Posted by Larry Doyle on August 26th, 2010 12:03 PM |
Sense on Cents is serving a full helping of Nouriel Roubini today.
Hopefully, our morning course only served to further whet your appetite for more financial wisdom from this economic giant. Having already dined on market structures, the world of Wall Street, and assorted vices and virtues this morning, this afternoon we are serving a course of Roubini’s outlook on the economy.
Bon appetit as Bloomberg delivers, Roubini Says Third Quarter Growth to Be ‘Well Below’ 1%:
Nouriel Roubini, the New York University economist who predicted the global financial crisis, said U.S. growth will be “well below” 1 percent in the third quarter and put the odds of a renewed recession at 40 percent. Read the rest »
Posted by Larry Doyle on August 26th, 2010 5:38 AM |
Nouriel Roubini is both revered and derided. While he gains huge credit for having forecasted our economic meltdown, he is equally maligned for having missed the 2009 rally in the markets. I am less concerned with Roubini’s market calls, but I am very interested in his views on the inner workings of our economy and market structures. To this end I was thrilled to review Roubini’s recent Project Syndicate commentary, Gordon Gekko Reborn.
As you read Roubini’s commentary, I encourage you to think whether the recently enacted Financial Regulatory Reform package will fully address and implement the changes Roubini deems necessary. I will add my take as we navigate. On that note, Roubini writes: Read the rest »
Posted by Larry Doyle on August 25th, 2010 1:54 PM |
If image is everything, then how is it that perhaps the most revered global banking institution in the world today allows itself to get enmeshed in an ugly legal complaint with a junior level professional.
I am referring to a complaint brought by Kevin Dillon against JP Morgan. I first addressed this situation on July 8th when I encouraged Mr. Dillon to meet Peter Sivere, a former JP Morgan employee who was unceremoniously, and in my opinion undeservedly, relieved of his responsibilities. I wrote Kevin Dillon Meet Peter Sivere, Read the rest »
Posted by Larry Doyle on August 25th, 2010 7:40 AM |
What is it that distinguishes the greatest athletes in sports, such as Michael Jordan, Bobby Orr, Wayne Gretzky, Peyton Manning, Magic Johnson, Larry Bird? While these ‘best of the best’ have and had many extraordinary athletic skills, those who love the game know that these world class athletes were able to see exceptionally fast moving action in slow motion. (In Manning’s case, he still does!!) As such, they played the game three steps in front of their teammates and four steps in front of the competition. As a result, special things happened.
In the world of investing, there are a handful of investment managers who possess similar instincts. Jeff Gundlach of DoubleLine Capital is one of them. Two months ago, Jeff was the keynote speaker at a Morningstar conference. Let’s roll the tape, as I highlighted Jeff Gundlach Sees 10Yr Treasury Rallying to 2.5%:
3. What does Gundlach predict for government bonds?
He said there hasn’t been a single day when the U.S. government bond market has failed to be the beneficiary of risk concerns globally, especially over the euro. “And as long as that’s the case, the probability is the 10-year Treasury is going to go to the yield of two-and-a-half percent,” he said. “Which sounds very low, but it’s been there before. In Japan, when they were dealing with similar problems, the bond yield stayed below that level for 20 years. So the bond market outlook in government bonds, for the time being, is positive.”
Where was the 10Yr Treasury when Gundlach made this call? Read the rest »
Posted by Larry Doyle on August 24th, 2010 11:58 AM |
Our nation rests on a foundation of entrepreneurial risk taking. I am a strong proponent that our government should work to promote those who have the minds and spirit to take risk and drive our nation’s future economic growth ever higher. That spirit has brought us untold gains over the years. We need to continue to tap into that spirit whenever and wherever we can. On a day in which we just reported that existing home sales dropped 27% in the month of July, I believe it is timely that we tap into this ’spirit’ and address another alternative housing finance solution.
I referenced the need for real entrepreneurial spirit the other day in writing, A Proposed Solution to the Foreclosure Crisis:
With the Conference on The Future of Housing Finance being held in Washington today, do we really expect the government to propose anything that may help support or fix our system of housing finance? Read the rest »
Posted by Larry Doyle on August 24th, 2010 8:27 AM |
Why is it that the very people who saved and invested to finance a lot of the growth in our nation are now the very ones being penalized by the exceptionally low interest rate policy of the Federal Reserve? While Ben Bernanke and his Washington cronies maintain that our economy needs these artificially induced government driven interest rates, the very fact is these anemic rates are crushing those citizens in our country who live on fixed incomes and rolled their CDs. While savers are getting waxed on one side of the coin, the banks are sticking it to our brethren who rely on credit lines from their credit cards on the other side. That’s business, you say? No, that is not purely business. In the midst of an economy dominated by the government, our current interest rate and credit card policies are nothing more than invisible taxes on both savers and consumers alike.
There are two sides to this coin and on both sides banks are squeezing American citizens. Savings rates have plummeted while borrowing rates via credit cards move higher. Both these points are highlighted in recent commentaries. Read the rest »
Posted by Larry Doyle on August 23rd, 2010 12:23 PM |
What is something worth? Very simply whatever somebody is willing to pay for it, correct? While regulations or the lack thereof have a big impact on overall levels of returns and compensation, all other things being equal, I do not begrudge those who take risk, work hard, and reap rewards. I applaud them. I view that process as the essence of capitalism.
Does this line of thinking still work in our Uncle Sam economy circa 2010? One of the overriding themes highlighted in Observations on My Afternoon in New York City addressed the topic of market valuations. I wrote:
4. Investors do not want to sell what they currently own because they do not know what they might purchase to replace it. Investors do not want to allocate more capital because they are concerned about market valuations in general.
I should have been even more pointedly specific in writing this statement. While I do believe many people in the market today are concerned about the overall level of the market, the point I was trying to get across is that people do not trust or believe the individual values of investments at current prices. Why is this the case and how does this happen? Read the rest »
Posted by Larry Doyle on August 23rd, 2010 7:56 AM |
Do you increasingly feel that you are not receiving the full story in terms of our overall economy? Do you feel as if the ‘political class’ in Washington is speaking a different language than the ‘working class’ in the rest of the country? Do you scratch your head as to why economic releases are often immediately panned and quickly thereafter revised? (Case in point, the initial release of 2nd quarter GDP on July 30th was quickly thereafter projected to be halved.) For all of the above reasons, more and more Americans are relying on independent economic research and analysis. Two of my favorites in this camp (aside from Sense on Cents, of course!!) are John Williams of Shadow Government Statistics and Rick Davis of Consumer Metrics Institute.
I recently highlighted Williams’ work in writing, What Is the Real Rate of Unemployment in the United States? In that commentary, I referenced Williams as he had stated:
That began a lengthy process of exploring the history and nature of economic reporting and in interviewing key people involved in the process from the early days of government reporting through the present.
For a number of years I conducted surveys among business economists as to the quality of government statistics (the vast majority thought it was pretty bad), and my results led to front page stories in the New York Times and Investors Business Daily, considerable coverage in the broadcast media and a joint meeting with representatives of all the government’s statistical agencies. Despite minor changes to the system, government reporting has deteriorated sharply in the last decade or so. (LD’s emphasis) Read the rest »
Posted by Larry Doyle on August 22nd, 2010 10:23 AM |
While the general financial media would seem not to understand nor care that Wall Street to a large extent is a self-regulated industry, many within the industry and around the country very much care. The Financial Industry Regulatory Authority (FINRA) is the financial industry’s self-regulatory organization.
At FINRA’s 2010 Annual Meeting held a week ago, FINRA’s member firms overwhelmingly voted for seven aggressive non-binding proxy proposals. These proposals were by and large targeted at bringing greater transparency and disclosure to FINRA’s operations. Will FINRA’s board of governors acquiesce and fully address these proposals? Read the rest »
Posted by Larry Doyle on August 20th, 2010 3:15 PM |
When might a voting process with overwhelming returns be negated by the wishes and desires of the powers that be? Am I speaking of those who may occupy bully pulpits in third world nations? No, that guess would not be close.
Am I referring to political leaders who are protected by military and business minions? Nope, still quite cold.
How about a board that is more affiliated with an organization’s executives than with its members? We are getting warmer.
What about financial regulators and a board who have the reputation of being much more closely aligned with major players within the financial industry than their rank and file members and American investors at large? Bingo!!
Let’s get more specific. A week ago, FINRA’s member firms voted overwhelmingly in favor of seven non-binding proxy proposals put forth by Amerivet Securities. In light of the vote and the overwhelming results, one would have thought that FINRA’s board would have absolutely no choice but to fully address these proposals. To do otherwise, one would think that the FINRA board might run the risk of further alienating its membership while sending a message to the American public at large that transparency and disclosures are virtues this financial regulator speaks of but does not truly practice. Read the rest »
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