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  • The European Union is doomed to fail, observes former Fed Chairman Alan Greenspan, because the divide between the northern and southern countries is too great. "The effect of the divergent cultures in the eurozone has been grossly underestimated," Greenspan says. "The only way to have several currencies from divergent nations lumped together is if they are culturally close, such as Germany, the Netherlands and Austria. If they aren’t, it simply can’t continue to work." (video)  [View news story]
    People still listen to this guy? What does Bernie Madoff think of the Euro debt crisis?
    Oct 25, 2011. 07:35 PM | 8 Likes Like |Link to Comment
  • Hitting the wires as Europe closes is Ulrich Schroeder, the head of KfW - a German Development Bank. Saying many banks are hardly able to finance themselves, he believes the current situation of the banking industry is much more dramatic than 2008.  [View news story]
    It's not good, but it's not 2008.

    2008 had several twists that are not present in this 'crisis', most notably, complex collateralization of financial products not fully understood by the parties holding them. Additionally, the pricing of subprime paper was chased upward using additional leverage, having a multiplicative impact on our switch from credit to cash and carry. I don't foresee a single deflationary event like LEH, primarily because people should know that countries like Greece and Portugal in their current form have unsustainable economies. Regulatory constraints on the banks as well as outstanding litigation related to events pre-2008 have everyone on edge. I think the comment by KfW should be taken out of context in that he's actually seeing slow manifestation of events as opposed to a quick hitter like the subprime mortgage meltdown.

    Europe has multiple levers yet still, and they will undoubtedly try to string this thing out as long as possible because the ECB is clueless and policy makers appear just as selfish over there as they are here in the states. In the meantime, both the U.S. and Euro will continue to flood the economy with paper. There are plenty of opportunities whether it be precious metals and currencies to stay hedged in your non-financial equities if you want to be there. I am concerned that some trades are a bit loaded right now. The real question is which currencies should you be in instead of holding US Dollars or Euros.
    Sep 5, 2011. 01:37 PM | 6 Likes Like |Link to Comment
  • The supercommittee breakdown will likely lead to more "lengthy and heated" battles over the deficit throughout 2012, HSBC says. At some point rating agencies will lose their patience, so be wary of further downgrades of the U.S. sovereign credit rating "at some point next year."  [View news story]
    Should have had both sides pick favorite initiatives from Bowles-Simpson, and each week where a deal is not reached, a policy decision is implemented by choice of either party. Then, we recalibrate and the target is moved forward, up to the point where we hit it without any compromise.

    I actually don't think either side wants to get a deal done, and therein lies the problem.
    Nov 20, 2011. 03:31 PM | 5 Likes Like |Link to Comment
  • Chipotle (CMG) dips in the post session, giving back most of the day's gains after hedge fund manager Jeff Gundlach repeated his short thesis on the company during his presentation today at the Ira Sohn Conference. “All you need to compete with CMG’s core business is a taco truck,” he quips. In fact, Gundlach takes it a step further, saying he's not interested in virtually "anything related to middle-class consumer discretionary income.” [View news story]
    All you need to compete with $WMT is a bunch of shelf space and a smiley face next to everyday low prices.
    May 8, 2013. 08:45 PM | 4 Likes Like |Link to Comment
  • Wall Street is losing some of its cachet among America’s best and brightest college students, and is facing a serious recruiting problem. As its professional image continues to get tarnished by a series of highly publicized industry scandals - such as the one buffeting Goldman right now - college students who were once attracted to prestigious banks like moths to bonfires have begun turning to other industries in search of success.  [View news story]
    I am a recent MBA grad from a decent school, albeit non-ivy.

    I am not so sure that people seek higher education in finance only to find creative ways to put your hand in the other guy's (muppet's) pocket.

    Lessons learned in finance can help you contemplate key strategic decisions as they relate to your business. There were plenty of entrepreneurs and those in completely unrelated industries pursuing higher education in finance. I know that if I didn't get a masters, my career prospects would be capped - though I found the experience fulfilling even though it didn't translate to a lucrative Wall Street banking job.
    Mar 17, 2012. 11:26 AM | 4 Likes Like |Link to Comment
  • The keyword used to be "synergy" - the justification for a host of mergers with varying success rates. In 2011, it's the spinoff that's in: Twenty public companies this year have announced they're breaking pieces off, including Abbott Labs (ABT), Kraft (KFT), ConocoPhillips (COP) and Sara Lee (SLE). And whatever the reason, Dan Primack says, it's good for the economy.  [View news story]
    The spin-offs that would really be good for the economy are if the larger TBTF banks started spinning-off or divesting some of their businesses aggressively.

    I'm a big fan of simplicity and understanding your core business. While having a diversified and progressive business operation, when one part of your business becomes an impediment to the entire organization, constraining how you invest in it further through capital expenses or compensation to keep your best people, it's time to reconsider the best way to grow that business.

    BAC has a tremendous bankcard division through their acquisition of MBNA in 2005. That acquisition was for $35 billion dollars. That represents more than half the market cap of Bank of America today. You can see other instances if you look at C, WFC, where the value of the parts of a bank (card processing, asset/wealth management, insurance) are greater than the whole.

    I know it was Sandy Weill's dream to make one bank your one stop shop for everything, but instead we have large, clunky banks where one unit subsidizes the mistakes of the other. A break up of large banks would be great for shareholders of financials and great for the economy as well.
    Oct 22, 2011. 08:59 AM | 3 Likes Like |Link to Comment
  • Recovery isn't a complicated calculus: You can't have it until housing bounces back, and that won't happen until banks figure out a comfortable middle ground on lending - which means consumer debt is still the key issue, Fox's Dunstan Prial writes. Consumer spending is some 70% of the U.S. economy, and the average consumer has a debt-to-income ratio of 150%.  [View news story]
    We have been devaluing the dollar for 3 years in attempt to boost housing. We've been creating money supply to make up for trillions of leveraged paper lost in subprime.

    This effort has come up short, as consumers have continued to deleverage while not seeing the increase in their incomes.

    Mortgages have a big impact on the creation of said credit. 30-years of payments discounted back. If consumers were to come back to housing, the impact this would have on the creation of credit and the health of the financial system would be huge. Unfortunately, I don't think there is a fair way to engineer this type of activity without picking winners and losers.

    I think a good place to park your money in a ZIRP environment until we see home price inflation is multifamily apartment REITS. Consumers are still willing to absorb higher rents as long as it doesn't mean increasing their debt burden. I understand that rents are considered financial obligation - but it offers flexibility in that they are locking in for typically a year, and they don't need to take actions that leave them at the mercy of the market once their lease is up. It provides them with mobility to seek employment in other locations.

    Housing will one day come back - once aggregate demand comes back and incomes increase. The damage done to the economy through subprime was far worse than most have ever imagined, but if we view economic health as a relative concept, the US is actually in better shape than many other economies - as crazy as that sounds.
    Oct 8, 2011. 10:48 AM | 3 Likes Like |Link to Comment
  • An army of lobbyists supported by tech giants Google (GOOG -1.1%), Apple (AAPL -0.8%), Cisco (CSCO -0.7%), and other tech giants mobilizes in DC with a singular goal in mind: create a tax holiday for $1T in profits sitting offshore. Though advocates say a repatriation holiday will help regenerate the economy, studies indicate the biggest effect from previous tax breaks is less dramatic...more stock buybacks.  [View news story]
    Stock buybacks will help though. Think of all of the near retired boomers hanging on to jobs just because their nest egg isn't where they imagined due to the recession.

    There are hungry, driven Gen Y-ers ready to take advantage of this and innovate. We need boomers to retire - the result will be two-fold. Decrease in the jobless rate as job seekers fill the void left by career advancement of the younger workforce and more innovators in the marketplace, making critical decisions to bring some of these fledging businesses out of the doldrums.

    This has to happen, as long as we are dedicated to protecting our corporations from failure.
    Sep 30, 2011. 10:44 AM | 3 Likes Like |Link to Comment
  • Fusion-io (FIO): FQ2 EPS of $0.13 beats by $0.05. Revenue of $120.6M beats by $0.68M. Shares -15% AH. (PR[View news story]
    Jan 30, 2013. 04:14 PM | 2 Likes Like |Link to Comment
  • MC poll: What are your predictions for 2012? Which way will stocks go? What about oil and gold? What will happen with the eurozone crisis, or U.S. unemployment? Any under-the-radar stocks or ETFs worth keeping an eye on?  [View news story]
    There is not much of a difference between democrats and republicans. They pretend to stand for ideology but in the end, they create all of this drama just to support the same protected class of people. I'm surprised to see educated people bickering over the party of one pulling wool over your eyes. Congress must be doing a much better job than their poll numbers suggest.

    The only thing that drives the world economy are invention and innovation. That is why the 90's were such a prosperous time. It's not because government policy inspired someone to make the world a better place -- they did it on their own.

    Based on technological advancement and increased quality of life, I see great things on the horizon. The stock market will typically lag this. Everything else to me is just noise and an attempt to transfer wealth from one party to another.
    Dec 26, 2011. 03:33 PM | 2 Likes Like |Link to Comment
  • Not since at least 1960 has the U.S. standard of living fallen so fast for so long. The average American has $1,315 less in annual disposable income now than at the start of the recession. More pieces of evidence (as if you needed them): The misery index has hit a 28-year high, real GDP is mired at 2005 levels, and median paychecks are at their lowest since 1999.  [View news story]
    The problem isn't with redistribution of income, it's with the original distribution. If you believe that the median American is dumber, lazier, and not worthy of keeping up with their standard of living from 10 years ago in the face of a substantial rise in food and commodity prices, you still have acknowledged that there is a problem.
    Oct 20, 2011. 06:38 PM | 2 Likes Like |Link to Comment
  • Hitting the wires as Europe closes is Ulrich Schroeder, the head of KfW - a German Development Bank. Saying many banks are hardly able to finance themselves, he believes the current situation of the banking industry is much more dramatic than 2008.  [View news story]
    No - but the majority of the equity market, as valued in nominal currency, is starting to price in a swan. Perhaps it's a bit of hangover and skepticism from 2008, but we'll get to a point where something beyond a Portugal, Italy, or Greece hard default to justify some of these moves. We'll need some serious contagion beyond what happened in 1997. Surely the monetary union complicates the situation, but there is still room for looser monetary policy as well as Eurobonds, which will eventually happen so long that there is not dissolution of the Union, which of course, would be a swan that the bears have been looking for.

    I'm not saying that it won't happen, but we're nearing an inflection point that the burden shifts to the bears to make their case as to what will happen. How many large bank failures will there be and how will the U.S. and China allow policy makers in the EU let banks fail? I'm just curious to see how bears think it all plays out.
    Sep 5, 2011. 05:04 PM | 2 Likes Like |Link to Comment
  • Pimco's Bill Gross makes mistakes? All the more reason to question whether you're paying too much for your bond fund (which probably isn't managed by someone with Gross' track record). Some investors are giving up a quarter of their return to fees and would do far better with bond ETFs like BND, AGG or LAG.  [View news story]
    Bearfund, I agree with the majority of what you posted, but at the end of the day, Bill Gross has underperformed in 2011.

    He's a fund manager. We all know that the treasury market is being artificially propped up. If a fund manager purchased CDS a few years ago knowing that the Fed/Gov't would make sure that buyers received 100 cents on the dollar in spite of counterparty failure, he was on the winning side of the trade and delivered to his investors. If a fund manager purchases equity/debt in a company because he thinks that it will get bailed out and it does, he wins. This is not about trying to make a statement about what is right or wrong about government entities picking winners or losers, it's about managing money and returning growth/income for his clients.

    I get what Bill Gross is saying. Believe me I do, but he's a fund manager - not a talking head, not an economist, not a policy maker. It is his role to understand the agents, risks, and the macro behind his strategy, and he whiffed. He was wrong, and he admits it.
    Sep 3, 2011. 03:48 PM | 2 Likes Like |Link to Comment
  • Feb. Consumer Price Index: +0.7% vs. +0.5% expected, 0.0% prior. Core CPI +0.2% vs. +0.2% expected, +0.3% prior. [View news story]
    Growth always leads inflation, ask Japan. We're OK for the time being but the Fed needs to start thinking up an exit strategy.
    Mar 15, 2013. 09:18 AM | 1 Like Like |Link to Comment
  • Fusion-io (FIO): FQ2 EPS of $0.13 beats by $0.05. Revenue of $120.6M beats by $0.68M. Shares -15% AH. (PR[View news story]
    It's in the PR .. $80 mil for q3 top line.
    Jan 30, 2013. 04:20 PM | 1 Like Like |Link to Comment