General | Sense on Cents - Part 83 Sense on Cents

Archive for the ‘General’ Category

Further Thoughts on S&P’s Downgrade of USA

Posted by Larry Doyle on August 8th, 2011 7:44 AM |

The sun did come up here on the east coast this morning. That is a very good thing. Life does go on.

Our fiscal life goes on as well. In many respects it is little changed but in others it is very much changed and will not soon be restored. As the emotions of many inside and outside of the markets are frayed as a result of S&P’s downgrade of the USA, let us keep our heads and maintain our ‘sense on cents‘ approach.

On that note, what are three questions I see many asking and how would I respond to them? (more…)

Tags: chances for disinflation or deflation, decline of US credit rating, forecast for the economy August 2011, how can we change Washington, need for entitlement reforms, need for term limits, reaction to S&P downgrade of US debt, reaction to the S&P downgrade, S&P downgrade, S&P downgrade of US debt, the boy who cried wolf, Tim Geithner reaction to US downgrade, Treasury Department reaction to S&P downgrade eaction to, Treasury rates after S&P downgrade, why aren't Treasury rates moving higher
Posted in General | 11 Comments »

Breaking News: S&P Downgrades United States

Posted by Larry Doyle on August 5th, 2011 7:55 PM |

The Wall Street Journal is reporting that Standard & Poors has just downgraded the credit rating of the United States from a AAA rating.

This is a HUUUUGE story. What do I see as the implications?

1. Short term lending markets will get tighter and activity will likely decline as the quality of what had been the highest quality collateral, US Treasury debt, is now downgraded.

These short term lending markets, also known as the repo market, are the liquidity in our financial markets’ engine. As the liquidity lessens and the cost of doing business increases, overall activity in the markets will be negatively impacted.

2. Other entities which had owned and used US Treasury debt for collateral purposes will be negatively impacted by the higher costs of holding lower quality debt. Other entities which were closely aligned with the US Treasury, such as Freddie and Fannie, will also be negatively impacted in terms of higher borrowing costs. (more…)

Tags: 2012 elections, Are you in?, barack obama's reelection campaign, Congressional campaign 2012, downgrade of United States, how will economy react to US downgrade, how will markets react to US downgrade, Jesse Lee obama communications, market reaction to US downgrade, obama reelection, quality of US Treasury collateral c, S&P downgrades US Debt rating, Standard adn Poors downgrades US debt, term limits, The Great Society, United States just got downgraded, what will happen with the downgrade of US debt, White House
Posted in General | 29 Comments »

Unemployment Report August 5, 2011: Discouraging

Posted by Larry Doyle on August 5th, 2011 9:13 AM |

The big exhale you may have just heard emanating from Washington follows a slightly better than expected unemployment report this morning.

I am happy to hear that the report is slightly better than expected and will address the particulars momentarily. I caution people not to make too much of this report, though. Why?

While the report may have exceeded expectations, let’s not lose sight of the fact that the expectations were not all that high at the outset.

Additionally, this report is backward looking. What have we seen and heard from a wide array of companies recently? Indications of further layoffs.

Those with a measure of ‘sense on cents‘ do not take reports on face value. Let’s dig a little deeper. (more…)

Tags: 2011, average workweek august 2011, Bureau of Labor Statistics, employment report august 5 2011, employment situation August 2011, Employment Situation Summary August 2011, hourly earnings august 2011, labor participation rate august 2011 p, labor report august 5 2011, Larry Doyle, NFP report august 5, nonfarm payroll report august 5 2011, Sense on Cents, unemployment rate august 2011, unemployment report august 2011, unemployment report august 5 2011, what is participation rate
Posted in Employment, General, Unemployment | 5 Comments »

What Caused the Market Meltdown?

Posted by Larry Doyle on August 4th, 2011 5:08 PM |

“Everybody out of the pool” and “Adult Swim Only” are phrases that ring in my ear from my trading days at Bear Stearns. A long lost friend (God bless you, buddy!!) would bellow those statements when markets plunged like today.

What has recently drained the liquidity and lowered the water level in our equity market ‘pool’?

A number of critically important factors have been building and continue to haunt us.These include:

1. Meltdown in European sovereign debt. This is not and should not be a surprise. The meltdown was merely a matter of time. The outstanding question remains the depth and breadth of the meltdown. Stay tuned as risks remain very high.

2. The dysfunction in Washington truly displayed how screwed up our political dynamic is while shedding light on the enormity of our national debt and deficit. This reality is not changing anytime soon. Stay tuned as risks remain very high.

(more…)

Tags: Adult Swim only, another round of quantitative easing, as good as it gets, BEA Revisions Revisited, budget talks in 2011, Bureau of Economic Analysis, consumer activity, consumer spending, Daily Growth Index, economy at stall speed, everybody out of the pool, explaining GDP, GDP forecast, GDP revisions, God Bless Mike Zulawski, higher rates in emerging economies, is the economy going back into recession, lower GDP projections, market meltdown august 4 2011, market vs economy, QE3, quantitative easing, Rick Davis of Consumer Metrics Institute, Sense on Cents, stall speed for economy, stall speed on economy, U.S. debt and deficit, what caused the market meltdown august 4 2011, what drove the stock market lower august 4 2011, what is stall speed economy, why did the market dive august 4 2011, why did the market selloff august 4 2011, why did the stock market go lower august 4 2011, will we have a QE3
Posted in General | 3 Comments »

Very Disturbing UPDATE: Student Loan Bubble and Seeking Arrangements

Posted by Larry Doyle on August 4th, 2011 7:11 AM |

I have a soft spot for those within our society whom I believe are preyed upon and ultimately victimized by the perils and pitfalls of modern day finance.

I fully appreciate that people need to be held responsible for their personal behaviors and decisions, but we need to acknowledge that the tangled financial web that our nation has woven has placed many members of our society in untenable positions.

The story I address today is perhaps one of the saddest I have encountered since launching Sense on Cents in early 2009. (more…)

Tags: are student loans a bubble, are student loans a scam, college students using sugar daddies to pay off student loan debt, college tuition sugar daddy, cost of higher education, friends with benefits, higher education, how students are paying off loans, Huffington Post article on Seeking Arrangement, is higher education a racket, johns, paying off student loans, prostitution in student loans l, scumbags preying upon students, Seeking Arrangements, Seeking Arrangements website, student lending industry, student loan bubble, student loan industry, student loans, students prostituting to pay student loans, sugar daddies, sugar daddies and students, Taylor from Hunter College
Posted in Education, General | 5 Comments »

The Recession Never Truly Ended

Posted by Larry Doyle on August 3rd, 2011 8:19 AM |

A wide array of supposedly smart people are now informing us that the economy is slowing and may slip back into recession. The new phrase being used to describe our economic condition is ‘stall speed’.

Well how about that? Stall speed, they say. Is the economy truly slowing? Is it really?

Or perhaps did the real economy, that is the one in which we live and operate—not the one fabricated by Wall Street pundits and Washington politicians—never truly rebound?

I ask because I firmly believe that our domestic economy never truly rebounded in a meaningful fashion over the last few years.

I cautioned people to avoid the regular smoke and mirrors emanating from our financial and political hotbeds in spring 2010, and have continued to caution since, when I first equated our economic malady as akin to “walking pneumonia“.>>>>>>>> (more…)

Tags: BEA GDP revisions, Bureau of Economic Analysis, ddi we ever get out of recession, economy august 2010, economy never rebounded, green shoots, our recession never truly ended, revisions to GDP, Sense on Cents, stall speed economy, sugar high economic activity, sugar highs, the recession never ended, Uncle Sam economy, V-shaped recovery, walking pneumonia economy, we never got out of recession, what is stall speed
Posted in General | 6 Comments »

Auction-Rate Securities Update: Discovery in Merrill/Maui Case is Explosive!!

Posted by Larry Doyle on August 2nd, 2011 8:17 AM |

Information is everything. The appropriate use of information can be particularly powerful if not explosive.

Whether in the canyons of Wall Street, the halls of Capitol Hill, or in the most distant regions of our great nation, the value and use of timely information is critical in determining the truth as to 1. what did people know 2. when did they know it, and 3. what did they do with it?

The legal process known as discovery is critical to elevating our Sense on Cents virtues of truth, transparency, and integrity. What is discovery? (more…)

Tags: anti-fraud violations, ARPS, ARS, Auction Rate Securities scandal, auction-rate securities update august 2011, Brokerage May Buy Back Dormant Securities, Chinese wall at Merrill Lynch, did Merrill prop up the ARS market, FINRA and SEC ARS, FINRA arbitration Merrill Lynch ARS Maui, Frances Constable Merrill Lynch e-mail, Goodson Anderson Quinn & Stifel, legal process known as discovery, Maui County auction-rate case, Maui County Council Policy Committee, Maui News, Maui vs Merrill Lynch, Merrill Lynch sales of auction-rate securities, NASAA, no more 2k dinners at Cru, pre-trial litigation process, pursuing the truth, pursuit of the truth, SLARS Hawaii, what is discovery, when did ARS market begin to collapse, who is Joachim Cox, who is Riki Hokama
Posted in ARPS, ARS, Auction Rate Securities scandal, General | 1 Comment »

Debt Deal, Our ‘Walking Pneumonia’ Economy, QE3 and More ‘Sense on Cents’

Posted by Larry Doyle on August 1st, 2011 7:40 AM |

What now? What lies ahead on the challenging and winding road filled with clouds and great unknowns that defines our American economic landscape?

The political circus in Washington has clearly taken center stage over the last few weeks. Watching this show has been anything but entertaining and don’t think the theatrics do not harm our economy. They do.

Uncertainty breeds risk aversion and our economy needs people and businesses willing to take risks.

Can we assume that the passage of a bipartisan debt package means we can get back to business as usual and that the economy will rebound? Not so fast. (more…)

Tags: America needs term limits, Barclays revisions to GDP forecasts, cooking the books, details of debt deal, fixing politics, future of economy August 2011, GDP revisions, give us term limits, impact of credit rating downgrade, impact of quantitative easing, increase in debt ceiling, meaningful deficit reduction, means testing for entitlement programs, monetization of our debt, monetize the debt, need for campaign finance reform, political circus in Washington August 2011, public service was not meant to be a career, reforming our tax code, Terry Belton of JP Morgan, walking pneumonia economy, what does debt deal mean for our economy, what is ahead on our economic landscape, what lies ahead for our economy August 2011, will credit rating sagencies downgrade our debt, will debt deal help economy, will debt deal help nation, will we have a QE3 August 2011
Posted in General | 8 Comments »

ECRI Had Forecasted GDP Weakness

Posted by Larry Doyle on July 29th, 2011 9:14 AM |

While economists up and down Wall Street express real surprise at the GDP reports this morning, regular readers of this blog hopefully recall the siren sounded by the Economic Cycle Research Institute in mid-May.

I highlighted the ECRI’s warning at that time in writing, ECRI Forecasting Global Economic Slowdown,

The ECRI clearly has a strong pedigree. More importantly the ECRI is not compromised by an existing relationship with a global investment bank or another entity looking to sell financial products. Against that backdrop, the crowd at the ECRI sees storm clouds on the horizon. Just yesterday IBD released a report covering ECRI’s forecast entitled Cruel Summer?>>>>>>>> (more…)

Tags: 1st quarter GDP revision, 2nd quarter GDP, 2nd quarter GDP report very weak, Economic Cycle Research Institute, economic forecasts, ECRI, forecasting the economy, global economic slowdown, is another recession on the horizon July 2011, Lakshman Achuthan, Larry Doyle, Sense on Cents, they told us so, Wall Street economists missed 2nd quarter GDP, weak economy, who forecasts the economy, why did economy slow in 2nd quarter, will we have another recession
Posted in General | 2 Comments »

Revisiting the Sense on Cents Halls of Fame/Shame

Posted by Larry Doyle on July 28th, 2011 7:31 AM |

For those who love baseball, summer is not only a time for taking in a ballgame (like today’s matinee at Fenway Park between our beloved 1st place Boston Red Sox and the Kansas City Royals) but also for paying a visit to the Hall of Fame.

Baseball fans of all ages love to make the pilgrimage to the hallowed hall in Cooperstown, New York.

Fans of Sense on Cents are well aware that yours truly has inducted worthy and deserving recipients into both wings of our own hall here over the course of the year. Just yesterday, I inducted Muddy Water’s Carson Block into the Sense on Cents Hall of Fame.

While I take the boys to the ballpark, I hope readers, both new and old, may like to pay a visit to the Sense on Cents Halls of Fame and Shame a/o year end 2010.