Monthly Archives: October 2009

How The Treasury Can Sell So Much Debt For So Little For Now…..

By Admin | Published: October 30, 2009

It’s called carry, but not like currency carry. As most know, banks can fund themselves at 0.1%-0.25% as the Federal Reserve keeps Fed Funds at 0.0%-0.25%. Then banks are incentivized to find the safest, highest return they can with this cash.

Now, the US Treasury and the Federal Reserve hope that this low cost of funding to banks would make lending more attractive and incent banks to make new loans. As the Fed loan surveys show, this is now occurring and new lending is not being generated. This is a phenomenon that is not only occurring in the United States, … …READ MORE

Posted in Front Page | Tagged , , , | Leave a comment

Treasury to Increase Duration?

By Admin | Published: October 26, 2009

Bloomberg carries an interesting analysis of the looming shift of US Treasury issuance for 2010. “After selling $1.9 trillion of short-term securities to finance President Barack Obama’s efforts to end the worst recession since the 1930s, the Treasury plans to lengthen the average due date of its outstanding debt to 72 months from a 26- year low of 49 months. That may mean boosting sales of 10- and 30-year bonds by 40 percent over the next year to $600 billion…”.

As everyone knows, this week ends the Federal Reserve’s $300 billion QE program of monetizing the US government debt by … …READ MORE

Posted in Front Page | Tagged , , | Leave a comment

Fed Fueling Stocks?

By Admin | Published: October 23, 2009

As US corporations continue to report better than expected earnings for Q3, it’s hard not to be upbeat and positive on the outlook for the stock market. Honeywell, Amazon, Kia Motors, and Microsoft all beat expectations as 77% of companies in the MSCI World group have exceeded projections. The reasons for this outperformance are multifactoral from extreme cost cutting via job losses to an improved revenue stream. On CNBC’s Earnings Central page, 15 out of 17 companies reporting in the last 24 hours beat expectations.

Money appears to keep flowing back into equities and the rally continues to extend. However, … …READ MORE

Posted in Front Page | Tagged , , , | 2 Comments

Currencies and Exit Strategies

By Admin | Published: October 21, 2009

Here’s a quick back of the envelope list of countries and whether the currency’s strength will be a problem to engage in reducing monetary stimulus.

1. Australia: no problem
2. New Zealand: no problem
3. Canada: a problem
4. Brazil: a problem
5. China: no problem
6. UK: no problem
7. EZ: no problem
8. US: no problem……but no exit.

Brazil and Canada are clearly the poster children for currency strength duress as both those nations made it clear they are not happy with the situation yesterday. After the government denied on Friday then announced on Monday a tax on … …READ MORE

Posted in Front Page | Tagged , , , , | Leave a comment

Discovering No Spending:

By Admin | Published: October 7, 2009

In the past, consumer spending was 70% of the US economy. In the past, an increase in consumer confidence has led to an increase in consumer spending. We have seen global increases in consumer confidence including today’s UK numbers. US consumer confidence has risen from a low of 25.3 in February to 53.1 in September. However, retail sales are still lagging and are expected to be down 2.0% in September.

According to the Discover US Spending Monitor, US consumers are still worried about their personal finances and are limiting their spending plans. The survey showed 19% expect to spend more … …READ MORE

Posted in Front Page | Tagged , , , | Leave a comment

Australia Leads Where the Fed Needs To Go

By Admin | Published: October 6, 2009

Today in a somewhat surprise move, the Reserve Bank of Australia raised interest rates 25 basis points to 3.25%. The RBA becomes the first G20 central bank to officially begin an exit strategy from monetary easing to stem the global financial crisis. They had previously cut rates a record 425 basis points. RBA Governor Stevens said, “The risk of serious economic contraction has passed.”

Australia didn’t experience a contraction to the extent that Western countries have and is fortunately tied to economic stimulus in China. However, this tie comes at a cost as the massive Chinese loan stimulus has bled … …READ MORE

Posted in Front Page | Tagged , , , , | Leave a comment

G7 Formally Announces It's Insignificance

By Admin | Published: October 5, 2009

After the Pittsburgh summit, we found out that the major group economic decisions by large industrialized nations will be made within the G20 framework. This deflated expectations for last weekend’s G7 meeting in Istanbul. This smaller group may shrink further as the US has proposed a Seinfeld-like G4 of US, Japan, Europe, and China. Remember, one year ago the G7 issued an agenda to resolved the panic that was occurring in the financial markets.

At the meeting this year, there were the obligatory comments from Geithner that the US would do everything we can to sustain a strong, stable dollar … …READ MORE

Posted in Front Page | Tagged , , , | 1 Comment

  • Recent TWEETS @abusch