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  • Fiscal cliff negotiations between Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell hit a major snag after Republicans demand use of the "chained CPI" method for calculating entitlement benefits - which would result in lower payments for Social Security beneficiaries. Pres. Obama backed the provision previously, but Democrats now object to including it as part of a scaled-down deal. Updated 5:51 p.m.: The Senate won't vote tonight and will reconvene at 11 a.m. tomorrow, Reid says. [View news story]
    To bgold1955. Simply put, the answer is an unequivocal YES. Defined contribution vs. defined benefit and YOU make your own investment choices...unless your emotional dependency on the Feds is just too great.
    Dec 30 06:11 PM | 3 Likes Like |Link to Comment
  • The House will reconvene on Sunday in an attempt to strike a last-minute fiscal cliff deal, Congressmen have been told. Equities are bouncing on the news. S&P -0.8%. Dow -0.5%. NASDAQ -0.6%. Pres. Obama may have a new proposal for Republicans to weigh. [View news story]
    a wholly-likely "kick the can down the road" outcome, at best. it's just so embarrassing to be an evolving 3rd. world country. and, that's probably an insult to a number of 3rd. world countries.
    Dec 27 03:09 PM | 2 Likes Like |Link to Comment
  • HCA Holdings (HCA) announces a 32M share secondary offering consisting principally of affiliates of, or funds sponsored by, Bain Capital Partners and Kohlberg Kravis Roberts. The Selling Stockholders will receive all of the proceeds from this offering. No shares are being sold by management or the company. Morgan Stanley will act as sole underwriter for the offering. [View news story]
    smart. get it sold before the Fed's jack capital gains rates.
    Dec 10 04:57 PM | Likes Like |Link to Comment
  • Loomis Sayles' Matt Egan issues a bit of a warning on high-yield, noting their only upside at this point is the coupon (not something to sneeze at). If prices rise any further, expect issuers to refinance into lower rates. The downside is defaults, and with the default rate as low as it currently is, they can only go in one direction. [View news story]
    how can you have a "pull to par" effect from an asset class (HY bonds) that already trades near at it a new all-time mark in terms of low average coupon. i cant think of one meaningful HY bond index that is used as a benchmark by institutional investors where the average price isnt already above par.

    no one should invest in this asset class on in leveraged loans through funds or ETFs expecting a "pull to par" when they arent ACTIVELY managed. these days "pull to par" really requires thorough, single-name analysis of below-par bonds and loand and the identification of possible catalysts (fundamental or strucutural) which, over time, should result in value creation.
    Dec 6 03:43 PM | Likes Like |Link to Comment
  • Loomis Sayles' Matt Egan issues a bit of a warning on high-yield, noting their only upside at this point is the coupon (not something to sneeze at). If prices rise any further, expect issuers to refinance into lower rates. The downside is defaults, and with the default rate as low as it currently is, they can only go in one direction. [View news story]
    i agree on all points except the last. while i would not expect overall default rates (and one should really look at them on a ratings-basis) to go down, i dont expect them to move meaningfully up, either. if one is following the huge refinancing which has occurred in both the HY loan and bond market (and which is steaming ahead at least until the holidays finally arrive), we've been on a multi-year surge on refinancings (which Egan himself indirectly notes) which have pushed out the next leveraged credit market "cliff" for several years. this is even more so given the high refinancing rate (with better terms, too) of shorter duration leveraged loan.

    even if the economy remains at its current lackluster growth rate, even if we head over the fiscal cliff, many/most of these companies have stockpiled cash and reduced capex spending and would likely do OK. if we get a fiscal cliff agreement, economic growth will rise and operationally these companies should be in a much better place.

    the real risk here is to investors HY loans and bonds. on the one hand, total return in this environment will likely be no better than the coupon yield, and in the worst case, rising rates will erode prices and spreads in both asset classes
    Dec 6 10:14 AM | 1 Like Like |Link to Comment
  • The reason for the worsening jobs picture, writes Floyd Norris in the NYT, is because everybody looks at seasonally adjusted figures. "But those adjustments most likely overstate reality." Pre-adjustment, the private sector added 800K jobs/month in the last 3 months, while in June, the number of jobs rose by 1.8M Y/Y. Expect a poor July and August, a pick-up in September and an impressive October.  [View news story]
    To all who believe that the introduction/extension of the ACA will lead to lower insurance premiums for those of us who will be paying for this:

    1) Please name for me ONE Federal government introduced and managed program of ANY TYPE that has resulted in forward costs actually going down, please;

    2) All we can do is to somewhat suppress what I expect to be dramatically higher national health expenditures and i believe we will do that by reducing Medicare fees to providers of all types and for hospitals to replace experienced providers with less experienced ones, or to replace them with less qualified care administrators. This is already happening, for example, in anesthesiology where "nurse anesthitists" are beginning to supplant actual physicianse. CBO estimates that the ACA will reduce the deficit and reduce the INCREASE in costs (note:notice the phrase "reduce the increase in costs") are all bullshit because as anyone who has any semblance of financial modeling knowledge knows, 10-year-out estimates of savings are worthless.

    3) if you love nationalized, single payer (read: government, through your taxes) health plans, then you must be looking forward to our future, because that's where we are headed. Ever wonder why so many Canadians cross the border to the U.S. to privately pay for cancer treatment, cardiac care, knee/hip transplants or renal dialysis?. Or why the National Health Service in the U.K. actually filters out those for whom they will pay for this care?

    Can you say "death squads"
    Jul 9 10:13 AM | 2 Likes Like |Link to Comment
  • The reason for the worsening jobs picture, writes Floyd Norris in the NYT, is because everybody looks at seasonally adjusted figures. "But those adjustments most likely overstate reality." Pre-adjustment, the private sector added 800K jobs/month in the last 3 months, while in June, the number of jobs rose by 1.8M Y/Y. Expect a poor July and August, a pick-up in September and an impressive October.  [View news story]
    Tack:

    All i want to do is to disconnect investment markets direction/trends from job formation causality.
    Jul 8 12:59 PM | Likes Like |Link to Comment
  • The reason for the worsening jobs picture, writes Floyd Norris in the NYT, is because everybody looks at seasonally adjusted figures. "But those adjustments most likely overstate reality." Pre-adjustment, the private sector added 800K jobs/month in the last 3 months, while in June, the number of jobs rose by 1.8M Y/Y. Expect a poor July and August, a pick-up in September and an impressive October.  [View news story]
    ....and, by the way, the jobs picture still sucks here in the Chicago area and many other parts of Illinois as surging State and Local taxes (soon to augmented by surging Federal taxes) are driving many to leave the state and head for Wisconsin and Indiana.
    Jul 8 09:24 AM | 2 Likes Like |Link to Comment
  • The reason for the worsening jobs picture, writes Floyd Norris in the NYT, is because everybody looks at seasonally adjusted figures. "But those adjustments most likely overstate reality." Pre-adjustment, the private sector added 800K jobs/month in the last 3 months, while in June, the number of jobs rose by 1.8M Y/Y. Expect a poor July and August, a pick-up in September and an impressive October.  [View news story]
    first, i don't the that words such as "exagerated" and "hysteria" are anything but overstated and hyperbolic. second, i think that connecting the explanation that fears of a "folding" economy, bond default fears (in actuality, i doubt the "smart money" ever gave much credence to the possibility of a U.S. debt default from not extending the debt ceiling) to the that period's job creation, confuses two major issues: what impacts behavior-riddled investment markets and what "on-the-ground" factors drive employment. i just think don't think that causality can be verified. Third, is one to use events in Europe and globally as the reasons for this year's lackluster job creation? What reasoning shall we use next year? the "debt cliff'? An Obama re-election (if it happens)? the looming extension of the ACA?

    Perhaps the reason behind it all is much more simple: (1) increases in productivity have reduced the need to add more full-time workers as the economy endures minimalist GDP growth; (2) that this "step function" happens in all capitalist systems over time;(3) the hiring of more temporary workers, given employers's ability to avoid paying many benefits, including healthcare (whose costs are rising at 18%-20% annually) and, with the affirmation of much of the ACA, will only act as a disincentive for many small employers to hiring permanent workers.

    Cause and effect. Cause and effect.
    Jul 8 09:20 AM | 3 Likes Like |Link to Comment
  • The lackluster economic recovery is prompting homeowners to pay off their mortgages more quickly rather than buy things, says Parthenon economist Richard DeKaser. As such, "paying down mortgage debt is bad for economic growth," says FBR's Paul Miller, although it's good in the long run, "because it improves household balance sheets."  [View news story]
    Tack:

    Yes, i agree that refinancing at a lower rate can be tantamount to paying off mortgages more quickly depending on how the "saved cash" used. The effect on the economy is more immediate if the mortgage savings is spent or invested, and the effect on the economy is longer term if the savings is merely used to pay the mortgage at the previous amount. I'd still like to know what the writer thinks is the split between paying down first vs. second lien mortgages.
    Jun 14 03:08 PM | Likes Like |Link to Comment
  • The lackluster economic recovery is prompting homeowners to pay off their mortgages more quickly rather than buy things, says Parthenon economist Richard DeKaser. As such, "paying down mortgage debt is bad for economic growth," says FBR's Paul Miller, although it's good in the long run, "because it improves household balance sheets."  [View news story]
    hmmm....
    while ANYTHING is better than "recent credit bloated spending" i dont think this is as immediately bullish as my good friend, Tack thinks, unless the debtor is paying down home equity lines of credit which typically can be re-borrowed. if people are paying down their first mortgages, payment application can be "iffy". sometimes banks take it off the back end, sometimes they dont. but very few mortgages include provisions which recalculate the monthly payment due based on a paid-down balance. so, while it is good news in the longer run, i just dont think it necessarily frees up immediate cash for savings, investment or even spending.
    Jun 14 01:28 PM | Likes Like |Link to Comment
  • "What am I going to do with the other 60 years of my life," says Goldman Sachs (GS) CEO Lloyd Blankfein, responding to a question about whether he has plans to step down. The government isn't going to come calling with an offer, he says, "so that leaves staying forever and dying at my desk."  [View news story]
    I worked for Lloyd Blankfein and he is truly those who can be called "the smartest man in the room". His leaving Goldman would be a truly big loss.
    Jun 13 12:52 PM | Likes Like |Link to Comment
  • While not a worrying issue at the moment, Fitch says the broad outlook for the U.S. banking industry could worsen "unless the eurozone debt crisis is resolved in a timely and orderly manner." This can't be the reason for the late day selloff?  [View news story]
    To HerrHansa:

    I think you're comment is not unlike someone mixing metaphors. MF was a primary dealer in U.S. treasury securities and derivative, such as futures and options, and some foreign exchange products. The lack of liquidity in equities and many fixed income asset classes has nothing to do with MF. It's a reflection of traders/funds stepping back from the market because volatility has become unpredictable that no one has a decent view of whether the improving U.S. economy (albeit slow) can push our market up or whether rumored U.S. bank problems with European bank debt and sovereign positions will rule the day. You may think you're looking at major block sales, but the volume of trading has been significantly down in all asset classes for over a year. Liquidity means you have active bidders and sellers, which isn't the case now. And if you're worried about bank failures, don't be. Bank earnings were up over 38% last quarter and balance sheet quality from large capitalization banks down to local community banks continues to improve.
    Nov 16 04:49 PM | 1 Like Like |Link to Comment
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