Category Archives: Investment outlook

Dallas Fed Chief Talks of Sustainable Growth, Rising Inflation Risks

Members of the Fed officialdom are doing their best to preserve the Fed’s policy options (i.e, not cave in to market pressures at the next FOMC meeting) by talking down expectations of another rate cut. Dallas Fed President Richard Fisher, in Sydney, spoke of solid US economic fundamentals and increasing inflation risks. Note that Fisher […]

"The establishment of the capital world, hesitant and uncertain"

John Dizard of the Financial Times has a fascinating article in which he goes to the blue-chip art auctions to get a reading of the mood of the Seriously Rich. And what he finds is not encouraging. Even the wealthy are rattled. He also argues that the Euro is overbought and will trade down by […]

Yet More Doubts About the SIV Rescue Plan

Sometimes I feel like I am beating a dead horse, or in this case, an about-to-be-stillborn one. The leak over the weekend revealed that the sponsors of SIV salvage operation, the so-called Master Liquidity Enhancement Conduit, had come up with a deal structure. That’s an important hurdle, but it still puts the concept a long […]

CDOs: The Ticking Time Bomb

The equity markets seem to have finally realized that conditions are ugly in the credit markets, due to get uglier, and the mess will pull down the real economy. And the bad news continues. The dollar index fell to a new low. Wachovia said the value of its subprime securities, largely “super senior” tranches of […]

When Do We Hit Bottom?

The question posed in the headline isn’t exactly the one Gillian Tett and Paul Davies address in a long and worthwhile analysis at the Financial Times, “What’s the damage? Why banks are only starting to uncover their subprime losses.” But that’s because, as the piece make clear, we are only at the end of the […]

Day After the Rate Cut, Lobbying Begins for the Next One

I will confess to being cynical about the reporting in the Wall Street Journal. As we have noted repeatedly in the past, it generally goes overboard to stress the positive its market-related reporting. That says the reporters too often lack the time or savvy to go beyond their sources’ spin. Now Thursday was undeniably a […]

Jim Rogers Increases His Bets Against Investment Banks

Famed investor Jim Rogers has been down on the investment banking industry for some time, and thinks there is even more reason to be negative, as a Bloomberg story reports. However, I think George Soros would take exception to the characterization of Rogers as “co-founder” of Quantum. Rogers most assuredly worked for Soros. Note that […]

Arguing Against a Rate Cut

Despite the widely-held view that the Fed will lower the Federal funds rate another 25 basis points this Halloween, some continue to argue against further reductions. We’ve taken that position here before, and will recap some of the reasons. The 50 basis point cut in September was a pre-emptive strike, based not on evidence of […]

An Update on Housing Market Downside

The New York Times, in “Reports Suggest Broader Losses from Mortgages,” does a workmanlike job of providing an update on the losses likely to result from the housing slump. Nevertheless, the piece feels woefully incomplete. It’s not the authors’ fault, but the bad news is coming in faster the experts can update their estimates. Today, […]

Jim Rogers Abandons the Dollar

Bloomberg reports that famed investor/fund manager Jim Rogers is moving entirely out of US $. He depicts the US as in the process of losing its reserve currency status (a theme familiar to readers) with dire consequences for the currency’s performance. From Bloomberg: Jim Rogers, chairman of Beeland Interests Inc., said he is shifting all […]

The Clear and Present Danger of Inflation

We’re a bit late to a very good comment in today’s Financial Times, “Interest rate cuts will not solve the crisis,” by Wolfgang Munchau. Munchau argues that despite inflation targeting, the potential to move into an inflationary cycle is greater than many analysts recognize, and that even a small increase in inflation at this juncture […]

The SIV Bailout Plan: Does the Math Work Even for Citi? (Revised)

A reader question got me to work through a back of the envelope calculation of what the SIV rescue plan, the so-called Master Enhanced Liquidity Conduit, would buy for its chief beneficiary, Citigroup. What I came up with gives cause for pause. It’s one thing to know in a general way that a proposal is […]

"The Financial Crisis – Why It May Last"

An excellent post by Angel Ubide, an economist for Tudor Investments as well as for the Center for European Policy Studies, at Vox EU (you need to click through to Telos to read the full text). He starts with a simple premise, that this crisis can’t be about liquidity because aggressive injections of liquidity haven’t […]

In Case You Thought the Credit Crunch Was Over….(SIV Rescue Edition)

The recent record highs in stock market were presupposed on the notion that the credit crisis of the summer was now history and that growth would resume its former course. Investors chose to regard large writeoffs at UBS, Citigroup, Merrill, and Deutsche Bank as signs that they were all putting the problems behind them. That […]

On Earnings Prospects and the Accuracy of Forecasts

The Financial Times’ Lex column today, in reflecting on the coming anniversary of the 1987 crash, dashes cold water on those who continue to be optimistic about corporate earnings. Independent of the outlook for housing, it seems quite remarkable that analysts can come up with forecasts of meaningful aggregate increases in earnings over the next […]