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It’s All About Relationships

Posted by Larry Doyle on March 8th, 2009 7:22 AM |

I had a conversation last week with a recent college graduate working in the finance industry. He was recently laid off. Understandably, he was somewhat miffed and unsettled. I was happy to talk to him. My first statement to him was that he has approximately another 40 work years in front of him. Given the length of time and the dramatic changes ongoing in our economic landscape, I offered that this was actually an interesting time to be in the job market because change creates opportunity. His initial deadpan response was not unexpected and actually hoped for. I did not want to be merely a shoulder for him to lean on and commiserate. I advised him that his next job would not necessarily find him, he must find it. In that spirit, I enthusiastically apprised him to actively engage people in dialogue and conversations.

I told him to not even look for interviews but first and foremost to gather information. Utilizing a variety of networks (friends, family, college alums, neighbors, cold calls), I strongly impressed upon him that he needed to remain engaged. Read the rest »


Entrepreneurial Spirit

Posted by Larry Doyle on March 7th, 2009 7:30 PM |

There is no substitute for an indomitable entrepreneurial spirit. We all know these are challenging times, but the American spirit will carry the day. I found this video clip to be particularly inspiring. I hope you do, too:


Spring Ahead!

Posted by Larry Doyle on March 7th, 2009 1:30 PM |

Don’t forget that Daylight Savings Time begins at 2 a.m. Remember to move your clocks one hour forward!

turn-clocks-ahead

Cartoon by Dave Granlund, Chicago Tribune


So Many Questions

Posted by Larry Doyle on March 7th, 2009 10:52 AM |

question-cubeIn the midst of any storm, one wonders what the landscape may look like when the dust settles. Well, our current economic tsunami is no mere rainy day at the beach. What will the landscape look like on the other side? Let’s ponder some of the questions we need to ask as we navigate forward:

1. Which companies will no longer exist as currently formulated?

2. Will companies become smaller, more simplified, with less financial engineering?

3. How will regulation of the financial industry look? Could it have a global basis? Will national interests prevail over global demands?

4. Where will the DJIA be on March 7, 2010? March 7, 2014?

5. What will the unemployment rate be on those dates?

6. What will Obama’s approval ratings look like on that first date? Which Obama program will be deemed successful? Read the rest »


Fed Releases Names of AIG’s Creditors

Posted by Larry Doyle on March 6th, 2009 9:03 PM |

Under pressure from Congress this week  to release the names of AIG’s creditors, the Federal Reserve’s Vice Chairman Donald Kohn clearly got the message. The Fed has acquiesced in releasing that Top U.S., European Banks Got $50 Billion in AIG AID.

My immediate reaction to this news is how interesting that the bulk of these institutions are European. What does that tell me? These European banks were getting plowed by Wall Street with a lot of sub-prime backed CDOs and when the dam was breaking they wanted to hedge their position. Market speculation is that European institutions own twice the amount of toxic assets as U.S. based institutions. That exposure on top of their delinquent loans in eastern Europe is crushing a number of western European banks.  Who are they? Start by looking at the list, included in the above-referenced article, of AIG creditors.

In providing the hedge – which is the insurance – AIG received a fat premium but has been paying for it ever since. Actually, AIG only truly paid for it up until last September . . . the American taxpayer has been and will continue to be paying for it for a long time. Where were the regulators when we really needed them?

LD

 


Sallie Mae . . . Sallie Mae Not

Posted by Larry Doyle on March 6th, 2009 5:36 PM |

In reading a fair amount of market analysis and listening to a number of policy wonks, it strikes me that more and more people feel the Obama administration is neither focused nor properly staffed. In Treasury, Secretary Geithner is largely working on his own!! What happens in situations like that?  Not surprisingly, Obama himself and his secretaries are not fully informed and say and do things haphazardly.

For those who are wondering what I am doing writing about politics while I navigate the economic landscape, well, risk comes in many shapes and sizes. The risk of an unfocused and thinly staffed administration is a huge risk. Let’s review one specific company that was literally blindsided by the administration. 

The Student Loan Marketing Association was the largest provider of student loans in the country. This company, like every consumer finance company, has been very negatively effected by the shutdown of the asset-backed securitization market. That said, what the Obama administration’s budget proposal did to current SLMA shareholders and bondholders is nothing short of devastating. Read the rest »


Fibonacci Retracements

Posted by Larry Doyle on March 6th, 2009 12:40 PM |

I am going to assume that for the general public, the term Fibonacci Retracements is not part of the normal vocabulary. In helping people navigate the economic landscape, allow me to introduce you to a basic Wall Street practice utilized by many traders. Every investor can benefit from a basic understanding of this concept.

Major market indices trade based on fundamental analysis (cash flow, asset/liability, earnings ), technical analysis (price regressions), and psychology (measure of bullishness vs bearishness). Our friend Fibonacci falls into the technical analysis camp. I do not want to get overly involved in the arcane aspects of this concept, but it can be very useful in assessing market levels and market directions. Read the rest »


Unemployment Report 3-6-09

Posted by Larry Doyle on March 6th, 2009 9:21 AM |

UnemploymentThe highly anticipated monthly unemployment report was just released. On the surface, the numbers may appear to be in line with expectations, but looking deeper into the numbers the report is actually worse than expected. Let’s dive into the numbers and comment on what they mean for our economy and markets.

The Unemployment Rate jumped from 7.6% to 8.1%. The rate was expected to move to 7.9%. The 8.1% rate is a 25 year high.

Non-farm Payrolls lost 651k jobs against an expectation of a loss of 650k jobs. In line with expectations, right? Well, one needs to look at the revisions to the prior two months to get the full picture. Non-farm payroll revisions from the prior two months show a further loss of 161k jobs over and above initial reports. That’s ugly!! Total jobs lost since December 2007, when the recession officially began, are 4.4 million!! More than half of those jobs have been lost in the last 4 months.

Average hourly earnings only rose .2. This number is not exactly robust and will further pressure consumers who are already cash constrained. Read the rest »


FROM THE ARCHIVES: The Wall Street Model Is Broken…and Won’t Soon Be Fixed!!

Posted by Larry Doyle on March 5th, 2009 6:37 PM |

Some of my favorite movies are The Sting, Rocky, and Papillon.  I could watch those films a few times a year and appreciate the plot, character development, and climax.

In that same vein, for newer readers here at Sense on Cents, I want to highlight a piece I wrote on November 12, 2008.  I believe this piece is as clear cut an historical explanation as I have seen to highlight the background of the debacle on Wall Street which precipitated this economic disaster. I also find it interesting as to my comments about potential market reaction to an aggressive tax/spend program under President Obama and a Democratic Congress. 

I hope you find this article informative and enlightening: Read the rest »


Loan Sharks Not Welcome Here

Posted by Larry Doyle on March 5th, 2009 3:49 PM |

In the midst of this economic turmoil in which many people are increasingly cash constrained, a cottage industry has developed which preys on the most vulnerable in our society. This industry facilitates short term loans in exchange for the borrower’s paycheck or tax refund. 

The companies that participate in this lending should not only be outed but they should also be prosecuted for this activity.

Bloomberg writes how More Americans Turn to Tax Refund Loans to Pay Monthly Bills. With implied rates of interest on these loans from 50% to 500%, this is loan sharking at its worst!!  Where are the Better Business Bureau and Attorney Generals when you really need them?  Read the rest »


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Larry Doyle

Larry Doyle A Wall Street veteran's views and instincts on the markets, economy, and all things financial.







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