- S&P 500′s back in positive territory for 2010. “Small and midcap stocks have led the way up in recent days, which is a positive sign for bulls hoping that the market is about to make that next leg higher,” Bespoke says.
- Defining victim losses in Bernie Madoff’s Ponzi scheme as difference between cash paid into a Madoff account and amount withdrawn before fraud collapsed is the “difficult but correct call,” Barry Ritholtz writes.
- Forecasting firm Macroeconomic Advisers updates its projection of this week’s jobs report, concluding “somewhere between 150,000 and 220,000 jobs were temporarily lost in February due to unseasonably bad weather.”
- Still, take any snow-related monthly employment projections with large grain of salt. “February’s will include weather related job losses, March will see a rebound and, assuming no freak spring snowstorms, April will show the underlying trend,” WSJ’s Real Time Economics says.
- Policymakers are congratulating themselves for avoiding total collapse, when they should be berating themselves for failing to engineer recovery,” Paul Krugman notes.
- Consumer-protection unit within the Fed a “dreadful idea,” Yves Smith writes. “Do we have a single shred of evidence to support the notion that the Fed has undergone a miraculous conversion experience as a result of the crisis and will now act as staunch defender of the little guy? I certainly haven’t seen it.”
- Believers of the recovery focus on consumer spending slowly returning to pre-recession levels, but how consumers will sustain such spending seems questionable given the plunge in income, credit and savings, Peter Schiff says.
- Time to stop fighting speculation, Reuters blogger James Saft argues. “Fighting reality by punishing people who point it out — and yes, may profit in the process — is a lot easier than addressing the fundamental underlying issues.”
- This week’s spat between Disney (DIS) and Cablevision (CVC) has a familiar feeling, MediaMemo blogger Peter Kafka says. “The characters change, but the script is always the same. A programmer wants more money from a cable provider, and threatens to pull its shows.”
- Google’s (GOOG) latest acquisition of online photo editing service Picnik, announced yesterday, represents another head-to-head battle of competing businesses with Adobe’s (ADBE) Photoshop and Apple’s (AAPL) iPhoto.
- “Twitter’s finally pushing ahead with a business plan that could begin to justify the venture capital investment it’s attracted,” John Paczkowski says.
While we ponder the awesome responsibilities to be housed within the new Consumer Reports division of the Fed and , take a minute to dive down this rabbit hole. One of the big sticking points is giving the government power to break up big banks, right? Well, what if it already has this power?
“Don’t give me any of this ‘our hands are tied’ malarkey. The Obama administration could break the “too bigs” up in a heartbeat if it wanted to, and then justify it after the fact using PCA or another legal argument,” the Washington Blog wrote in October, citing the “PCA,” or the Prompt Corrective Action law, which charges the government with taking prompt, correction action to minimize losses to the deposit insurance fund.
Indeed, the government stepped in to take control of Continental-Illinois back in the ’80s when action was needed, and it could have stepped in during the financial crisis as well. Of course, it may have ended up with Citi, BofA, Fannie, AIG, Freddie, Goldie, Wells and who know who else to “resolve,” but at least we wouldn’t be held hostage to a bunch of big banks that have way too much influence in both the government and the market.
Like I’ve been saying, if the right framework is in place, you don’t need some extra resolution authority. But this current Senate bill doesn’t seem to be geared toward doing that at all.
As the esteemed Art Cashin would say, it was a waste of a clean shirt and cab fare.
US stocks barely budged on the session, up slightly with the blue chips lagging the broader indexes. But with Greece set to announce yet another layer of heavy-handed budget cuts tomorrow, and with a jobs report coming Friday that is widely expected to be weak, nobody seems very eager to place any big bets.
DJIA flits in and out of positive territory for the day and year, closing up 2 to 10406, still down 0.2% on the year. S&P 500 adds 3 to 1118, Nasdaq Comp gains 7 to 2281; both are higher on the year.
Auto makers report February sales, and they don’t look so bad; Ford actually outsold GM for the first time in years. But remember that the industry is looking at an annualized sales rate of about 10.5M vehicles, far below the level from the salad days and closer to the level of the busted days. It’s going to be a long time before the industry gets back to anything resembling the boom times, and even when it does, don’t expect the American auto makers to ever look like their old selves again.
Greece is planning another heavy dollop of budget cuts, which is sparking another round of angst among the Aegeans. The question here is how much pain can the government inflict on its own people, because to do what they’re proposing will stunt the nation’s growth severely. If they can even pull it off. There’s already a lot of resentment among the people, and it’s worth questioning whether it’s enough to scuttle any austerity plans and plunge the Continent into fresh agita.
Car talk (not the NPR show, by the way,) another Grecian burn and the commodities guys, Canada and Australia, are sitting pretty. That’s what we’re on about today on Tomorrow’s News Today.
Everybody in Washington’s all fired up about this proposed consumer-finance protection agency and where it will be housed. Will it be independent? Will it be inside the Treasury? Or will it be inside the Fed? If you said, the Fed, you may win a t-shirt, because the latest reports have the new agency being housed within the central bank.
The Journal says lawmakers are close to a deal on that front, as well as new powers for the federal government to take the power to break up, large “systemically dangerous” institutions. “That plan tackles one of the most politically thorny flashpoints of the economic crisis: What powers should the government have to break up firms so it doesn’t have to resort to taxpayer-funded bailouts?” according to the Journal.
Watching this debate from a distance, I’m laughing so hard I just want to cry. This is what they’ve come up with? A Consumer Reports with the power to slap bankers on the wrist? The entire financial edifice came within hours of utter collapse, according to more than one account, and this is the response from Washington?
It still is not clear to me how any of these proposals will solve the problems that caused the financial crisis. Somebody tell me there will be rules preventing investment banking and prop desk operations from being under the government umbrella. That derivatives are going to be regulated. That capital ratios are going to be addressed. That accounting rules are going to be tightened.
If lawmakers feel they have enough agreement, Mr. Dodd could introduce his bill later this week and potentially hold a vote in his committee later in the month. If other lawmakers balk at agreements between Messrs. Dodd and Corker, it could make it tougher for them to pass legislation this year.
With any luck, this proposal will fall apart amid partisan wrangling, and a new bill that actually address the root causes will emerge. What is needed is a framework that ensures no bank gets too large to take down the system, that ensures the best way for banks to profit is by honest means, that restrains the worst impulses of individuals, and ensures they alone suffer the consequences if they stray.
We’ve been on a Yahoo (YHOO) kicklately, so might as well acknowledge the company’s 15th anniversary.
Co-founders Jerry Yang and David Filo pen a lengthy missive on Yahoo’s corporate blog, acknowledging the anniversary and the potential Yahoo has over the next 15 years. Not surprisingly, the post is full of corporatespeak, as there’s no mention of Yang’s disastrous decision not to sell the company to Microsoft (MSFT) a few years ago.
Still, it’s hard to reflect on the company’s history without at least acknowledging that failed takeover attempt. Even current CEO Carol Bartz commented on it today in an interview with CNBC.
Bartz wasn’t there at the time, but when CNBC asked whether she’d have taken Microsoft’s hostile, $36-a-share-takeover offer in 2008, she yodeled – all right, shouted – “Sure!”
Bartz later dismissed that as a “fast answer” to an “inappropriate” query.
“Any company at the right price” is tempting, Bartz said, adding she thinks the market undervalues her Internet giant. “The point is, you never know unless you’re in the middle of a deal what’s really happening, so it isn’t fair to go back.”
Bottom line: “I’m not shopping Yahoo today, so there is no price Yahoo today.”
Even if Yahoo isn’t for sale, maybe it should go shopping for some acquisition targets, instead, to drum up some buzz for a company that is getting more efficient, but seems to be losing some of the excitement that surrounded it years ago.
Just an average Tuesday in the Dow Jones newsroom.
I ran into a reporter in the halls here this morning, someone I know well but don’t see all the time as we work on opposite ends of the newsroom.
“What’re you up to?” she asked.
“Same thing I always am,” I said. “Trying to unlock the code. Figure out what it all means.”
“Will you share it when you do?”
“I dunno,” I said, “depends on what it says.”
That’s my job, basically, trying to crack the code. I feel like I’m in the Matrix sometimes, flooded with millions, trillions of bits of code, trying to piece it all together and figure out just what it is I’m looking at. Some days, it seems like the world’s going to implode. Some days, it seems like the clouds are parting. Some days I’m so busy it I’m drowning in information.
And it occurs to me that all of it is just part of a whole. The world’s never going implode, the clouds will always clear, only to come back again another day. The waters will always keep flowing, whether I’m in them or out of them.
There will be some resolution of the Greek crisis. It will involve a lot of pain for the Greek people, and it may or may not unravel the entire Eurozone (likely not, but these are extraordinary times.) There will be an end to the great deleveraging wave that has washed over our economy. The U.S. will some day find that great spark that will get the economy growing again (it hasn’t come yet, and it’s not on the horizon either, for that matter.)
US stocks aim to add to yesterday’s advance, helped by gains in Asia overnight and currently in European markets, along with pullback in the US dollar.
The buck played chicken with stocks yesterday, as both advanced early in the session but the buck blinked, unable to maintain an early spike.
Dollar index bolted higher again last night, but has since relinquished those gains, now at 80.77 after earlier rising well over 81. That’s energized commodities — gold and oil both up — and put a stronger bid into US stock futures premarket. February auto sales due for release today.
S&P futures up 5.60, DJ futures up 45. Ten-year lower, yield at 3.63%.
J.P. Morgan reported some strong earnings today. But what this bloggers eye were some of the sub-numbers in the earnings report. The bank booked $1.8 billion in investment banking fees. But don’t be fooled – that wasn’t from big M&A advising. But $429 million was in advisory fees. Instead, that $1.3 billion + remaining fees […]
You can’t lie to the Internal Revenue Service. But can the IRS lie to you? Congress spent much of the day grilling IRS officials for the revelations that came out last week that the IRS was targeting conservative groups. And some lawmakers didn’t like the answers they were getting and accused IRS officials of lying. […]
