Saturday, June 13, 2009

Going, Going, Gone

To say that the Federal Reserve is between a rock and a hard place could well be the understatement of the day. Treasury's sale of bonds do not go as well as the powers that be had expected. Let's face it, countries are not as interested in purchasing our debt anymore. So, interest rates went up almost an entire point. Fellow blogger Boom and Doom called this move approximately 8 months ago. He also predicted that CD's (which are as close to safe money as possible) will become more and more attractive in the future in part, due to the interest rate Treasury will have to pay to attract bond sales. However, this move begs several questions:

1. Will the U.S. Government raise interest rates in a time of deep recessions?
2. Will an increase in interest rates cause the consumer lending market to collapse?
3. Will businesses re-hire/hire anyone in a tight credit environment?

I would tend to say no to all of these questions. Right now, it seems as though the here and now are taking precedent over the future. And let's face it, the here and now is still a bit more serious than anyone is willing to admit!

I had the good fortune of running into a banker who is part of a diversity in the workplace initiative. He shared with me the good news that he and his organization received approximately $15.8 in stimulus money. The gentleman told me that his instructions are to crate as many jobs as possible. Sounds like fun right? His real concern is that the stimulus monies are only creating temporary work. Work that will last no more that three to five months. More importantly, he conceded that stimulus money does not constitute real growth... He raised the basic questions as to "What am I going to habve these people do?" "How well do you train a temporary worker?" Which leads us back to square one; where will growth come from? However, he did suggest that most banks in the United States are on solid financial footing... I will let readers digest whether an estimated $5 Trillion dollars in off balance sheet losses constitute solid financial footing.

Consumer discretionaries, particularly casino stocks continue to take a beating. MCRI closed under the $7.50 mark on Friday. WYNN another one of my short list members slipped below the Mason-Dixon Line to 37 and some change. That trade in particular appears to be best made in the 40-37 trading range.

Green shoots? I don't buy it. Amusement park attendance is down... way down. Some of the shops at Dollywood in Eastern Tennessee have even gone as for as sending workers home because they are so slow. Consumers are becoming fearful too of gasoline that is nearing the $3.00 per gallon national average.

The grilling that Ken Lewis (pronounced Loo-eth)took on Capitol Hill was only secondary to another drubbing Treasury took from the House Financial Services Committee. While I am schocked that Barney Frank is still allowed to handle the gavel at those meetings, equally concerning is Congress' lack of direction and lack of cohesion. But I am reminded that our great nation was founded on the basic principle of compromise... A footnote, BAC's stock moved above 12.00 this week, and appears poised to make another step to the upside... You can "bank"that Wall Street will accept whatever revisions in in over-sight, derivative trading, and accounting. LOn second thought, let's nix accounting standards. Maybe these new rules will be worth another 1,000 points to the upside.


In this blog, I have found an outlet which has allowed me to place reason and logic to a world that in many ways is senseless. As of late, many things just don't add up politically or economically. But I am still convinced that we live in the greatest country in the world.

Tribe Talk

Fausto Carmona and Jake Westbrook should be back in the big leagues within two weeks. This will add valuable arms to a beleaguered pitching staff. Yet as the cliche often goes, if it is not one thing it is another. Today, our bats took the day off giving St. Louis a game that should have invariably ended in another Tribe victory. Haffner is outright irritating, and Martinez should not be expected to carry the team. It is nice to see the bat of Choo come alive as well.

Grande Tirino
I would rate this movie two thumbs up. Clint Eastwood plays a crotchy old Archie Bunker type on steroids. The destruction of an old neighborhood, generational strife, and a basic human decency that we either share or do not share for one another. And it is this human decency that separates us from the other animals on this planet.


AX said...

interesting times. Should be fun to see if:

1. 30-year keeps rising and mortgages hit 6% again (already there in my opinion).

2. TARP is scam to build reserves in banks so they can buy treasuries at discounted rates (can they buy $1.5 trillion though?).

3. Lewis vs. Bernanke in battle of perjury.

4. Hafner, like other mysterious power outages in Boston (Pedroia and Ortiz have combined for 5 HR), is no mystery at all. Take out HGH and roids and you have injury prone singles hitters.

Anonymous said...

I wonder how long the FASB will allow banks to keep their Enronesquie off balance sheet accounting vehicles rolling?

For as much of a nut as Kucinich is, trust me, he is getting a few others to stand with him this time... and now it might start getting a bit ugly... As always he fights for the little guy!!!

A jittery market could and should push gold and oil up... something tells me a bigger plan is being hatched... and someone beside us shorts are going to be left holding the bag... As of now, it is clear that TARP was only a program to oil the wheels of big banking...

I think you can I can put balls outo f the park if we are pumped up on HGH... crazy stuff. Move over Bonds here comes AX...