Posts filed under “Fixed Income/Interest Rates”

The Deleveraging American Consumer?

click for ginormous graphic
Source: WSJ

I love this giant graphic from this morning’s WSJ — it gives us the 30,000 foot view of consumer debt here in the USA.

Despite low rates — or is it because of them? — American consumers have seen their debt loads fall to the lowest levels in 6 years. Now they are starting to open those wallets up again, and spend.

But is this a general improvement or a specific response to unique circumstances? While many mortgages and home equity loans have been refinanced at ultra low rates, is that giving consumer space to shop?

For example, Automobile loans have ticked up $20 billion in Q2 — but the US auto fleet is the oldest its ever been. Perhaps consumers are expecting higher interest rates, and are making belated car purchases. (Outside of autos, however, consumer debt fell $78 billion).


We cannot yet tell if this is part of a broader trend, or if it is a series of specific modest improvements. Note that the Great Depression created an entire generation of debt averse savers.

I wonder what the Lesser Depression has done to Consumers’ collective psyches . . .


UPDATE: August 15, 2013 8:30am
Wal-Mart (WMT) quarterly earnings are out — and they disappoint. Sales are $116.2B, weaker than $118.09B estimates; the company cuts fiscal year estimates. Traffic at Wal-Mart is now down 2 quarters in a row. Though Q2 profit rose 1.3%, to $4.07 billion ($1.24 per share), that was a penny shy of estimates. Net sales rose 2.4% to $116.2 billion. Revenue at stores open at least a year at Wal-Mart’s namesake business fell 0.3 percent. That’s considered an important measure of a retailer’s performance.

Is the consumer trading down? Or is the low end consumer broke?


Confident Consumers Step Up Their Borrowing
WSJ, August 14, 2013

Category: Consumer Spending, Credit, Fixed Income/Interest Rates

A Generational Selling Opportunity for the U.S. Long Bond

From James O’Shaugnessy, author of What Works on Wall Street, Best-Performing Investment Strategies:  

Category: Books, Fixed Income/Interest Rates, Think Tank

Barclays: Detroit Chapter 9 Begins

Zero Hedge embedded this Barclays piece about the Detroit Bankruptcy. I don’t agree with all of it, but it is a worthwhile read, and until they take it down, here it is.     Barclays Municipal Research Detroit – Chapter 9 Begins

Category: Fixed Income/Interest Rates, Legal, Think Tank

The Recent Bond Market Selloff in Historical Perspective

The Recent Bond Market Selloff in Historical Perspective Tobias Adrian and Michael Fleming Liberty Street Economics August 05, 2013     Long-term Treasury yields have risen sharply in recent months. The yield on the most recently issued ten-year note, for example, rose from 1.63 percent on May 2 to 2.74 percent on July 5, reaching its highest level since…Read More

Category: Federal Reserve, Fixed Income/Interest Rates, Think Tank

Interest Rates Are Manipulated

If We Don’t Break Up the Big Banks, They Will Manipulate More and More of the Economy … Making Us Poorer and Poorer Interest rates are rigged: The big banks have conspired for years to rig interest rates … upon which $800 trillion in assets are pegged This was the largest insider trading scandal ever…Read More

Category: Fixed Income/Interest Rates, Think Tank

Case-Shiller: Home Prices Increase in May 2013

Click to enlarge

Key data points:

•  Home prices show increases of 2.5% and 2.4% for the 10- and 20-City Composites in May versus April.
•  Dallas and Denver reached record levels surpassing their pre-financial crisis peaks set in June 2007 and August 2006.
•  This is the first time any city has made a new all-time high.
•  All 20 cities increased from May 2012 to May 2013 and from April 2013 to May 2013.
•  In May 2013, the 10- and 20-City Composites posted annual increases of 11.8% and 12.2%.
•  The Southwest and the West saw the strongest year-over-year gains.
•  The overall report points to some shifts among various markets: Washington DC is no longer the standout leader and the eastern Sunbelt cities, Miami and Tampa, are lagging behind their western counterparts.


Read More

Category: Fixed Income/Interest Rates, Real Estate

Detroit, Munis, A Follow Up

Detroit, Munis, A Follow Up David R. Kotok Cumberland Advisors July 26, 2013     As a follow-up to the Detroit-Muni Bond series we have published, here are additional views: 1. John Ruiz of Morgan Stanley Matrix offers this: “Note to cross-over buyers: if you see Meredith Whitney on your TV screen, and she is…Read More

Category: Fixed Income/Interest Rates, Think Tank

Post-Detroit Filing, Munis Are Cheap

Click to enlarge   Kotok via David Wilson: Municipal bonds are an “outrageous bargain” in the wake of Detroit’s bankruptcy filing, according to David R. Kotok, Cumberland Advisors Inc.’s chairman and chief investment officer. As the CHART OF THE DAY shows, the highest-rated notes and bonds of state and local governments yield more than Treasuries…Read More

Category: Fixed Income/Interest Rates, Legal

More on Munis, Detroit, Bloomberg, Whitney & Wilson

More on Munis, Detroit, Bloomberg, Whitney & Wilson David R. Kotok Cumberland Advisors, July 24, 2013     In our recent commentary on municipal bonds and Detroit, we argued in favor of buying the highest-grade AAA tax-free municipal bond It currently yields more than the corresponding taxable US Treasury obligation. Meredith Whitney, Muni Cassandra emeritus…Read More

Category: Fixed Income/Interest Rates, Think Tank, UnGuru

Cheap Munis, Not Detroit

Cheap Munis, Not Detroit David R. Kotok Cumber July 22, 2013     We thank Michael Wilson of Morgan Stanley Wealth Management and FactSet Research Systems for a compilation of returns. Michael’s commentary in July talked about how “There was no place to hide in fixed income.” We agree, although we think hedging dampened volatility…Read More

Category: Fixed Income/Interest Rates, Think Tank