Bloomberg.com – U.S. Banks Risk `Untold Problem’ as Muni Holdings Climb to 25-Year High Citigroup Inc., State Street Corp. and U.S. Bancorp are among U.S. banks whose municipal bond holdings have reached a 25-year high just as state budget deficits swell to $140 billion, the most since the start of the recession. Commercial lenders added… Continue reading Who Owns Muni Bonds?
Bloomberg.com – Fed Has No Plans for Further Monetary Easing, Officials Say Two Federal Reserve officials said the central bank has no plans to deploy additional tools for stimulating the economy and that the recovery is intact. Fed Governor Elizabeth Duke, asked about possible additional steps that could be taken to bolster growth, said in… Continue reading What Will The Federal Reserve Do?
<Click on chart for larger image> Calculated Risk (blog) – Part 3. What are the Market Estimates of the Probabilities of Default? This chart shows outstanding debt with the (CPD) for each country. Despite it having a moderate 8.3% probability of default, Japan’s huge outstanding bond portfolio makes it the largest contributor to expected sovereign… Continue reading Sovereign Default Probabilities
The Wall Street Journal – Finance Bill Close to Passage in Senate Democrats Clinch Support of Republicans Brown and Snowe, Likely Reaching the 60 Votes Needed for the Legislation Two Senate Republicans said Monday they would support the Obama administration’s financial-overhaul legislation, and Democrats now believe they have the 60 votes needed to push the… Continue reading FinReg
The New York Times – Critical Test Near for BP’s New Cap If the tests on the well show the pressure rising and holding — an indication that the well is intact, with no significant damage to the casing pipe that runs the length of the well bore to 13,000 feet below the seafloor —… Continue reading BP’s New Cap
The Wall Street Journal – Moody’s Downgrades Portugal Sovereign-Debt Rating The Portuguese government suffered yet another blow Tuesday as Moody’s Investors Service Inc. cut the nation’s sovereign-debt rating two notches to A1, citing the government’s weakening financial strength and meager economic-growth prospects. The agency said the continued deterioration in Portugal’s debt situation suggests the government’s… Continue reading Portugal
None Today
<Click on graphic for larger image> Comment As the table above shows, Q2 2010 earnings will start coming today, and with it comes a predictable pattern. Roughly 75%, or about 350 of the S&P 500 companies, will report better-than-expected earnings. And when they do, financial commentators will look shocked that these companies beat expectations. The… Continue reading Earnings Season Starts Today – Gamed And Useless Statistics Are Coming
The Wall Street Journal – The Herd Instinct Takes Over Component Stocks’ Correlation to S&P 500 at Highest Level Since ’87 Crash Stocks are trading in lock-step more than at any time since the 1987 crash, and the trend has some analysts concerned. In recent weeks, stocks in the Standard & Poor’s 500-stock index have… Continue reading Correlated Stocks … And Correlated Markets, The Rise Of The Macro Trader
Calculated Risk – Part 2. How Often Have Sovereign Countries Defaulted in the Past? Sovereign bonds have been defaulting for almost as long as there have been sovereign bonds. The problems go back many centuries. A good overview created for the IMF is “The Costs of Sovereign Default” by Eduardo Borensztein and Ugo Panizza. Some… Continue reading The History Of Sovereign Defaults, A Regular And Frequent Occurrence
The New York Times – European Bank’s Economist Is Optimistic on Sovereign Debt, but Critics Are Wary The European Central Bank’s de facto chief economist said Friday that “the worst is over” for Europe’s sovereign debt crisis and expressed optimism about the Continent’s growth, underscoring similar comments by the head of the bank in what… Continue reading More On Sovereign Debt
Reuters – David Gaffen: 5 Questionable Arguments Against the Double-Dip Here are some of their reasons, some of which appear to strain credulity: Double-dips are “rare.” Simon Hobbs of CNBC is a vigorous promoter of this idea, but let’s face it, the last 15 years of financial-market history is a veritable compendium things that no one… Continue reading Are We Having A Double-Dip Recession?