The Financial Times – Wall Street returns to era of big profits In dollar terms the biggest Wall Street banks are enjoying themselves more than at any time since 2007. After years of struggle, pre-crisis levels of profits are back. JPMorgan Chase, Citigroup, Bank of America, Goldman Sachs and Morgan Stanley made a combined $17.6bn… Continue reading Earnings Update
FT Alphaville – Does the Fed funds rate even matter? What is fed funds now measuring? Alternatively, there is a deeper question – does the fed funds rate accurately measure unsecured bank funding costs? After repeat rounds of asset purchases, bank reserves now exceed $2trn and all banks are massively long liquidity. No institution needs… Continue reading A Look At The Long Defunct Fed Funds Rate
MoneyBeat (WSJ Blog) – ES Browning: Investors Struggle With Cash Conundrum It is an odd spectacle. Teams of respected investment pros are scouring the world for stocks and bonds they can buy on the cheap, and coming up empty. They are left holding some cash, telling their investors and shareholders they prefer to dilute their… Continue reading Cash Is King
The Wall Street Journal – Detroit’s Bust Stings European Banks UBS and Others Are Hurt by Motor City Deals Dating Back to 2005 Detroit’s broken finances are intersecting with the troubled European banking industry, causing further distress for both the Motor City and its European lenders. The situation demonstrates the ways in which European banks… Continue reading European Banks
The Financial Times – Bailouts can turn a profit for central banks How much do bailouts really cost creditor countries? The question is particularly pertinent in light of the recent German Constitutional Court hearings regarding the scope of the European Central Bank’s new sovereign bond buying programme, called Outright Monetary Transactions, and the renewed concern… Continue reading The Cost Of A Bailout
FT Alphaville – When you’re rattled by collateral, do the Fed taper talk Tim Duy, professor of practice at the department of economics at the University of Oregon, is confusing Brad DeLong, professor of economics at Berkeley, with his observation that the Fed seems to be striving to change the mix but not the level… Continue reading Repo & Collateral
Bloomberg.com – Gary Shilling: Why Fed Has Failed to Lower U.S. Unemployment Central banks can raise or lower short-term interest rates, and buy or sell securities. That’s it. Those actions are a long way from creating more jobs. In contrast, fiscal policy can be surgically precise, aiding the unemployed by extending and fattening unemployment benefits.… Continue reading The Mythological Wealth Effect
Barron’s – Europe’s Economy Will Rebound The European Union could emerge from recession in the fourth quarter, and enjoy modest economic growth next year. Why Sept. 22 is the date to watch Europe’s economy has hit bottom, and is taking its first steps toward recovery. After almost six years of crisis induced by governments’ overreliance… Continue reading Europe
<Click on chart for larger image> MoneyBeat (WSJ Blog) – So Far, ‘Sell in May’ Has Not Been the Way If you’re a shorter, if you’re a doubter, if you’re a hater of this market, this has not been your summer. “The old adage ‘Sell in May and go away’ has not been helpful this… Continue reading Seasonals
The Wall Street Journal – Investors, Analysts See End of Commodity ‘Supercycle’ Popular Bet in Global Financial Markets—That Prices Would Keep Rising—Is Unraveling Investors are suffering mounting losses as a decadelong rise in commodity prices unravels amid slowing emerging-markets economies, rising supplies of oil and metals and the eventual end of central-bank stimulus policies that… Continue reading Commodities
The Wall Street Journal – Higher Rates Aren’t Enough to Stall Housing Price Gains May Moderate, but It Remains a Seller’s Market for Now Economists say that even at a 4.5% or 5% mortgage rate, housing is still affordable by historical standards—and that rates could rise to 6% or prices could rise an additional 20%… Continue reading Can Housing Survive Higher Rates?
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