Insomniac Hedge Fund Guy

Euro experiment must end

by

There doesn’t appear to be anyway out of the sovereign debt problem short of printing money.  Euro bonds don’t seem to have much traction although the idea is a nice hail mary and may still arise from time to time.  If the countries in Europe wanted to be more like the United States of Europe, they should have had a political union, a unified army, and a democratically elected United States of Europe government before they undertook monetary union. Several large systemically important European banks will fail unless bailed out by their prospective Governments.  Oops, they can’t print money the … Read more

U.S. investigating S&P over mortgages

by

  (Reuters) – The Justice Department is investigating whether Standard & Poor’s improperly rated dozens of mortgage securities in the years before the financial crisis, The New York Times reported on Thursday, citing sources familiar with the matter. The investigation began before S&P, a unit of McGraw-Hill, downgraded the long-term U.S. debt from a AAA rating to AA-plus this month, the paper said. In the mortgage investigation, the Justice Department has been asking about instances in which S&P analysts wanted to assign lower ratings to mortgage bonds but may have been overruled by S&P business managers, the Times reported. Justice … Read more

SEC May Have Destroyed Papers on Bank Probes

by

The Securities and Exchange Commission may have destroyed documents related to investigations into major banks and hedge funds, according to Sen. Chuck Grassley (R-Iowa). “From what I’ve seen, it looks as if the SEC might have sanctioned some level of case-related document destruction,” Grassley said in a statement. “It doesn’t make sense that an agency responsible for investigations would want to get rid of potential evidence. If these charges are true, the agency needs to explain why it destroyed documents, how many documents it destroyed over what time frame, and to what extent its actions were consistent with the law.” … Read more

Wall Street tumbles on economy, bank worries

by

(Reuters) – Stocks tumbled more than 4 percent on Thursday after data pointed to a stalled economyand as bank shares sank on a report regulators were scrutinizing the U.S. units of big European lenders. The decline was broad as well as steep, with just a small handful of the S&P 500’s components in positive territory. The KBW bank index slid 5.5 percent, with Citigroup Inc off 9.6 percent at $27, and Morgan Stanley down 7.5 percent at $15.75. “The market is in meltdown mode,” said Sal Catrini, managing director for equities at Cantor Fitzgerald & Co in New York. “The … Read more

‘ U.S. units

by

(Reuters) – The Federal Reserve Bank is taking a closer look at the U.S. units of Europe’s biggest banks, concerned that a euro zonedebt crisis could spill into the U.S. banking system, the Wall Street Journal reported. The $2.5 trillion U.S. money market funds industry — which supplies short-term dollar funding to banks — has retreated from the euro zone in recent months, concerned that the continent’s debt crisis is spiraling out of control. That and the drying up of interbank lending has led to a trebling of dollar funding costs for euro zone banks in the last month. One … Read more

Governments Still Buying Gold

by

Thailand, South Korea and Kazakhstan added gold valued at about $2.59 billion to their reserves in July, joining Mexico and Russia in increasing holdings this year as central bankers hedge against depreciating foreign-currency reserves. Gold fell for the first time in four days after the metal’s rally toward $1,800 an ounce prompted some investors to sell the metal. Immediate-delivery bullion lost as much as 0.4 percent to $1,784.20 an ounce, and traded at $1,787.90 at 9:09 a.m. in Singapore. Gold’s relative strength index has topped 70 since Aug. 5, a signal of a potential drop. “the next gold consolidation will … Read more

S&P Backs French Triple-A Rating

by

PARIS—A senior Standard & Poor’s Corp. analyst Thursday confirmed France’s triple-A rating and stable outlook for the country, dispelling investor fears that the top-notch grade of the euro zone’s second-largest economy may be at risk. “We’re confident in the triple-A rating, stable. We have confirmed it, we confirm it today,” said Carol Sirou, the head of S&P in France, in an interview on French radio. “There are several rumors, but we never comment on them.” France has increasingly appeared to be the weak link among top-rated euro zone countries, with higher deficit and debt-to-gross-domestic-product ratios than the other five triple-A … Read more

Greece, Ireland, Portugal Should Default on Debt, Pimco Says

by

Aug. 17 (Bloomberg) — European politicians should let Greece, Ireland and Portugal default while taking steps to ensure Italy and Spain won’t, according to Pacific Investment Management Co.’s Neel Kashkari. “They are delaying and denying as long as possible because the medicine to actually put out this crisis tastes so bad,” Kashkari, head of new investment initiatives at Pimco, said in an interview on “InBusiness With Margaret Brennan” on Bloomberg Television. “They are always behind, always trying to play catch-up, and the crisis is always getting worse.” Germany, France, the International Monetary Fund and the ECB should unveil a “massive” … Read more

Producer Prices Surge in July as Inflation Fears Ratchet Up

by

U.S. core producer prices rose at their fastest pace in six months in July, pushed up by higher tobacco and light truck costs, according to a government report on Wednesday that could stoke inflation fears. The Labor Department said its seasonally adjusted index for prices paid at the farm and factory gate, excluding food and energy, rose 0.4 percent—the largest increase since January—after rising 0.3 percent in June. That compared with economists’ expectations for a 0.2 percent rise. Overall prices received by producers rose 0.2 percent after falling 0.4 percent in June, above economists’ expectations for a 0.1 percent gain. … Read more

Fed Faces Criticism as Political Season Intensifies

by

  Don’t mess with Texas, at least when it comes t0 monetary policy. Rick Perry, the latest entrant into the race for the Republican presidential nomination and already among the frontrunners, fired a shot across the bow of the Federal Reserve Monday. “If this guy prints more money between now and the election,” the Lone Star state’s governor said “it would be almost…treasonous.” That kind of scathing criticism of the Fed usually was leveled behind closed doors. In the same Texas tradition, in the 1960s President Lyndon B. Johnson excoriated then-Fed Chairman William McChesney Martin for raising interest. But that … Read more

”ll Fizzle

by

Financials look likely to survive, but that doesn’t make their shares a good deal As U.S. stocks turned volatile this month, big bank shares got especially wild. The Dow Jones U.S. Financials Index plunged 17% in August through the middle of last week before rebounding 8% by the close of trading Monday. During the same stretch, the Dow Jones Industrial Average lost 12% and gained 7%. The bounce suggests investors don’t expect a 2008-style collapse of the financial system. On that point, there’s reason for optimism, but stability alone doesn’t make the sector a good deal. Banks face two longer-term … Read more

Apple Vs Samsung

by

Court limits Apple’s ban on Samsung’s Galaxy tablet The ban on a Samsung Electronics Co. (KS:005930) tablet computer across Europe was lifted after the German court that granted Apple Inc. (NASDAQ:AAPL) an injunction last week scaled back the ruling to within national borders. The iPad maker is not allowed to enforce its August 9 injunction outside of Germany against the South Korea- based Company, the Dusseldorf Regional Court decided yesterday. The ban on Samsung’s Galaxy Tab 10.1 in Germany stands, court spokesman Peter Schuetz said in an interview. “The judges decided to limit the enforceability for now because there are … Read more

Biden to Defend Obamanomics in China

by

The People’s Daily, the official newspaper of China’s ruling Communist Party, spelled out Beijing’s chief concerns ahead of Biden’s arrival in Beijing on Wednesday evening local time, when he was greeted by senior Chinese diplomats. China wants Biden to reinforce U.S. assurances that its holdings of dollar assets and U.S. Treasury debt remain safe, despite Standard & Poor’s recent downgrade of the sovereign credit rating of the United States, the paper indicated. Since the Standard & Poor’s ratings downgrade in August, Chinese state media have accused Washington of reckless fiscal policies that have created uncertainty about Beijing’s big holdings of … Read more

LSE Trading Soars Amid Volatility

by

High levels of volatility in global stock markets last week, triggered by Standard & Poor’s downgrade of U.S. debt and concerns over the euro zone, led to the third-highest number of daily trades at the London Stock Exchange. There were 1.54 million trades carried out on the LSE on Tuesday, Aug. 9, according to data from the U.K. exchange operator. This amounted to almost three times the average daily trading volume so far this year, which had been around 642,000 trades per day to the end of July. Full article available @: http://online.wsj.com/article/SB10001424053111903639404576514180786717862.html?mod=rss_whats_news_us&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+wsj%2Fxml%2Frss%2F3_7011+%28WSJ.com%3A+What%27s+News+US%29&utm_content=Google+Reader

Warren Buffett calls Tea Party Insane

by

Charlie Rose – Warren Buffett.   As always Buffett is illuminating and comforting.  He is the nation’s economic compass and a person we can consider a  genuine national treasure if there ever was one.   In this great interview with Charlie Rose he likens the budget debate as a game of chicken with two cars lined up heading  toward one another.  Both parties think the other will turn away before mutual self destruction except suddenly one party throw the steering wheel out the window.  Suddenly the other driver realizes he is dealing with an insane person, aka the Tea Party.

Trading Strategy in Volatile Markets

by

Be cool and do not let this volatility spoil the long term investment plan If you listen to the financial noise in the main stream media you have heard and read lots of opinions about the state of the US, EU, and Global economy. The evidence suggests GDP growth is slowing, despite government stimulus, and many governments are running out of options given their high debt to GDP levels and record low interest rate policies. But, corporate profits and liquidity are very high, and many companies are beat analyst expectations. So while governments may be struggling, many companies are doing … Read more

Obama Says Strong Recovery Will Begin With Small Businesses

by

Aug. 16 (Bloomberg) — President Barack Obama told an audience in rural Iowa that the U.S. economy will come back “stronger than before” after the worst recession in decades, driven by small businesses and entrepreneurs. “That comeback isn’t going to be driven by Washington, it is going to be driven by folks here in Iowa,” Obama said in opening a forum on the rural economy at Northeast Iowa Community College in Peosta. The federal government can help if lawmakers “put aside the politics of the short-term” and spend on programs such as education and expanded Internet access that will pay … Read more

US stocks fall on global economic worries

by

NEW YORK (AP) — More evidence of a slowing global economy sent stocks falling Tuesday and threatened to end the market’s three-day rally. Germany’s economy stalled last quarter and dragged down growth for Europe. In the U.S., reports painted a mixed economic picture: Housing remains weak, but factory output rose last month at its fastest pace since the March earthquake in Japan disrupted global manufacturing. The Dow Jones industrial average fell more than 120 points in the first half hour of trading before paring most of its losses by noon. Stocks then quickly resumed their decline after the leaders of … Read more

Merkel, Sarkozy propose eurozone government

by

PARIS (AP) — All countries that use the euro should have mandatory balanced budgets and better coordination of economic policy, the leaders of France and Germany said Tuesday, pushing for long-term political solutions instead of immediate financial measures like a single European bond. French President Nicolas Sarkozy and German Chancellor Angela Merkel also pledged to harmonize their countries’ corporate taxes in a move aimed at showing the eurozone’s largest members are “marching in lockstep” to protect the euro. Both leaders stressed their commitment to defending the common currency, a cornerstone of integration on this long-fractured continent. They presented their proposals … Read more

Why Banks Aren’t Lending: Weak Economy, Regulatory Uncertainty

by

Why Banks Aren’t Lending: Weak Economy, Regulatory Uncertainty By Peter Gorenstein U.S. banks got hammered last week on concerns the sovereign debt crisis in Europe coupled with slow growth and a weak U.S. consumer are setting the stage for another financial crisis. U.S. banks still have some troubling legacy assets on their balance sheets but for the most part they are in much healthier shape then back in 2008, says John Garvey head of U.S. banks and capital markets at PricewaterhouseCoopers. “The banks have made pretty significant steps in the last couple of years to improve their stability in terms … Read more

Fitch Affirms U.S. AAA Credit Rating, Says Outlook Stable

by

Aug. 16 (Bloomberg) — Fitch Ratings affirmed its AAA credit rating for the U.S. and said the outlook is stable, citing the nation’s central role in the global financial system and the flexible, diverse economy. Fitch had put the rating under review after lawmakers reached a compromise Aug. 2 on a debt-limit agreement that prevented a U.S. default. Standard & Poor’s on Aug. 5 cut its U.S. credit rating to AA+ from AAA, saying lawmakers failed to cut spending enough to reduce record deficits. Moody’s Investors Service affirmed its top U.S. ranking last week. The U.S. may be placed on … Read more

Pressure Rises on China to Fight Inflation

by

  SHANGHAI—Fresh data showing strong capital inflows into China and a spike in the interest rates on central-bank debt showed continuing pressure on the government to keep fighting inflation with tightening measures despite worries about weakness in the global economy. Foreign direct investment in China last month jumped 20% from a year earlier to $8.3 billion, China’s Commerce Ministry said Tuesday. The data came as the People’s Bank of China unexpectedly jacked up the interest rate on its debt for the first time since late June. That higher yield, which came in a regular weekly auction of one-year bills, was … Read more

A Wild Ride to Profits

by

The stock market’s recent wild swings have unsettled many investors, but they have led to record profits for high-frequency traders following months of disappointing returns, industry analysts and money managers said. Some traders interrupted August vacations to return to their computers amid the global panic that triggered steep market selloffs, sharp upward swings and then more selling. Traders don’t know how long the extreme volatility and elevated trading volumes will last—but they don’t want to miss out, said investors and Wall Street trade-execution managers. Full article provided by WSJ @: http://online.wsj.com/article/SB10001424053111904253204576510371408072058.html?mod=rss_whats_news_us&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+wsj%2Fxml%2Frss%2F3_7011+%28WSJ.com%3A+What%27s+News+US%29&utm_content=Google+Reader

Buffett Made Biggest Bets on Stocks This Year – Perhaps he should buy his own

by

Warren Buffett’s Berkshire Hathaway Inc. BRK/A increased its stake in Wells Fargo & Co. WFC, building equity holdings amid a markets decline that the billionaire investor said provided an opportunity for buying stocks “on sale.”Buffett’s firm added 9.7 million shares of the biggest U.S. home lender in the three months ended June 30, boosting the holding by 2.8 percent, Omaha, Nebraska-based Berkshire said yesterday in a filing that listed its U.S. stockholdings. Berkshire accelerated purchases on Aug. 8 as the Standard & Poor’s 500 Index plunged 6.7 percent, its steepest decline since December 2008.“I like buying on sale,” Buffett, Berkshire’s … Read more

‘s Lockhart says U.S. recession risks have risen

by

(Reuters) – The risk of a new U.S. recession has risen over the last couple of months, but an outright contraction will most likely be avoided, Atlanta Federal Reserve Bank President Dennis Lockhart said on Monday. Lockhart said there is plenty the central bank could do if the economydoes deteriorate further, including ramping up asset purchases or shifting their composition. Recent market volatility, driven in part by concerns of slowing economies both in the United States and Europe, threatens consumer confidence and could put a crimp on spending, Lockhart told a Rotary Club meeting. “The events of the last several weeks … Read more

BUFFETT CALLS FOR HIGHER TAXES

by

Buffett calls for higher taxes on US Super Rich The wealthiest Americans should pay more income tax and make sacrifice to bring the Nation’s fiscal house in order, Warren Buffett, chairman of Berkshire Hathaway, said Monday. “While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we Mega-Rich continue to get our extraordinary tax breaks,” Mr. Buffett said in an article carried on Monday’s The New York Times. Mr. Buffett noted that he paid 17.4% of his taxable income for the federal income and payroll taxes last year, and the … Read more

Next Budget Showdown Is Just 6 Weeks Away

by

The deal between Democrats and Republicans to raise the government’s debt limit did not end the warfare over the federal budget. It was merely a temporary ceasefire. The conventional wisdom in Washington (especially inside the administration) holds that the next skirmish will come around Thanksgiving, when the so-called Super Congress of six Republicans and six Democrats have a deadline to make their recommendations about reducing the expected 10-year deficit by another $1.5 trillion. But the next budget confrontation in Washington could come much sooner. We could be just six weeks away from another threat to shut down the federal government. … Read more

”’

by

s that cheap stock you have your eye on really a “value trap”? After a 9.3% drop in the Standard & Poor’s 500-stock index this month, most stocks are looking cheap—but some seeming bargains may have more room to fall. Investors need to do more than simply look at price history and buy the most beaten-down stocks, say strategists. The temptation to load up on such stocks is surely there. Using 12-month earnings forecasts, the S&P 500’s average price/earnings ratio is now about 9.9, down from 13.2 at the beginning of the year, according to S&P. And the median stock … Read more

Debt Crisis Could Be Turning Point for US-China

by

When President Nixon went on his historic visit to China in 1972, he probably wouldn’t have predicted that within four decades the country then struggling to emerge from decades of disastrous economic policies would be issuing tart statements urging the U.S. to adopt a more responsible fiscal policy, as its biggest creditor. Or, indeed, that it would have become second only to the U.S. in the sheer size of its economy, with some predicting that it could take over as the world’s largest economy within a decade, as its gross domestic product (GDP) growth—close to 10 percent per year—continues to close the … Read more

Low Rates May Do Little to Entice Nervous Consumers

by

The Federal Reserve’s announcement last week that it intended to keep credit cheap for at least two more years was a clear invitation to Americans: Go out and borrow. But many economists say it will take more than low interest rates to persuade consumers, a crucial driver of the nation’s economy, to take on more debt. There are already signs that the recent stock market upheaval, turbulence in Europe and gridlock in Washington over the federal deficit have spooked consumers. On Friday, preliminary data showed that the Thomson Reuters/University of Michigan consumer sentiment index had fallen this month to lower than it was in … Read more