The Wall Street Journal – New Data Muddle Debate on Economic Mobility The odds of a child moving up the economic ladder have remained about the same for the past three decades, according to a comprehensive new study that contradicts the narrative in Washington that economic mobility has declined in recent years. Politicians of both… Continue reading Economic Mobility
Bloomberg.com – Berkshire Is Said to Face Start of U.S. Systemic-Risk Scrutiny Regulators are starting to scrutinize Warren Buffett’s Berkshire Hathaway Inc. to determine whether it is important enough to the financial system to require Federal Reserve supervision, according to two people with knowledge of the matter. The U.S. Financial Stability Oversight Council staff’s study… Continue reading Is Berkshire Too Big To Fail?
The Wall Street Journal – Debt-Ceiling Deadline Put at Late February Treasury Secretary Jacob Lew on Wednesday said the U.S. government would exhaust its borrowing powers by late February without action by Congress, a deadline that could force Republicans to quickly decide which issues to put into play in any new debt-ceiling fight. In October,… Continue reading Get Ready For The Return Of Debt Ceiling Politics
The Wall Street Journal – El-Erian’s Departure ‘Entirely His Decision’ Says Bill Gross “Mohamed is a special energized person. The Eveready bunny. You just don’t think the battery is ever going to run out,” Mr. Gross said. ” I will miss his help, friendship and leadership”. The departure, announced Tuesday, took investors by surprise. Douglas… Continue reading El-Erian & Pimco
CNBC – A ‘tsunami’ of store closings expected to hit retail Get ready for the next era in retail—one that will be characterized by far fewer shops and smaller stores. On Tuesday, Sears said that it will shutter its flagship store in downtown Chicago in April. It’s the latest of about 300 store closures in… Continue reading Brick And Mortar Store Closings
Real Time Economics (WSJ Blog) – Markets Price in Fed Rate Changes Long Before They Happen Federal Reserve officials have been working hard to convey their strong beliefs that they won’t raise interest rates for a long time to come. But new research suggests financial markets may start getting ready for that shift well before… Continue reading Staying Ahead Of The Fed
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Charts of the Week Topics Covered This Week Include: Mutual Fund Flows Profit Warnings Equity Analysts Continue To Get It Wrong Just In Time For Davos ..IMF Updates Its Inaccurate GDP Forecast Are Correlations Breaking Down? Trading Volume Continues To Decline Who Is Not Bearish On Bonds? Abenomics Who Will Fill The Fed’s Shoes? Falling… Continue reading Charts of the Week
The Wall Street Journal – Smoothing May Rough Up 2014 Earnings After a year in which corporate earnings posted middling gains, investors can look forward to profit growth accelerating in 2014. Unless they bother digging into the numbers, that is. Fourth-quarter earnings season is getting into high gear. But, as always, it is what companies… Continue reading 2014 Earnings
<Click on chart for larger image> Credit Writedowns – The Fed is preparing markets for its reverse repo facility The Fed’s “full-allotment overnight reverse repurchase agreement facility” (FRFA) – a mechanism to control short-term rates (see post) – is no longer just an academic exercise. Given how dysfunctional the interbank market has become, using the… Continue reading Reverse Repo
The Wall Street Journal – Banks Sit Out Riskier Deals The Fed and the OCC’s focus includes loans, mostly related to new buyouts, that lenders sell to other banks and investors, according to the published guidance, as regulators want the banks to have responsibility for products they distribute. One practice in particular the OCC is… Continue reading U.S. Banks Stay Out Of Riskier Deals
<Click on chart for larger image> The Financial Times – Huge cash pile puts recovery in hands of the few Of the non-financial members of the S&P Global 1200 index, just 32 per cent of companies held 82 per cent of the aggregate cash pile, the highest level since at least 2000. With nearly $150bn… Continue reading Cash On The Sidelines