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STOCK MARKET WATCH -- Wednesday, 19 December 2012
[font size=3]STOCK MARKET WATCH, Wednesday, 19 December 2012[font color=black][/font]
SMW for 18 December 2012
AT THE CLOSING BELL ON 18 December 2012
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Dow Jones 13,350.96 +115.57 (0.87%)
S&P 500 1,446.79 +16.43 (1.15%)
Nasdaq 3,054.53 +43.93 (1.46%)
[font color=red]10 Year 1.82% +0.05 (2.82%)
30 Year 3.00% +0.06 (2.04%) [font color=black]
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[font size=2]Market Conditions During Trading Hours[/font]
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[font size=2]Euro, Yen, Loonie, Silver and Gold[center]
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[font color=black][font size=2]Handy Links - Market Data and News:[/font][/font]
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Economic Calendar
Marketwatch Data
Bloomberg Economic News
Yahoo Finance
Google Finance
Bank Tracker
Credit Union Tracker
Daily Job Cuts
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[font color=black][font size=2]Handy Links - Economic Blogs:[/font][/font]
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The Big Picture
Financial Sense
Calculated Risk
Naked Capitalism
Credit Writedowns
Brad DeLong
Bonddad
Atrios
goldmansachs666
The Stand-Up Economist
The Automatic Earth
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[font color=black][font size=2]Handy Links - Government Issues:[/font][/font]
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LegitGov
Open Government
Earmark Database
USA spending.gov
[/center][font color=black][font size=2]Handy Links - Videos:[/font][/font]
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Charlie Rose talks with Roubini
Charlie Rose talks with Krugman
William Black: This Economic Disaster
Bill Moyers with Kevin Drum and David Corn
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[font color=red]Partial List of Financial Sector Officials Convicted since 1/20/09 [/font][font color=red]
2/2/12 David Higgs and Salmaan Siddiqui, Credit Suisse, plead guilty to conspiracy involving valuation of MBS
3/6/12 Allen Stanford, former Caribbean billionaire and general schmuck, convicted on 13 of 14 counts in $2.2B Ponzi scheme, faces 20+ years in prison
6/4/12 Matthew Kluger, lawyer, sentenced to 12 years in prison, along with co-conspirator stock trader Garrett Bauer (9 years) and co-conspirator Kenneth Robinson (not yet sentenced) for 17 year insider trading scheme.
6/14/12 Allen Stanford sentenced to 110 years without parole.
6/15/12 Rajat Gupta, former Goldman Sachs director, found guilty of insider trading. Could face a decade in prison when sentenced later this year.
6/22/12 Timothy S. Durham, 49, former CEO of Fair Financial Company, convicted of one count conspiracy to commit wire and securities fraud, 10 counts of wire fraud, and one count of securities fraud.
6/22/12 James F. Cochran, 56, former chairman of the board of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and six counts of wire fraud.
6/22/12 Rick D. Snow, 48, former CFO of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and three counts of wire fraud.
7/13/12 Russell Wassendorf Sr., CEO of collapsed brokerage firm Peregrine Financial Group Inc. arrested and charged with lying to regulators after admitting to authorities he embezzled "millions of dollars" and forged bank statements for "nearly twenty years."
8/22/12 Doug Whitman, Whitman Capital LLC hedge fund founder, convicted of insider trading following a trial in which he spent more than two days on the stand telling jurors he was innocent
10/26/12 UPDATE: Former Goldman Sachs director Rajat Gupta sentenced to two years in federal prison. He will, of course, appeal. . .
11/20/12 Hedge fund manager Matthew Martoma charged with insider trading at SAC Capital Advisors, and prosecutors are looking at Martoma's boss, Steven Cohen, for possible involvement.
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[font size=3][font color=red]This thread contains opinions and observations. Individuals may post their experiences, inferences and opinions on this thread. However, it should not be construed as advice. It is unethical (and probably illegal) for financial recommendations to be given here.[/font][/font][/font color=red][font color=black]
42 replies
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http://theautomaticearth.com/Finance/ny-fed-mortgage-debt-data-says-no-us-recovery.html
Let me try to keep this short and still make the point I want to make. Lately, I've seen a huge amount of people talking about an economic recovery, certainly in the US, so much so that people who disagree with that assessment are labeled "doomer" or things like that. Again. It's an easy thing to do.
I'll start with a graph from this New York Fed report. It depicts the - almost - 10-year development of US household debt, which culminates in a total of $11.31 trillion at the end of Q3 2012.
The conclusion many people draw from the graph is that total debt is "still" falling. And that is supposed to mean that things are going well, or better if you will. But when I look at the graph, that's not the first thing I notice. What I see is mortgage debt at around $5 trillion in Q1 2003 and, after a peak just over $9 trillion in Q3 2008, slightly lower, at $8.03 trillion (the report provides the exact number), in Q3 2012.
Which means that mortgage debt may have come down by about 11% over the past 4 years (while home prices, mind you, fell 33%, as per Case-Shiller), but it's still 60% (!) higher than it was in 2003. And one thing is certain: it can't stay there, and it won't. We can discuss till we're blue in the face how much it still has to go on the way south, and we can argue about how long that will take, but I would think the main point is very clear. That is, an economic recovery in the US is not possible when households still have to deleverage to the tune of $2-3 trillion. And no, it's not different here, or this time, and no, Americans cannot carry a 40% mortgage debt increase in 10 years either, so another $2 trillion move south is really the minimum....Home prices are rising a little, says Case-Shiller now. If that were to last, mortgage debt would even rise again. Unless enormous amounts of the old existing debt were cancelled, forgiven, restructured. Well, it took more than four years to shave off 11%. So you tell me, where would that sudden drop come from? It's not going to happen, is it? So unless you would want to argue that $8.03 trillion is the new black, something's got to give. Rising home sales and rising home construction only serve to increase the debt. While the graph leaves no doubt that the debt must decrease. By about 25-30% from where it is now ($2-3 trillion of $8 trillion), and 40-60% of the $5 trillion it was in 2003....
MORE ANALYSIS AT LINK
Let me try to keep this short and still make the point I want to make. Lately, I've seen a huge amount of people talking about an economic recovery, certainly in the US, so much so that people who disagree with that assessment are labeled "doomer" or things like that. Again. It's an easy thing to do.
I'll start with a graph from this New York Fed report. It depicts the - almost - 10-year development of US household debt, which culminates in a total of $11.31 trillion at the end of Q3 2012.
The conclusion many people draw from the graph is that total debt is "still" falling. And that is supposed to mean that things are going well, or better if you will. But when I look at the graph, that's not the first thing I notice. What I see is mortgage debt at around $5 trillion in Q1 2003 and, after a peak just over $9 trillion in Q3 2008, slightly lower, at $8.03 trillion (the report provides the exact number), in Q3 2012.
Which means that mortgage debt may have come down by about 11% over the past 4 years (while home prices, mind you, fell 33%, as per Case-Shiller), but it's still 60% (!) higher than it was in 2003. And one thing is certain: it can't stay there, and it won't. We can discuss till we're blue in the face how much it still has to go on the way south, and we can argue about how long that will take, but I would think the main point is very clear. That is, an economic recovery in the US is not possible when households still have to deleverage to the tune of $2-3 trillion. And no, it's not different here, or this time, and no, Americans cannot carry a 40% mortgage debt increase in 10 years either, so another $2 trillion move south is really the minimum....Home prices are rising a little, says Case-Shiller now. If that were to last, mortgage debt would even rise again. Unless enormous amounts of the old existing debt were cancelled, forgiven, restructured. Well, it took more than four years to shave off 11%. So you tell me, where would that sudden drop come from? It's not going to happen, is it? So unless you would want to argue that $8.03 trillion is the new black, something's got to give. Rising home sales and rising home construction only serve to increase the debt. While the graph leaves no doubt that the debt must decrease. By about 25-30% from where it is now ($2-3 trillion of $8 trillion), and 40-60% of the $5 trillion it was in 2003....
MORE ANALYSIS AT LINK
http://www.economist.com/blogs/freeexchange/2012/12/american-growth-vs-world
FOR those who started out the year optimists on American growth (such as me), 2012 was sobering. It looks like America will end the year having grown about 2%, according to Deutsche Bank, marginally below the average pace since the recovery began in mid-2009.
Why was it disappointing? In great part part because the rest of the world had an even worse year. Take a look at the nearby table. Of the world's four major developed economies plus China, America was the only country to grow roughly as fast as the International Monetary Fund projected in the fall of 2011. Europe and the U.K. actually contracted, while China (and several other emerging economies) grew notably less briskly.
I draw four lessons from this.
First, America would have had a much better year had the rest of the world performed as expected. This isn't so much through trade, whose contribution to growth has been so far marginally positive, but through the impact on confidence. Complaints that American fiscal and monetary policy are too tight are more true in hindsight than they would have been at the time those policies were being formulated. By kicking the can repeatedly down the road, policy makers have so far managed to avoid tightening fiscal policy.
Second, America's performance next year rides heavily on whether the rest of the world gets its act together. China has emerged from its soft landing but its new leadership seems determined to keep stimulus to a minimum and allow growth to maintain its leislurely (for China) pace of 7.5% to facilitate transition to a more consumer-led economy. Europe's leaders are slowly remaking the region's institutions while Mario Draghi has their back. The threat of a disorderly euro breakup and sovereign default have receded. Whether that is enough to bring the region out of recession remains to be seen.
Third, perhaps the biggest risk in 2013 is that America follows the formula of the U.K. and Europe in 2012. Even if the bulk of its fiscal cliff is avoided, America should count on fiscal tightening in the area of 1.5% to 2% of GDP (and perhaps even 3% if only a partial deal is struck). The mere prospect that policy might tighten that much has been a major dampener on business investment and thus GDP lately. In the face of that austerity it will rely, as Japan, Europe and Britain have, on its central bank pushing quantitative easing even further towards the frontier. Even if you believe the Fed still has some juice left, it's hard to be optimistic about a global policy mix that emphasizes tight fiscal and ever more expansive monetary policy which, as Tom Gallagher of Scowcroft group notes, is not the preferred choice in a deleveraging world with short-term interest rates at zero.
Fourth, beware of forecasts.
FOR those who started out the year optimists on American growth (such as me), 2012 was sobering. It looks like America will end the year having grown about 2%, according to Deutsche Bank, marginally below the average pace since the recovery began in mid-2009.
Why was it disappointing? In great part part because the rest of the world had an even worse year. Take a look at the nearby table. Of the world's four major developed economies plus China, America was the only country to grow roughly as fast as the International Monetary Fund projected in the fall of 2011. Europe and the U.K. actually contracted, while China (and several other emerging economies) grew notably less briskly.
I draw four lessons from this.
First, America would have had a much better year had the rest of the world performed as expected. This isn't so much through trade, whose contribution to growth has been so far marginally positive, but through the impact on confidence. Complaints that American fiscal and monetary policy are too tight are more true in hindsight than they would have been at the time those policies were being formulated. By kicking the can repeatedly down the road, policy makers have so far managed to avoid tightening fiscal policy.
Second, America's performance next year rides heavily on whether the rest of the world gets its act together. China has emerged from its soft landing but its new leadership seems determined to keep stimulus to a minimum and allow growth to maintain its leislurely (for China) pace of 7.5% to facilitate transition to a more consumer-led economy. Europe's leaders are slowly remaking the region's institutions while Mario Draghi has their back. The threat of a disorderly euro breakup and sovereign default have receded. Whether that is enough to bring the region out of recession remains to be seen.
Third, perhaps the biggest risk in 2013 is that America follows the formula of the U.K. and Europe in 2012. Even if the bulk of its fiscal cliff is avoided, America should count on fiscal tightening in the area of 1.5% to 2% of GDP (and perhaps even 3% if only a partial deal is struck). The mere prospect that policy might tighten that much has been a major dampener on business investment and thus GDP lately. In the face of that austerity it will rely, as Japan, Europe and Britain have, on its central bank pushing quantitative easing even further towards the frontier. Even if you believe the Fed still has some juice left, it's hard to be optimistic about a global policy mix that emphasizes tight fiscal and ever more expansive monetary policy which, as Tom Gallagher of Scowcroft group notes, is not the preferred choice in a deleveraging world with short-term interest rates at zero.
Fourth, beware of forecasts.
http://www.theatlantic.com/business/archive/2012/12/redistributing-up/266400/
In the town that launched the War on Poverty 48 years ago, the poor are getting poorer despite the government's help. And the rich are getting richer because of it.
The top 5 percent of households in Washington, D.C., made more than $500,000 on average last year, while the bottom 20 percent earned less than $9,500 - a ratio of 54 to 1.
That gap is up from 39 to 1 two decades ago. It's wider than in any of the 50 states and all but two major cities. This at a time when income inequality in the United States as a whole has risen to levels last seen in the years before the Great Depression.
Americans have just emerged from a close presidential election in which the government's role as a leveling force was fiercely debated. The right argued the state does too much; the left, too little. The issue is now at the center of tense negotiations over whose taxes to raise and what social programs to cut before a Jan. 1 deadline. And the government's role will be paramount again next year if Congress takes up tax reform.
In the town that launched the War on Poverty 48 years ago, the poor are getting poorer despite the government's help. And the rich are getting richer because of it.
The top 5 percent of households in Washington, D.C., made more than $500,000 on average last year, while the bottom 20 percent earned less than $9,500 - a ratio of 54 to 1.
That gap is up from 39 to 1 two decades ago. It's wider than in any of the 50 states and all but two major cities. This at a time when income inequality in the United States as a whole has risen to levels last seen in the years before the Great Depression.
Americans have just emerged from a close presidential election in which the government's role as a leveling force was fiercely debated. The right argued the state does too much; the left, too little. The issue is now at the center of tense negotiations over whose taxes to raise and what social programs to cut before a Jan. 1 deadline. And the government's role will be paramount again next year if Congress takes up tax reform.
http://www.theatlantic.com/business/archive/2012/12/7-facts-about-government-benefits-and-who-gets-them/266428/
Six in seven households have received some sort of government benefit, according to a new survey from Pew Research Center. Here are some highlights from the report, plus some extra bits of context. These graphs focus on government spending, as opposed to tax benefits -- such as the Earned Income Tax Credit and the lower rate on investment income -- which can also be considered forms of "government assistance," since a dollar not taxed can perform a similar role to a dollar spent.
1. The big picture is bigger than 'the 47%.' Fully 55% of all Americans -- including a majority of those self-identifying as Democrats, Republicans, liberals, moderates, and conservatives -- have received benefits from one of these six federal programs: Social Security, Medicare, Medicaid, welfare (TANF), unemployment benefits, and food stamps (SNAP).
2. ... Actually, it's more than the 70%. If you broaden to households rather than individuals: "71% of adults are part of a household that has benefited" from at least one of those six programs.
3. In fact, it's the 86%. After you add veteran benefits and college assistance, 70% of individuals -- and 86% of households -- receive a government benefit of some kind. Put differently, one in seven households doesn't receive assistance from the federal government.
4. The demographic breakdown. Federal assistance is more likely to go to women than men (61% vs. 49%); to blacks than whites or Hispanics (64% vs. 56% vs. 50%); and to rural residents than urban or suburban (62% vs. 54% vs. 53%).
Six in seven households have received some sort of government benefit, according to a new survey from Pew Research Center. Here are some highlights from the report, plus some extra bits of context. These graphs focus on government spending, as opposed to tax benefits -- such as the Earned Income Tax Credit and the lower rate on investment income -- which can also be considered forms of "government assistance," since a dollar not taxed can perform a similar role to a dollar spent.
1. The big picture is bigger than 'the 47%.' Fully 55% of all Americans -- including a majority of those self-identifying as Democrats, Republicans, liberals, moderates, and conservatives -- have received benefits from one of these six federal programs: Social Security, Medicare, Medicaid, welfare (TANF), unemployment benefits, and food stamps (SNAP).
2. ... Actually, it's more than the 70%. If you broaden to households rather than individuals: "71% of adults are part of a household that has benefited" from at least one of those six programs.
3. In fact, it's the 86%. After you add veteran benefits and college assistance, 70% of individuals -- and 86% of households -- receive a government benefit of some kind. Put differently, one in seven households doesn't receive assistance from the federal government.
4. The demographic breakdown. Federal assistance is more likely to go to women than men (61% vs. 49%); to blacks than whites or Hispanics (64% vs. 56% vs. 50%); and to rural residents than urban or suburban (62% vs. 54% vs. 53%).
http://www.guardian.co.uk/business/economics-blog/2012/dec/17/inflation-jobs-intergenerational-economics
Inflation is now an intergenerational issue. Photograph: Graham Hughes / Alamy/Alamy
Do central banks care about unemployment more than inflation? To some extent it is an intergenerational issue.
The question arises after the winner in the Japanese general election on Sunday, the Liberal Democratic party's Shinzo Abe, demanded the Bank of Japan accept higher inflation as a fair trade off for policies that could kickstart the moribund economy. The demand follows a speech by US central bank chief Ben Bernanke, who has taken the hint that unemployment remains too high and said, in central banker code, that cutting unemployment will be his chief target. If he starts to see prices rises get out of control, then he will pay attention to the old inflation target, but making sure the US avoids millions of long term unemployed is priority number one.
In the UK, the Bank of England can already point to three years of measures unemployment targeting at the expense of inflation. Its policy of printing money under its quantitative easing plan has infuriated inflation hawks and savers groups, who want to maintain the pre-crisis focus on fighting high inflation.
And here we have the intergenerational issue in a nutshell. Older people with pots of cash in savings and investment accounts want low inflation to protect their assets. Young people, who have only small savings, if any at all, and big debts, are keener on having a job to pay the bills.
Inflation is now an intergenerational issue. Photograph: Graham Hughes / Alamy/Alamy
Do central banks care about unemployment more than inflation? To some extent it is an intergenerational issue.
The question arises after the winner in the Japanese general election on Sunday, the Liberal Democratic party's Shinzo Abe, demanded the Bank of Japan accept higher inflation as a fair trade off for policies that could kickstart the moribund economy. The demand follows a speech by US central bank chief Ben Bernanke, who has taken the hint that unemployment remains too high and said, in central banker code, that cutting unemployment will be his chief target. If he starts to see prices rises get out of control, then he will pay attention to the old inflation target, but making sure the US avoids millions of long term unemployed is priority number one.
In the UK, the Bank of England can already point to three years of measures unemployment targeting at the expense of inflation. Its policy of printing money under its quantitative easing plan has infuriated inflation hawks and savers groups, who want to maintain the pre-crisis focus on fighting high inflation.
And here we have the intergenerational issue in a nutshell. Older people with pots of cash in savings and investment accounts want low inflation to protect their assets. Young people, who have only small savings, if any at all, and big debts, are keener on having a job to pay the bills.
