Posts filed under “Think Tank”

Green shoots with inflation?

In addition to the heated debate over whether the global economy is
experiencing a bottoming process or is just an inventory head fake, the
other discussion is whether the policies of the Fed and other central
banks will eventually lead to a period of high inflation. Inflation will
be a process not an event so not only do us gardeners have to look for
shoots in the economy, we have to also look for the ugly shoots of
inflation. Apr PPI is expected to fall 3.7% y/o/y but the core # is
expected to up by 3.4% y/o/y. While we’ve seen multiple negative m/o/m
PPI headline #’s over the past year, the core has not gone negative
since Oct ’06, notwithstanding the big declines in GDP in Q4 and Q1.
Thus any big moves of oil and food higher can really swing the debate.
Amazingly, crude is still near $60 even after the IEA cut its ’09 oil
demand estimate today to 83.2mm barrels per day, back to where it was in
’04 when crude averaged $43. Supply matters too.

Category: MacroNotes

SPX Momentum Indicators

Kevin Lane is one of the founding partners of Fusion Analytics, and is the firm’s director of Quantitative Research. He is the main architect for developing their proprietary stock selection models and trading algorithms. Prior to joining Fusion Analytics, Mr. Lane enjoyed success as the Chief Market Strategist for several sell side institutional brokerage firms….Read More

Category: Index/ETFs, Markets, 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…Read More

Category: MacroNotes

Mortgage Rates

According to Bankrate.com, 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.

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Category: Think Tank