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HomeToyota:Wall Street as NHTSA:SEC/FINRA
Posted by Larry Doyle on February 12th, 2010 10:35 AM |
When regulators are in bed with industry, bad things happen. When regulators actually go to work for the industry, then really bad things happen.
Evidence of this dynamic on Wall Street is overwhelming. Yet, don’t think that Wall Street has a monopoly on this incest. Bloomberg highlights that incestuous activity has also played out in the disaster encompassing Toyota. Bloomberg reports, Regulators Hired by Toyota Helped Halt Investigations:
Former regulators hired by Toyota Motor Corp. helped end at least four U.S. investigations of unintended acceleration by company vehicles in the last decade, warding off possible recalls, court and government records show. (more…)
China, Greece, and Germany Rattle Overnight Markets
Posted by Larry Doyle on February 12th, 2010 7:11 AM |
No rest for the weary.
If you thought yesterday’s nice 1% upward move in our equity markets was a precursor for calmer and stronger markets ahead, think again.
Overnight developments in China, Greece, and Germany are clear signs that our economic landscape remains challenging and our markets remain fragile. Let’s navigate:
1. Looking eastward, China’s central bank raised reserve requirements (interest rates) by 50 basis points (.50%). Why? (more…)
David Rosenberg: 4th Quarter GDP Likely Revised to 5%
Posted by Larry Doyle on February 11th, 2010 12:44 PM |
4th quarter 2009 GDP of 5.7% may have looked impressive on its face, but in peeling back the onion we learned that a large percentage of the growth was due to a slowing in inventory drawdowns rather than real growth. I highlighted as much on January 29th in writing,“Markets Fading the 4th Quarter GDP Report”:
The question for the economy, and in turn the markets, is to what degree the supposed growth embedded in the 4th quarter GDP is sustainable. To determine that, people need to appreciate the fact that this 5.7% GDP figure was driven to a large extent (60%) by a slowing in the drawdown of inventories. Are you scratching your head wondering what that means? Let’s just reduce it to the fact that drawing down inventories is not exactly a driver of growth at all.
What drives growth? Personal consumption. What drives personal consumption? Jobs.
Regrettably, we keep hearing from CFOs that they do not expect significant or meaningful job growth this year.
Over and above that, recent trade data will likely cause a revision lower in the aforementioned 4th quarter GDP. None other than our Sense on Cents Economic All-Star David Rosenberg projects that the increase in our trade deficit and overall weakness in wholesale trade will cause 4th quarter GDP to be revised to 5% from the initial 5.7% figure.
LD
Elizabeth Warren Calls for New Bank Stress Tests
Posted by Larry Doyle on February 11th, 2010 9:34 AM |
The initial Bank Stress Tests run by Treasury Secretary Geithner were largely a sham. I questioned as much last April in writing, “Bank Stress Tests: Major Sham?”:
As with any test, the results are only meaningful if the process and proctor have unquestioned integrity. The proctors for the Bank Stress Test are none other than Treasury Secretary Tim Geithner and Fed chair Ben Bernanke. Why is a testing authority of the magnitude of FDIC, led by Sheila Bair, not more involved in the process? Ms. Bair is the one individual in our country with the greatest level of interaction with and understanding of the student body, that being the banking industry as a whole and individual banks specifically.
What does the FDIC, led by Ms. Bair, have to say about the upcoming Bank Stress Tests? The New York Post provides a CHILLING perspective: (more…)
Why Are Companies Hoarding Cash?
Posted by Larry Doyle on February 11th, 2010 8:20 AM |
In order for the economy to grow, for companies to hire, and for new employees to benefit, we need velocity in the money supply. The fact is, this velocity has slowed dramatically. Bloomberg highlights this stark reality on our economic landscape by writing, Jobless Suffer with Corporate Cash Climbing to $1.19 Trillion:
A majority of companies in the Standard & Poor’s 500 stock index increased cash to a combined $1.19 trillion while simultaneously reducing spending, keeping a jobs recovery on hold.
Caterpillar Inc., Eaton Corp., Walgreen Co. and General Electric Co. are among 260 companies that ended last quarter with $522 billion more than a year earlier after cutting capital spending by 42 percent. Economists say the dearth of investment is keeping the jobless rate at about 10 percent as the U.S. emerges from its worst recession since the 1930s. (more…)
I Think Bernanke Just Indicated a Tightening
Posted by Larry Doyle on February 10th, 2010 10:52 AM |
Fed Chair Ben Bernanke
I think Fed Chair Ben Bernanke just sent a very clear sign that he is getting ready to start tightening monetary policy.
Be mindful that Bernanke, as with every Fed chair, chooses his wording very carefully. While many market strategists and economists seem to be dismissive of Bernanke’s comments this morning, I beg to differ. The fact that Bernanke used the phrase “before long” in regard to his view on a shift in the discount rate is a very clear sign that he will soon start to raise selected rates.
How did Bernanke deliver this message? (more…)
Global Confidence Rollercoaster Hits Downdraft
Posted by Larry Doyle on February 10th, 2010 8:28 AM |
Rollercoaster…..!!!
I used the analogy of this amusement ride yesterday to describe our global economy and markets. A day at Six Flags seems far more appealing than the continued twists and turns of our global economy. Today, the riders on our global economic rollercoaster indicate they see further downward motion with hard twists and turns ahead. Bloomberg surveyed close to 2,500 ‘riders’ the first week in February and reports, Global Confidence Ebbs on Concern Budget Gaps Will Hurt Rebound:
Confidence in the world economy dropped in February on concern worsening government finances in some European nations will derail the global recovery, according to a Bloomberg survey of users on six continents.
The Bloomberg Professional Global Confidence Index dropped to 54.9 from 66.6 in January, when the reading was at the highest level since the series began two years ago.
What drove the 20% decline in this reading? In one man’s opinion: (more…)
Media Appearance on the Barry Farber Show
Posted by Larry Doyle on February 9th, 2010 6:43 PM |
UPDATE: You can listen to an audiotape of the show here. I join the broadcast at the 27 minute, 50 second mark.
*******************
I will be a guest this evening on the Barry Farber Show. Barry’s radio broadcast runs from 8-9pm ET. I will be on for the last half hour of the show.
Barry writes at the widely disseminated WorldNetDaily. His syndicated radio show is broadcast over many stations, but you can also listen live on the internet via the CRN Digital Talk Radio website. Once on the site, navigate over to the right side of the page and under the heading “Listen Live,” click on CRN 1 for live audio of the show.
Rest assured, I will provide a full helping of Sense on Cents for Barry’s audience. Hope you are able to listen in.
LD
Goldman Drops ‘F-Bomb’ on Alistair Darling
Posted by Larry Doyle on February 9th, 2010 1:51 PM |
British Chancellor of the Exchequer Alistair Darling
If the taxman is going after the bonus, then don’t be surprised when the financial industry shifts a greater percentage of overall compensation to higher fixed salaries.
Recall a few weeks back that the UK Chancellor of the Exchequer Alistair Darling announced an aggressive surcharge on the bonus pools of its banks. Well, it did not take long for the banks to respond and revise their base salary structure.
I am happy to link to a London-based site, eFinancialCareers, which highlights changes in the salary structure at banking operations in the UK and specifically focuses on the expected new salary structure at Goldman Sachs. Sarah Butcher of eFinancial Careers writes, Exceptional Salary Increases at Goldman Sachs?: >> (more…)
Will the EU ‘Greece the Wheels?’
Posted by Larry Doyle on February 9th, 2010 11:03 AM |
The recent market volatility reflects the fact that our overall economic and market foundations are anything but secure. In fact, dare I say the market over the last few weeks resembles a rollercoaster. While our market rollercoaster, with Uncle Sam’s assistance, climbed the wall of worry in 2009, so far in 2010 we are cascading along and taking some hard turns at full speed. Keep those seats belt fastened.
What has precipitated our 1% upward move this morning? News from the Euro-zone that the EU will backstop Greece’s budget deficit or, if I could stick with our theme, the EU will “greece the wheels” of our rollercoaster. (more…)
