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Archive for July, 2013

Sense on Cents Quiz: Average GDP from ’02-’12 Is . . ?

Posted by Larry Doyle on July 31st, 2013 10:53 AM |

The Bureau of Economic Analysis this morning released the 2nd quarter GDP report and it registered a surprisingly robust reading of 1.7%.

Not that a growth rate of 1.7% is anything to write home about but it was better than the forecasted growth rate of 1% or thereabouts.

The cynic in me tells me that I guess we are supposed to disregard the downward revision to the prior quarter’s growth from a reading of 1.8% to 1.1%. That fact only further confirms that our economy continues to largely walk in place with what I have long defined to be a case of “walking pneumonia.’ (more…)

How Do China’s Seven ‘Speak-Nots’ Play in America?

Posted by Larry Doyle on July 30th, 2013 8:08 AM |

People of faith are likely very familiar with the seven deadly sins: pride, envy, gluttony, lust, anger, greed, and sloth.

I think it goes without saying that our nation would be a better place if we had less of these vices on display. That said, our greatest virtues emanate from the very freedom that allows the aforementioned vices to gain a foothold. What if we did not have our freedom, though? Then what?

To explore this question, let’s navigate to The People’s Republic of China and review a recent report from Global Post that highlights:

In a directive reportedly distributed last month to local party committees, China’s top propaganda officials issued new

restrictions banning discussion of seven topics deemed to be “dangerous Western influences.”   (more…)

Why Larry Summers Will Be Next Fed Chair

Posted by Larry Doyle on July 29th, 2013 8:36 AM |

The race to occupy the most influential position in the nation — that is, the chairman of the Federal Reserve — is now widely acknowledged to be a two horse sprint between Janet Yellen and Larry Summers.

Those supporting the appointment of Ms. Yellen, including Nancy Pelosi, Christina Romer and others, are actively and publicly voicing their endorsement of the current Vice-Chairman of the Federal Reserve.

Meanwhile we hear little from those most closely aligned with the oft-described arrogant — and sleep-deprived? — Mr. Summers. I gather that Robert Rubin and others supporting Summers are more comfortable operating under the blanket that has come to define Washington as being in bed with Wall Street.

So who will President Obama appoint?

Weekend Reading: WSJ’s Saving Detroit from Itself

Posted by Larry Doyle on July 27th, 2013 5:58 AM |

The Wall Street Journal writes today that there should be no federal bailout of Detroit.

The AFL-CIO and its friends are mourning Detroit as a victim of capitalism, claiming the government has a moral obligation to rescue the bankrupt city. This is a nice political fable, but the hard truth is that Motown is a victim of its own political vices and a bailout would merely forestall the necessary rehab.

For lots of informative details adding up to a whole lot of sense on cents:

Saving Detroit from Itself


SAC Capital: Most Likely Done

Posted by Larry Doyle on July 26th, 2013 8:03 AM |

This past March two affiliated entities of Wall Street’s largest hedge fund whale, Steven A. Cohen, forked over a cool $616 million in fines to the SEC to settle insider trading allegations.

At the time, the firm tried to put the typical spin on this situation and offered that it was continuing to assist with the ongoing investigation. My gut instincts tell me that both Cohen and the firm believed that the $600+ million was the “stay out of jail” card for Cohen himself and the green light for the firm to continue business. Two months later, the “can’t we all be friends” approach took a dramatic change as SAC said that it would no longer cooperate.

Fast forward another two months and this week we witness an indictment of the firm, although not of Cohen himself. (Come on, paying $600 million has to get you something, right?) (more…)

Wall Street’s Top Strategy: Besiege The Regulators

Posted by Larry Doyle on July 25th, 2013 8:27 AM |

Everyday we hear of a new recommended strategy put forth by analysts on Wall Street.

Some of the supposed smartest people in the business recommend sector rotation strategies, others a new found pro-growth approach, still more prefer a style that accentuates value, and others investments that generate income.

There are seemingly as many strategies on Wall Street as there are strategists.

Of all the strategies put forth by Wall Street, though, what do you think is the top Wall Street strategy — not for you, the investor — but for the industry itself? I have no doubt as to the answer to this question. (more…)

Hoisington: The Case for Lower Long Term Rates

Posted by Larry Doyle on July 24th, 2013 7:08 AM |

When the herd on Wall Street is moving to one side of the boat, I am inclined to start thinking about moving to the other. Or at the bare minimum, I want to consider getting to the middle.

I make that point as many strategists and Wall Street savants are playing the momentum card and recommending that people overweight equities and underweight bonds because rates are assuredly headed higher.

The vicious sell off in bonds over the last two months on the heels of Fed chair Bernanke’s comments about tapering is clear cut evidence that the savants are right and that rates will continue their move higher, correct? (more…)

Khuzami Goes Through The Revolving Door

Posted by Larry Doyle on July 23rd, 2013 9:54 AM |

How do people feel about the performance of the SEC over the last number of years?

Seriously. On a scale of 1-10 (1 being horrendous and 10 being superb), please share your opinion as to how the SEC has gone about pursuing its mission of protecting investors and our markets while overseeing the manner in which Wall Street’s banks and money managers run their operations.

I ask this very basic question as a means of also grading the performance of the SEC’s Director of Enforcement, Robert Khuzami, during this period. (more…)

Manipulating Electricity: When Will Madness End?

Posted by Larry Doyle on July 22nd, 2013 7:25 AM |

Do readers recall how the morally depraved crowd at Enron manipulated the electricity markets so aggressively in California in 2000 as to force the state to implement rolling blackouts?

I am assuming there are some in our audience who not only remember the rolling blackouts, but actually lived through them.

Market manipulation of a basic good or service is a destructive force like none other. Many in America and around the world will dismiss the manipulation that goes on in a structured products market, such as mortgage-backed securities or auction-rate securities. They will similarly dismiss the clandestine dealings within the credit derivatives space or the arcane world of high-frequency trading.  (more…)

Detroit Files Chapter 9: What Lies Ahead?

Posted by Larry Doyle on July 19th, 2013 12:23 PM |

With no surprise to absolutely anybody, the City of Detroit filed bankruptcy yesterday via Chapter 9.

How does an entity such as Detroit get to the point of being 18 billion in debt? Well, I addressed that point a month ago in writing, Detroit: D is for Disaster.

There will be years worth of likely challenging negotiations and contested legal battles among Detroit’s creditors (primarily the pensioners and bondholders). Those within the municipal bond market and beyond will be watching this play out with bated breath. (more…)

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