Posts filed under “Think Tank”

Retail Sales

April Retail Sales were weaker than expected, falling .4% headline and
.5% ex auto’s vs the consensus of flat and up .2%. Also, March was
revised lower both headline and ex auto’s. Sales ex auto’s and gasoline
fell .3%. Sales fell in furniture, electronics, food/beverages,
department stores, and online. Gains were seen in restaurants/bars,
sporting goods, health/personal care and in building materials. All the
green thumb gardeners out there can count as many shoots as they want
but the US economy still comes down to the activities of the US consumer
and the consumer is still retrenching, paying down debt, saving and
getting their credit lines cut. This is a long term process and with a
still difficult labor market, won’t change anytime soon.

Category: MacroNotes

Mortgage Rates

According to, the average 30 yr mortgage rate has risen to the highest level since March 25th at 5.04% and its why refi’s for the week fell to a two month low. Purchases rose a touch but still remain just 13% off its lows. The MBA said the average 30 yr rate was 4.76%…Read More

Category: MacroNotes

Greenspan Opens Mouth; Hussman has Last Word

Good Evening: U.S. stock averages opened and closed near the unchanged mark today, but those levels belie quite a bit of activity between the bells. Tales of falling home prices and concerns about the freshening supply of equity issuance pushed stocks lower during the first half of the session, while some positive comments from Alan…Read More

Category: Markets, Think Tank

Stock markets: reversal time?

Category: Think Tank

Banks CDS, if you blinked…

Now that we are a few days removed from the release of the stress test results, let’s look at the markets view of the credit quality of the bigger institutions today versus where they were on Feb 10th, the day Geithner introduced the stress test. Interestingly, the CDS of each, except Citi, are near the…Read More

Category: MacroNotes

Suckers Rally or Not?

Wading in on the debate of whether this is a bear market rally or not one has to start differentiating among groups that have long term secular fundamental headwinds and those that have long term secular tailwinds. Consumer deleveraging and the shrinking of bank balance sheets will be a multi year process that will keep…Read More

Category: MacroNotes

Financials: Is the Tailwind Becoming a Headwind?

keeping-score-cs-weekly-railroad-update Good Evening: After taking the weekend to reconsider last week’s celebrations over seeing less awful than expected economic data and the relief in feeling less angst than expected in the wake of the stress test results, investors decided to take profits on Monday. Financial companies led the downdraft in part due to the recent…Read More

Category: Markets, Think Tank

Bernanke: The Supervisory Capital Assessment Program

Chairman Ben S. Bernanke

At the Federal Reserve Bank of Atlanta 2009 Financial Markets Conference, Jekyll Island, Georgia

May 11, 2009

The Supervisory Capital Assessment Program

My remarks this evening will focus on the Supervisory Capital Assessment Program, popularly known as the banking stress test. The federal bank regulatory agencies began the assessment program in late February and concluded their review with the release of the results just last Thursday. This initiative involved an unprecedented, simultaneous supervisory review of the 19 largest bank holding companies in the United States. Its objective was to ensure that these institutions have sufficient financial strength to absorb losses and to remain strongly capitalized, even in an economic environment more severe than currently anticipated. A well-capitalized banking system is essential for the revival of the credit flows that will underpin a sustainable economic recovery.

Objectives of Supervisory Capital Assessment Program
As you know, the abrupt end of the credit boom in 2007 has had widespread financial and economic ramifications, including a sharp slowdown in global economic activity and the imposition of substantial losses on banks and other financial institutions. Economic and financial weaknesses have fed on each other, as a declining economy has exacerbated credit losses and the resulting pressure on banks and other financial institutions has constrained the availability of new credit.

A number of significant steps have been taken to restore confidence in the nation’s financial institutions, including a substantial expansion of guarantees for bank liabilities by the Federal Deposit Insurance Corporation (FDIC), injections of capital by the Treasury in many institutions both large and small, and Federal Reserve programs to provide liquidity to financial institutions and support the normalization of key credit markets. These efforts averted serious threats to global financial stability last fall and have contributed to gradual improvement in key credit markets, though many markets remain stressed.

These steps, however, did not fully address market concerns over the depletion of bank capital caused by write-downs and increased reserving for potential losses. At the beginning of this episode, bank losses were focused in a few asset classes, such as subprime mortgages and certain complex credit products. Today, following the significant weakening in the global economy that began last fall, concerns have shifted to more-traditional credit risks, including rising delinquencies on prime as well as subprime mortgages, unpaid credit card and auto loans, worsening conditions in commercial real estate markets, and increased rates of corporate bankruptcy.

Read More

Category: Think Tank

A Fully Fledged Garden of Economic Recovery?

Marshall Auerback is a Denver, Colorado-based global portfolio strategist for RAB Capital plc and a Fellow with the Economists for Peace and Security ( He is a frequent contributor to the blog, Credit Writedowns, and the Japan Policy Research Institute ( and a new contributor to The Big Picture.


Are Ben Bernanke’s “green shoots” metamorphosing into a fully fledged garden of economic recovery? Judging from the recent euphoria of the market, it certainly appears that way.

Whilst we have not been in the camp that has tended to see every green shoot as an overflowing weed, we certainly thought the market was increasingly pricing in economic oblivion in February, a Great Depression II, if you will. As we have studied the Great Depression, however, we have been increasingly struck by the differences between now and then. Whilst this is the most severe recession of the post W.W. II period, bear in mind that there has never been as vigorous monetary and fiscal policy response than what is now occurring. By way of illustration, let me point out that the amount of crude in the government Strategic Petroleum Reserve = 700 million barrels @ $50 =$35 billion.

The Treasury gold position is worth $235 billion. This week alone the treasury will sell over $100 billion of paper of which at least $70billion will be in notes.

So one can make a fairly compelling case that we have seen major lows, at least as far as the commodity complex goes. And there is increasing evidence of stabilisation in the housing market, notably in areas such as California. Additionally, we have seen a major inventory liquidation, which always happens in a slump, where production falls more rapidly than consumption does. Eventually you have to reorder.

Read More

Category: Economy, Think Tank

Bernanke speaking on Jekyll Island, ironic?

With regards to the Fed, I’ve been highly critical of them over many years, believing that it was their unstable and easy money monetary policy that sowed the seeds for the massive credit bubble that has now popped. The FOMC’s policy response, led by Bernanke who was a key player in the Greenspan 1% fed…Read More

Category: MacroNotes