Andrew Busch

Treasury rule change on pensions: it matters

Admin — Fri, 03 Feb 2012 16:48:13 +0000

Yesterday in an underreported story, the US Treasury announced that they are changing the rules for USpension plans. Treasury proposed two regulations to make it easier for those approaching retirement to buy an annuity through their company-funded pensions or 401(k) savings accounts according to Bloomberg. (Annuities are insurance contracts that guarantee a lifetime stream of income in exchange for up-front payments.)

Why is this important?

First, there is a massive amount of money in pension plans with about $2.9 trillion in 401(k) accounts and a total $17 trillion in retirement savings (as of Sept. 30, according … ...READ MORE

My spin on the US jobs data

Admin — Fri, 03 Feb 2012 16:43:09 +0000

In speeches I do for clients and conferences, one of my favorite charts comes from the Kauffman Foundation’s study on where jobs are created in the United States. It shows that firms 5 years and younger accounted for over 90% of new jobs created in the US from 1992-2006……

Read Full BU… ...READ MORE

Greek sidedish note:

Admin — Wed, 01 Feb 2012 14:17:22 +0000

Is it really a smart thing to do to give PSI kickers if GDP is better than expected or any upside? Won’t this mean that Greece has to make higher payments on debt and then will be forced to pay more to debt rather than be allowed to grow? In turn, won’t this limit the upside to growth? The best debt restructuring plan for Greek growth is to have the largest haircut and set it in stone or the kickers will act as a drag on potential upside growth.… ...READ MORE

Global PMI’s Better than Expected, but….:

Admin — Wed, 01 Feb 2012 14:15:28 +0000

Overnight, we had a slew of PMI data out with the numbers all slightly better than expected. The euro zone Dec. PMI was 48.8 vse 48.7 and Germany’s PMI was 51.0 vse 50.9. The semi-official Dec. Chinese CLFP PMI was 50.5 vse 50.3. As with many of the Chinese numbers, the official data collection could be improved and expanded. China Business News Reports that the National Bureau of Statistics and China Federation of Logistics & Purchasing said they plan to expand the sample in compiling its Purchasing Managers Index for manufacturing sectors to 3,000 enterprises from the current 820, according … ...READ MORE

EUR trade for Squawk on the Street:

Admin — Wed, 01 Feb 2012 14:13:37 +0000

Why did the EUR/USD rally in January?

Short covering: Last week, the market was extremely short EUR/USD and speculators added more to their net short position to a new high of 169,740 contracts according to CFTC commitment of traders report.
ECB funding: bond yields for Italy and Spain fell dramatically and sovereign refundings have gone smoothly.
FOMC 2014 and QE3 talk.

Why is the EUR/USD stalling now?

Greek debt talks not done with either PSI or Troika: These could drag on until March 20th when the 14.4 billion euro payment is due.
Portugal is now Greece. The 10yr Portuguese debt

Key story today: China repo rate drops by most in 6 months.

Admin — Tue, 31 Jan 2012 15:47:30 +0000

China aggressively added funds into their financial system and their money-market rate had its biggest monthly drop since July. The PBOC injected 477 billion Yuan ($75.6 billion) and is the most cash to the financial system in almost four years. This is another example of policy makers stepping in to eliminate funding risks and downside to the equity markets. (February’s ECB LTROs will also be supportive as well.) The Chinese injection makes up for the lack of a reserve rate cut. It’s very positive for the AUD and NZD.… ...READ MORE

Aussie PM signals higher AUD is good

Admin — Tue, 31 Jan 2012 15:45:53 +0000

Fresh from being chased out of an event by protestors, Australian PM Julia Gillard is expressing her belief that a strong Australian dollar is a good thing. The high Aussie is a reflection of the strength of the
Australian economy and it is the world saying that the Australian economy is strong, says Prime Minister Julia Gillard according to MNI. “The government is aware of the pressure it is putting on sectors like manufacturing, tourism and international education, and is working with them….It is important that the mining boom doesn’t hollow out other sectors of the economy, Gillard says.”

Anytime … ...READ MORE

Beyond Florida: it’s all about delegate totals

Admin — Tue, 31 Jan 2012 15:42:32 +0000

In my 2012 outlook, I stated that the US Republican primary will be won by Mitt Romney with the potential for the outcome to be decided at the convention due to large Republican voter lack of conviction. Yesterday, WaPo had this nugget:

“Despite his troubles in Florida, Gingrich says the GOP presidential contest will continue for months and that Romney may not get enough delegates to win outright at the convention….“When you add the two conservatives together we clearly beat Romney,” Gingrich said, according to the Wall Street Journal. “I think Romney’s got a very real challenge trying to … ...READ MORE

Germany’s Ronald Reagan moment

Admin — Mon, 30 Jan 2012 16:28:37 +0000

The discussions around Greece and their debt are reaching an important stage as the private sector negotiations are coming to a conclusion. On January 27^th, the two sides they had reached understandings on legal and technical issues. Sadly, the sticking point remains what the yield for the coupons on the new swapped bonds will be as the lower the rate, the bigger the relief to Greece. Given the contraction in the Greek economy, the lack of tax revenue and the inability to implement structural reforms, estimates for their bailout loan have swollen to $145 billion euros to meet … ...READ MORE

2012 Speaking Topics: US Elections, European Crisis, China, Dodd-Frank and Obamacare

Admin — Sun, 29 Jan 2012 23:56:26 +0000

My central belief this year: The Mayans have it all wrong!

US Election impact on financial markets

After three years of the Obama administration, the nation is growing uneasy over the lack of economic and employment growth the country. The near collapse of the US government over raising the debt ceiling has raised the stakes for the way forward for both parties. What will the Republican nominee propose and how will he appeal to the crucial independent voter. What would another four years of an Obama administration mean for the markets given the recent populist rhetoric towards US business and … ...READ MORE