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President Obama spent some time in a backyard in Ohio yesterday, which is better than spending it on a golf course; unfortunately this listening tour underscores just how backwards the priorities were out of the gate. This tour was to be some kind of victory tour, the summer of success, touting all the achievements of the stimulus and other government programs. But, it's just not working anymore. The hype, spin, and untruths, that is. People are tired of the notion that millions of people would have been out of work if this and if that didn't happen. At this stage of the game, nobody wants to hear "if" or twisted facts and non-facts. I hope a message was delivered to President Obama instead of a sales jobs delivered to the good folks in a backyard in Ohio.

The White House message now is give us time, as it's going to take years to get this right. That's a far cry from the promises, so many promises, from limiting unemployment to 8.0% to going through the budget line by line and to uniting the nation. If there was a real effort to arrest the economic downturn and turn things around, people might be willing to consider entertaining the hype and spin. It's falling on more deaf ears these days just as concerns from Americans have fallen on deaf ears at the White House. Turnabout is fair play.

Another huge takeover deal in the works this time is a U.S. name, and a big U.S. name at that. Intel (NASDAQ:INTC) is buying McAfee (MFE) for $7.68 billion in cash. This is a huge premium, but the stock closed at a 52-week low yesterday so it's a win-win for both parties. I love these big deals, and I think more will come. Companies are loaded with cash, and some have begun increasing capital expenditures while others will cut to the chase and make acquisitions. The good news is this suggests businesses see the economy maybe as hitting a bottom, and at some point over the next year making a meaningful turn higher.

It also serves as a lesson in value, which is largely ignored by investors these days. There was no hint at this deal from the charts, but some will be telegraphed. But, the best way to be in a major mega-deal is to understand value and weather some initial weakness.

Free Markets

After all the bailouts and easy money, it turns out banks have only recently begun easing lending standards for would-be homebuyers and businesses. With demand in the gutter, banks (who are actually in business to lend money when not getting freebies from the government) have to fight for business, and that's great news. With the kind of money on the sidelines that will eventually seek returns, banks understand they must make it easier to seduce reluctant borrowers-in-waiting into the mix. It's only a trickle right now, but banks are lowering standards, and at some point will make getting loans more attractive.

If the government moves out of the way, this ritualistic dance between banks and would-be borrowers would get hot and heavy, and ignite the economy.

A couple of days ago the Federal Reserve released its Senior Loan Officer Opinion Survey on Bank Lending Practices. As it turns out, banks eased lending standards for the first time since 2006. Commercial and industrial loan demand edged up slightly even as standards eased "somewhat." (click to enlarge)


There were many selections for why banks were easing credit standards or loan terms; the following two stood out to me. It's not about the economy as only 3 of 32 banks choose that answer.
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The issue of risk tolerance is still a key issue, but more respondents said it was "not important" but equally "somewhat" and "very" important.
(click to enlarge)

The biggest reason banks are making credit and loans easier is competition. If you connect the dots there is no doubt thin demand is making banks more aggressive. This debunks the notion banks don't want to lend money.
(click to enlarge)

On the topic of demand, smaller firms are still more reluctant than larger ($50.0m +) to seek Commercial and Industrial (C&I) loans and in fact, banks report demand is moderately weaker than stronger.
(click to enlarge)

For residential mortgage loans, 48 of 55 banks replied standards "remained basically unchanged", with five large banks saying there was some easing, and two small banks saying standards tightened somewhat. There is some softening that is now allowing the 90% financing to come back, after a mandatory 20% down became the norm during the financial crisis.

Economic Data

Initial jobless claims hit 500,000. This is a shockingly sad number that should piss everyone off. I want to cry for my country because it feels like the best we could get is a jobless recovery with a new permanent underclass.
(click to enlarge)

Disclosure: None

Source: My Goodness, 500,000 Initial Jobless Claims