Posted by Larry Doyle on October 27th, 2009 11:18 AM |
Dr. Doom agrees with Wall Street’s top fixed income manger? Who are these individuals and on what do they agree?
Both these individuals are Economic All-Stars here at Sense on Cents (see left sidebar). Nouriel Roubini (aka Dr. Doom) and Jeff Gundlach (aka Wall Street’s top fixed income manger) possess a contrarian view on the future of the U.S. dollar. While most analysts, economists, traders, investors, and speculators call for ongoing weakness in the greenback, Roubini and Gundlach believe the dollar will rebound and risk-based assets will retreat.
I addressed Gundlach’s views on this market driving principle on September 10th when I wrote “Jeff Gundlach of TCW Calling for Deflation and Dollar Rally”: (more…)
Posted by Larry Doyle on March 26th, 2009 11:10 AM |
The other day, I provided a cursory overview of the details embedded in the recently proposed Public-Private Investment Partnership, Will Banks Truly Sell these Toxic Assets?
The main point I tried to highlight in that piece was the need for true price discovery for these toxic assets. A loyal reader provided tremendous insight in highlighting that the PPIP needs to assure that sellers are truly at arm’s length from buyers to insure that the price discovery process is real and fair.
There are potential concerns with this price discovery process highlighted in my piece Send in the Clown. Are the bank portfolios, located within the largest banks needing to sell toxic assets, attempting to prop the market higher? (more…)
Posted by Larry Doyle on March 26th, 2009 8:42 AM |
I always keep a close ear for the market insights of any of our Economic All-Stars. Highly proclaimed NYU professor and economist Nouriel Roubini is decidedly bearish on the state of financial companies, the economy, and the markets. Bloomberg reports, Roubini Says Stocks Will Drop as Banks Go Belly Up.
Laszlo Birinyi is more tempered in his assessment but believes the market has come too far, too fast and is subject to some pullbacks. Please remember that we saw a market bottom in the S&P 500 at the 666 level (pretty scary, eh) on Friday March 6. We have moved up 22% in a very short time frame. Birinyi further offers that this market is less geared for long term investors and more for short term traders focused on picking individual stocks.
Posted by Larry Doyle on March 23rd, 2009 6:05 AM |
The movie Jaws struck fear into the souls of beachgoers in the mid-70s. If our current economy were only a scary movie. A classic scene in Jaws occurred when the salty mariner Quint eyed the shark and informed his sidekicks, “we need a bigger boat.”
In similar fashion, the size of the losses embedded in our banking, insurance, automotive, and states and municipalities will similarly require “a bigger boat!!”
Capital needs in the banking industry are projected from at least $500 billion to $1.5 trillion. Bloomberg reports former Fed chair Greenspan Says Banks Need $750 Billion More Capital. Nouriel Roubini puts the needs at upwards of $1.5 trillion. (more…)
Posted by Larry Doyle on February 27th, 2009 5:30 AM |
When trading bonds on Wall Street, I always wanted to know what the largest accounts were doing. A handful of these accounts were so massive that in order to make a meaningful change in their portfolio they had to execute trades of monstrous size. In executing trades with these clients, there was enormous risk. That said, if I did not provide enough liquidity to the accounts then we would stop seeing their inquiry. Information is everything, so not seeing their business was even more dangerous than printing some of it. Given this balancing act, I would try to pick and choose my spots. Amongst these clients is the largest bond manager in the country, Pacific Investment Management Company, otherwise known as Pimco, headed by the legendary Bill Gross (one of our Economic All-Stars highlighted in the lower left sidebar).
Bill offers his thoughts on a monthly basis. Anybody with even passing interest in the markets should read his remarks. I will offer an overview: (more…)
Posted by Larry Doyle on February 20th, 2009 5:20 PM |
While there is tremendous volatility in the markets and commensurate anxiety as a result, there were some major stories and developments that got less play but deserved more.
Allow me to expound. Robert Shiller, a highly distinguished Economics Professor at Yale Univeristy and co-designer of the Case-Shiller Home Price Index spoke this morning on Bloomberg News. Shiller is the preeminent expert on trends and developments in housing. He made the following assessments:
1. Glad to see that Obama is making an effort to support housing but has serious concerns about the effort.
2. $75 billion allocated for loan modification is not nearly enough to make a truly meaningful impact. (remember there is another $200 billion allocated for Freddie and Fannie to refinance mortgages).
3. No plan or proposal for those holding Jumbo mortgages leaves a large part of the market without benefits. Those homes will likely hang over the market.
Posted by Larry Doyle on January 6th, 2009 10:00 AM |
On the first real day of business after the holidays, I will tip my hat to PEBO and his economic team. Obama opened his press briefing this morning with his take that the economy is “bad and getting worse.” In deft fashion, he then caught almost everybody off guard by leading his proposed economic stimulus plan with focus on a significant level of tax cuts and tax credits. In my opinion, this was a very, very strong first move. Well done, Barack!!
The general outline of these cuts and credits include:
1. tax cuts for those paying taxes or with an earned-income credit. Likely for families earning up to 200k, although that is not yet defined.
2. businesses can retroactively reduce tax bills going back 5 years by writing off losses from 2008 and 2009.
3. offer tax credits to entice firms to plow money back into new investments.
4. provide a one year tax credit for companies that make new hires or forego layoffs.
5. increase write-offs for a wide array of expenditures for small business.