Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Arcanaut
novahockey
quarterback
ScottC
yellojktVital Statistics:
| Last | Change | Percent | |
| S&P Futures | 1355.9 | 0.0 | 0.00% |
| Eurostoxx Index | 2513.0 | -6.0 | -0.24% |
| Oil (WTI) | 106.31 | 0.0 | 0.03% |
| LIBOR | 0.4906 | -0.001 | -0.20% |
| US Dollar Index (DXY) | 78.971 | -0.254 | -0.32% |
| 10 Year Govt Bond Yield | 2.03% | 0.02% |
Markets are flat on a better than expected jobs report. Initial Jobless claims were 351k vs 355k expected, and continuing claims dropped to 3,392k vs 3,455k expected. The FHFA House Price Index will be released at 10:00 am and the Kansas City Fed Manufacturing Activity Index will be released at 11:00. Bonds and MBS are flat-to-slightly lower.
Freddie Mac released its February Economic Outlook yesterday. Punch line: Housing is recovering gradually. Interesting statistic from the report regarding affordability: “At the end of 2011, a family earning the median family income had almost double the income necessary to qualify for a conventional loan covering 80% of a median-priced existing singly-family home.” Mortgage applications rose by 4.1% in January, and 80% of those were for refinancings. We are entering a seasonally strong period for house prices – it will be interesting to see if low rates and low prices finally pull people off the sidelines.
For a glass-half empty view, look here. Mark Hanson makes a very good point – that when a stock doesn’t do what it is supposed to do in response to news or events traders will key on that and position accordingly. A market darling that “beats” earnings expectations but doesn’t go up is a great short candidate. Mark makes the same point with housing – we have record low interest rates and affordability, yet housing isn’t going up. Which means it is going lower.
A few years ago, everyone was talking about the yen carry trade. Japanese companies would borrow yen for basically nothing and invest in higher yielding assets overseas, typically in Europe. Traders would watch the Euro / Yen cross rate like hawks, and every time the euro weakened against the yen, world markets would roll over. After the financial crisis drove everyone into Treasuries, people have been wondering when the dollar carry trade would take over. Well, it looks like that day has come. J.P. Morgan has been picking up European MBS to find some yield. While a $72 billion bet on foreign MBS is a drop in the bucket, if JPM is doing it, so is everyone else.
Filed under: Uncategorized |
All Things in Moderation 
Where’s the bailout?
“Sears Posts Big Loss, Sells Stores to Boost Liquidity”
http://www.cnbc.com/id/46495553
As Sears move towards ultimate bankruptcy and disolution, why won’t the Federal governmnet step in?
As of two years ago, Sears had more employees than GM and Chrysler combined, 322,000.
http://money.cnn.com/magazines/fortune/global500/2…
It has many, many more locations than the carmakers, and so a bailout woud be much more national in scope.
Sears pension plan is only underfunded by about 2 billion dollars, or less than 10% of GM’s underfunding.
http://myinvestingnotebook.blogspot.com/2009/07/se…
Finally, Sears, unlike Chrysler, is a publicly traded company, with a higher debt rating still in place.
So how about it Feds, time to step in?
LikeLike
Does Sears still have some affiliation with Martha Stewart? Might be time to send her to jail, again. I’m sure she’s done something else that our senators and congresspeople do every day that she could be thrown in jail for. 😉
I suspect a retail store will be seen as something there are plenty of, with plenty of competitors sitting, at the ready, waiting to step in. Sears has a problem much like Kodak—there’s plenty of business to be had, as there was with Kodak, but their business model was designed around a marketplace that no longer existed. Kodak still actually made plenty of money—they just lost even more. But in the old film-and-processing days, their profit margins were huge. Wa-Mart and Target prove, quarter after quarter, there is huge money to be made in retail. They just make it with much lower profit margins than Sears was accustomed to.
Kodak had digital cameras and printers. Kodak effectively invented digital cameras. But they couldn’t adjust to a more competitive, much lower margin marketplace.
LikeLike
And let’s not forget Polaroid. Let’s spend billions on trying to force our highly profitable 20th century product lines on a 21st century public.
LikeLike
This isn’t going to happen obviously, but it was just an exercise to show that all the arguments used for the auto bailout could be applied to Sears, except for market share.
LikeLike
“bannedagain5446, on February 23, 2012 at 8:22 am said:
This isn’t going to happen obviously, but it was just an exercise to show that all the arguments used for the auto bailout could be applied to Sears, except for market share.”
This was obvious when they let Circuit City tank in 2009 during the middle of the financial crisis. Presumably the same external credit limitations that required the government to step in to help finance the automakers structured bankruptcy (after the initial bridge loans) also affected Circuit City as well, however no bailout was forthcoming as they weren’t politically popular or connected enough.
In any event, despite the fact that the Obama administration is touting the bailouts as a successful policy, they have also promised to never do them again.
“Let’s never forget: Millions of Americans who work hard and play by the rules every day deserve a government and a financial system that do the same. It’s time to apply the same rules from top to bottom. No bailouts, no handouts, and no copouts. An America built to last insists on responsibility from everybody. ”
http://www.whitehouse.gov/photos-and-video/video/2012/01/25/2012-state-union-address-enhanced-version#transcript
LikeLike
jnc:
Until the bill for GM’s pensions comes due.
LikeLike
“built to last”
product placement — that’s a GMC ad, right?
LikeLike
Ezra Klein on the moving target of what is
‘levy’s‘left’ or ‘right’ :http://mobile.bloomberg.com/news/2012-02-23/why-voters-shouldn-t-trust-their-own-political-party-ezra-klein.html?wpisrc=nl_wonk
LikeLike
Levy’s = left
LikeLike
” This isn’t going to happen obviously, but it was just an exercise to show that all the arguments used for the auto bailout could be applied to Sears, except for market share.”
What about collateral damage?
LikeLike
What about collateral damage?
Well, it will be bad for Kenmore. Of course, Kenmore appliances are (as far as I know) all appliances from other manufacturers, rebranded with the Kenmore name, so I don’t suppose that’s much of an issue. There could be a lot of malls who would suffer, as Sears is, typically, a significant anchor store, and thus a significant source of revenue for the mall, and most malls would find it difficult to find another anchor store to replace the Sears.
LikeLike
“Levy’s = left”
Reminder, here you can edit posts after the fact.
LikeLike
Yay, one of those irrational days on the street, when we go up for no reason whatsoever!
LikeLike
bsimon: re: Ezra’s article.
One part he leaves out is that, in many cases (the individual mandate being one), the party itself is split. So it’s not like the part is trying to define left or right; politicians within the party may be trying to do so. There tends to be some objection when members of a given party, who assert they are on the right are left, do things that seem philosophically at odds with their espoused ideological position. The individually mandated alternative to Clinton Care was superior to the Clinton healthcare bill, but was clearly not beloved of all Republicans, and certainly not the rank and file. Politicians make political calculations, and pundits and even media sources (either due to bias, or other reasons) tend not to call left-wingers embracing right-wing tactics or concepts out of political convenience (or vice-versa) out. Generally, when you are attacking a tactic or piece of legislation, associating that tactic, or piece of legislation, with your side is not desirable.
But there are things we generally association with being left or right, or conservative or liberal, that are painted with too broad a brush. There are numerous big government conservatives, and even they are divided. Some would like a wealthier and more solvent government that can spend money on public works, scientific research, and space exploration (I would be that kind), while not supporting the constant explosion of regulation and government micromanagement that comes out of Washington and the state level. Other conservatives may want to slash taxes and spending, but are comfortable with the government passing all sorts of laws, so long as they are laws they see as accomplishing desirable economic or social or security goals. I’ve talked to liberals who are as rabid supporters of the 2nd amendment as any tea partier. Liberals who think we should cut government spending (social spending as well defense) but raise taxes on the wealthy to prevent “unhealthy” concentrations of wealth at the top. And there are plenty of liberals who want universal healthcare who don’t support individual mandates, or the ACA.
There are conservatives who consider the US a beacon of freedom, with an obligation to put boots on the ground almost anywhere there is strife in the world, or anywhere we need to protect the free flow of oil, and liberate people under the yoke of dictatorships. There are other conservatives who think we need to have a strong standing army, but don’t need to get involved in every skirmish, or conduct pre-emptive wars. And so on.
In short, I don’t see anyway to avoid issues flip-flopping from right to left and back again. It’s not just a matter of political convenience, but a matter of which issues how many people of a party may support at a given time. A given Republican may not change their stand on individual mandates, but there were certainly plenty who were opposed to them even when their own party was doing it. They are certainly going to object when it’s the other party.
Also, it’s one thing, politically and practically, to support individual mandates as an alternative to the wildly over-ambitious Clinton Healthcare proposal (where, at least at one point, the government would be assigning doctors to their specialties, controlling how many doctors could practice in a given area, controlling what they could make and how much they could charge, yada yada), where there were some who believed it was the lesser of two evils, and opposing the ACA, where it seemed possible to just keep the government out of healthcare altogether, rather than just attempting to minimize government involvement. Also, it was one thing to be against individual mandates on the left, when it looked like we might get single payer (and centralized control of all healthcare in the United States), and another to support it when it looked like it was going to be the only game in town. Sometimes this left/right flip-flopping is a matter of politicians and partisans opting to lose small, rather than lose big, or win small instead of losing big—not a matter of changing their ideals to fit the political mood of the country.
A pragmatic politician, or partisan, takes what it appears they can get. When it appears they can get more, they’ll go for more. When it appears they cannot, they’ll go for the less. This looks like flipping from “left” to “right” in the abstract, when it’s just sliding, based on both political considerations, but also what may be possible at a given point at time. They do call politics “the art of the possible”, after all.
LikeLike
Reminder, here you can edit posts after the fact.
A feature for which I am very grateful.
LikeLike
Ah, but there’s a value in the “wince” factor.
LikeLike
this article explains two things (at least)
– why those insitutions that make mortgage loans and consumer loand have shifted capital away from the former to the latter because they make more money, and
– why the US auto industry’s and it’s captive lenders (Ally, etc) are a ticking time bomb, going back to all the practices that got them in trouble in the first place
http://www.cnbc.com/id/46496052
LikeLike
I was associated with Sears for many years in the late 1980s and 1990s. It was badly run then and it’s even worse now.
Despite the fact my Sears pension will probably be history if it goes under, it would be a mistake for the feds to step in.
LikeLike
my Sears pension will probably be history
You will probably be spared. Sears pensions are not severely under funded and the Pension Benefit Guarantee will probably kick in.
LikeLike