocks on Fri, 19 Dec 2008 15:51:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

Treasuries rise, pushing 30-year yield to 2.95%, lowest since late 1970s

Joseph Lazzaro — Tue, 16 Dec 2008 10:40:00 EST

Filed under: Forecasts, Other Issues

How'd you like to borrow money for 30 years at 2.95%?

The U.S. government can, and it's making it easier for the federal government to fund its increasing budget deficit, as well as help build the case for a large fiscal stimulus package.

Treasury prices continued to rise Tuesday, pushing the yield on the 30-year government bond down to 2.95% -- close to its lowest level since regular sales began in 1977. The 10-year note yielded 2.48%; the 5-year note, 1.47%.

Further, while it may seem like a contradiction to have long-term interest rates fall at a time the U.S. government is on-track to record at least a record $600 billion (and probably much higher) budget deficit this fiscal year, there's a method to institutional investors' madness, so says economist Richard Felson.

"The landscape for private investment is poor. We have a recession on all continents, and there's a lack of places to deploy capital productively. That dearth of opportunities for return on investment plus fear of losses from toxic assets is driving investors to the safer investments, and one of the safest is the U.S. Treasury," Felson said. "It's the preferred place to be until the major economies start to recover."

Continue reading Treasuries rise, pushing 30-year yield to 2.95%, lowest since late 1970s

Treasuries rise, pushing 30-year yield to 2.95%, lowest since late 1970s originally appeared on BloggingStocks on Tue, 16 Dec 2008 10:40:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments

No bids for Port Authority of NY/NJ bond offering shows credit crisis far from over

Joseph Lazzaro — Wed, 03 Dec 2008 17:34:00 EST

Filed under: Bad News, Financial Crisis

In another sign that the credit crunch has not disappeared, the Port Authority of New York and New Jersey received no bids from investment banks to underwrite a taxable note offering.

The Port Authority was trying to sell $300 million worth of three-year notes, backed by revenue streams, Bloomberg News reported. The Port Authority operates airports, river crossings, and certain transit systems in the New York metropolitan area and has a strong credit rating. The agency is also rebuilding the World Trade Center site, including the new Freedom Tower.

Economist David H. Wang was apoplectic about the failed offering. "This is unbelievable," Wang said. "It's a ridiculous situation, frankly, and something has to be done to free-up these credit markets. This is the financial equivalent of Warren Buffett not being able to get a $20 million loan."

State, cities, and other taxing districts have had trouble selling bonds through advertised bidding, after institutional investors pared-back their appetite for fixed-income securities -- and just about every other asset class -- as the financial crisis intensified in September. In tandem, investment banks have balked at bidding for certain debt, sensing insufficient client demand, Wang said.

Continue reading No bids for Port Authority of NY/NJ bond offering shows credit crisis far from over

No bids for Port Authority of NY/NJ bond offering shows credit crisis far from over originally appeared on BloggingStocks on Wed, 03 Dec 2008 17:34:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments