Results 1,751–1,800 of 2,118 found.
Q2 2011 Bank Ratings; FSOC Memo on Bank America
We present our view on Bank of America (BAC Q2 2011 Bank Stress Rating: B) from the perspective of a fictional analyst named Herbert Gold working at the Fed. He has been asked to write the briefing for the Financial Stability Oversight Council, the vehicle created by the Dodd-Frank confidence in bureaucracy legislation to liquidate insolvent financial firms. But before we delve into a fanciful exposition on the importance of a parent-only analysis of a bank holding company, let's check on developments at IRA and the new Q2 2011 bank stress index (BSI) ratings for the US banking industry.
The US Financial Sector in an Environment of Turbulence
US financial companies have spent the past three years trying to improve their balance sheets. We saw this trend reflected in company reports of asset quality improvements, increasing capital and strengthening liquidity. Heightened anxiety about the European debt crisis, a potential slowdown in the global economic recovery and the US credit downgrade appears to have overshadowed financial company fundamentals. Fundamental improvements by financial companies have fortified the sector, leaving it substantially stronger than in 2008. Currently, we think financials are well positioned.
Perspective on the Fed, Inflation, and the Economy, as Well as Implications for Income Investors
The Fed recently took the unprecedented step of declaring their interest rate policy for the next two yearsthey will be holding their short-term rate target essentially at zero well into 2013. Well give our perspective on why the Fed has taken this unusual step, and what these policy decisions tell us about the state of the economy, inflation, and the bond market. Finally, well address potential solutions for income-oriented investors in todays environment of record-low bond yields.
Year-End S&P 500 Price Targets
Here is a table highlighting the year-end 2011 S&P 500 price targets of major Wall Street strategists from Bloomberg's weekly survey. We also provide where the targets stood at the start of the year when the slate was clean. As shown, the average year-end price target is 1,383, which would be a gain of 16.2% from current levels. Five firms have increased their targets while two have lowered them. The increases were done earlier in the year when the market was still in positive territory. It will be interesting to see how much these drop now that the market has turned decidedly negative.
What stage of deleveraging are we in?
The Litman Gregory research team has been assessing how long it will take for the U.S. economy to deleverage and when we can expect earnings to revert to the old trend line, which has been adjusted downward slightly after the great recession. The bottom line is that we think deleveraging started in late 2008 and that it will probably take roughly 10 years to complete the process. What this means is that going forward we will roll earnings forward at a slightly higher rate than we have in the past and, as a result, our fair-value point for the S&P will also increase at a slightly higher rate.
The GDP Growth Downgrade
While much of the nation focused on events leading up to the credit rating downgrade for the U.S. by Standard & Poors last week, this was preceded by another downgrade to the estimates of our recent, past gross domestic product (GDP) growth, which was announced by the U.S. Bureau of Economic Analysis (BEA) on Friday, July 27. While garnering much less attention, this revision has some serious implications for our economic outlook at least through the end of this year.
Volatility set a record last week when, for the first time in the Indexs 115 year history, the Dow Jones moved by more than 400 points for four consecutive days. The Index was down 635 points on Monday, up 430 points on Tuesday, down 520 points on Wednesday, and up 423 points on Thursday. We all know that the value of the underlying businesses did not change drastically even day by day. Jason Zweig said it well in his book, Your Money and Your Brain: In the short run, a stocks price will change whenever someone wants to buy or sell it and whenever something happens that seems like news"
Middle East/Africa: Economic Review July 2011
Inflation has been the highest in the MENA regions due to capacity constraints and food prices. While rising costs of food and oil have increased inflationary pressures in South Africa, Israels inflation rate has breached the target range set by its central bank. In addition, South Africa is witnessing strained consumer demand, while growing economic disparity despite lower unemployment rates has triggered social unrest in Israel. Jordan is also battling pricing pressures and is looking to bridge its wide funding gap by raising capital with the issuance of its first Islamic debt instrument.
Emerging Asia Pacific: Economic Review July 2011
China, India, Taiwan and Philippines and other Asian economies seeing inflation accelerate to new highs in June. In most of these countries higher fuel costs and food prices were the primary culprits. While large economies such as India and China hiked interest rates aggressively, many countries increased bank reserve ratios to drain excess liquidity and rein in credit growth. The lone exception to the inflation-ridden scenario in Asia was Indonesia. Indonesia has successfully navigated inflationary pressures by allowing its domestic currency to strengthen strongly.
Americas: Economic Review July 2011
Second quarter economic growth was weaker than expected in the U.S.. Canada is also expected to report slower second quarter growth, but may regain some of the lost pace by the second half. Slower growth in the U.S. will likely have a restrictive effect on economic activity in Latin America, especially in Mexico and Colombia, which have relatively deeper economic ties with the U.S. For the resource exporters in the region, the expected decline in global demand growth for commodities and industrial material is likely to be a dampener.
Economic outlook softens further as the fiscal crisis in the developed countries escalates. While the European debt crisis continues unabated, the unprecedented downgrading of U.S. debt has shaken investor confidence across the globe. Policy responses to the growing crisis so far are widely perceived to be ineffective, as deep ideological and political divisions make compromises inevitable. Monetary policy is also constrained as central banks have limited tools left to effectively address the slowdown in economic activity.
Emerging Europe: Economic Review July 2011
The European Bank for Reconstruction and Development (EBRD) has sounded a cautionary note for the east European region after a new $229 billion aid package for Greece by the Euro-zone leaders was awarded in July. The bank, which was established to help the former communist states in their transition to market economies, said Eastern Europe and central Asia are at serious risk from the Euro-zone debt crisis, according to a news report published by Bloomberg. Still, the EBRD upped its economic forecast for the current year for the countries where it has investments.
Developed Asia Pacific: Economic Review July 2011
Reconstruction spending in some key countries in the region, like Japan and New Zealand, also played a key role in improving labor markets. In Australia, however, labor markets turned sour as job losses inched up during the quarter. Inflationary pressures have become acute in Singapore and Hong Kong mainly due to labor shortage and a relentless rise in property prices. Economies that depend on China for their export industries are worried about a weakening in the Chinese economy in the quarters ahead.
Robert Rubin, Bank America and the fate of the dollar
This week in The Institutional Risk Analyst, we take a look at the latest week of inaction and indecision on the part of the leaders of the G-20 nations. Never has doing absolutely nothing taken so much time and garnered so much market and media attention. If the nothing doing dance by Barack Obama, Nicholas Sarkozy and Angela Merkel reaches a much higher frequency, life as we know if is definitely going to change big time. And that change may include altering the international role of the dollar, a change regarding which neither Congress nor the American people have been consulted.
Making Sense of the Markets
It is one thing to theorize about markets. It is quite another to invest. With that sentiment in mind, we offer a sampling of views from some of our portfolio managers across our firm who each independently form their own conclusions as to what to make of the market and how to position portfolios according to their respective investment disciplines.
Developed Europe: Economic Review July 2011
Sovereign debt problems on both sides of the Atlantic kept the global investment community anxious in July. While the U.S. government struggled to build political consensus on the terms for having its debt ceiling raised, European leaders negotiated hard to push their domestic agendas through, while deciding on the exact nature of another aid package for Greece. Eventually, concerns about a Greek debt contagion eased slightly after the country was given a 109 billion bailout, which included provisions for lower interest rates and longer repayment periods.
A Primer on Debt, Deficits, and Economic Growth
The recent kerfuffle in Washington over the extension of the debt ceiling presented investors with many competing arguments and seemingly contradictory information. On the one hand, we hear that debt is bad for growth. On the other hand, we are told that government spending is key to supporting the economy. And why is it that stocks tanked after an agreement was reached to avoid default and extend the debt limit? In this Weekly Market Update, we will try to provide some context for understanding these competing positions, as well as the recent market reaction to these events.
Global Investment Outlook: Aberdeen's monthly outlook for economies and markets.
Eurozone crisis threatens financial stability Global industrial production momentum may be turning back up Fiscal policy and sovereign indebtedness is the major medium-term issue Monetary policy remains accommodative with emerging countries becoming less restrictive
Update on Global Economic Uncertainty
Investors can afford to be less nervous in a market that has already declined significantly. Rather, we would recommend that investors should recognize the ability of these companies to generate earnings as well as their ability to sustain their dividends payments. Governments of all major developed and emerging countries have to deal with deteriorating economic forecasts, so until investor psychology calms down, patience may be needed. We will continue to monitor the changing investment environment and identify stocks that offer worthwhile investment opportunities.
Comments Regarding Recent Market Volatility
Uncertainty, in our opinion, is one of the most difficult factors for professional as well as individual,investors to deal with, and it is dominating the markets currently. Uncertain markets are characterized by increased volatility and correlation between asset classes, as well as increasingly shorter time frames for investment decisions. None of this, in our opinion, will improve the probabilities of earning a satisfactory return over a reasonable period of time. Rather, we think that in most instances, these will improve the odds of the opposite outcome.
Pacific Basin Market Overview July 2011
Equity markets in the Pacific Basin edged higher in July despite the ongoing sovereign debt issues troubling both Europe and the U.S. and the pressure from a slowdown in Chinas economy. Smaller ASEAN (Association of Southeast Asian Nations) economies continued to provide support this month, so the MSCI AC Asia Pacific Free Index including Japan and the MSCI AC Asia Pacific ex Japan Free Index closed 1.33% and 0.03% higher, respectively.
US Credit Rating Downgrade Q&A
Will foreign investors, who own almost half of US Treasurys, suddenly lose confidence in the US? We think not. The US is not the only nation struggling with a debt burden. But the US Treasury market is the largest, deepest, most liquid bond market in the world, by far. Investors may talk about diversifying their holdings away from the US dollar, but it is tough to execute. This is particularly true for countries who wish to maintain a fixed exchange rate or manipulate their currencies.
Insights from the 2010 Census
The good news is that while we are aging as a nation, we are also growing both in absolute size and the size of our young population. How quickly we grow is tied to a number of factors. But two of the most important are continued healthy economic growth (where a sense of growing affluence and economic possibility is a strong incentive for young adults to have children) and how liberal or restrictive our future immigration policy will be. Based on how these factors play out, we could easily be a nation of 450 million (or more) to 360 million (or less) just in the next four decades.
Winners and Losers in the Debt Ceiling Deal
In a last-minute attempt to stop the U.S. from defaulting for the first time ever on its loan obligations, Congress voted this week to increase the country's debt ceiling by at least $2.1 trillion. The deal includes $917 billion in spending cuts over the next 10 years, and the establishment of a congressional committee to reduce the deficit further by $1.5 trillion. Questions remain, however, about what is at stake. To answer some these and other questions, [email protected] spoke with Wharton professors Olivia S. Mitchell and Kent Smetters.
Recently, the Tax Court affirmed a tax deduction a family had taken for the 24 hour supervision needed for an elderly family member. Caregivers were hired-even though they were not licensed healthcare providers-and the family took a tax deduction for the cost of these caregivers. The IRS denied the deduction, but the Tax Court affirmed it. The Court went further by stating that the costs of maintenance and personal care services could qualify as a medical expense if a healthcare professional certifies that at least two of the six activities of daily living cannot be done without assistance.
Is the US a "BBB" credit? David Woolley on the MERS land title chain fiasco
In this issue of The Institutional Risk Analyst, we feature a summary of a paper by David E. Woolley, a California Licensed Land Surveyor and Certified Fraud Examiner, who is a principal of Harbinger Analytics Group in Tustin, CA. Thanks to David and Lisa Herzog, who edited the study and performed research, for summarizing the paper. But first a rant on the furious inaction of the past week.
Rough Waters? Trim the Sail
These are interesting times, to say the least, for politicians, businessmen and investors alike. Given the systemic challenges and political standoffs in the U.S. and Europe, we believe it's wise to keep a little extra powder dry. While we generally prefer to be fully invested, we believe our more conservative stance may help dampen the impact of what could be some extreme market volatility in the time ahead. The situation is fluid and we intend to redeploy the cash and short exposure into the markets as some of these risks dissipate, but for the time being, we're trimming the sail.
Would a Stock Market Decline Be a Good Thing For President Obama?
We have repeatedly noted in the past how even though many consider him to be a tough critic of Wall Street, President Obama has presided over one of the strongest stock market rallies in history.In fact, the only other President who saw better returns in his first two years in office was FDR.In spite of the strong stock market returns, President Obama has received little credit. Back in June wenotedthat even though he has one of the lowest approval ratings at this point in his Presidency, no US President has seen better stock market returns at this point in his Presidency.
On Your Mind: The Debt Ceiling, US Credit Rating and Potential Default
We are disappointed in the continued inability of Washington to resolve the current short- and long-term debt issues. However, we do not believe now is the time to make major portfolio adjustments given US companies' continued strong earnings reports, few signs of a double-dip recession, and few signs that the bond market currently questions the fundamental ability of the US to pay its bills. Be prepared for more volatility as the political negotiations continue. Watch the VIX index for upward spikes indicating that investors are losing patience.
We remain concerned about the global economy and suspect of broad asset class valuations.However, in a world of tens of thousands of securities there are always opportunities.Absent a significant market correction, we are likely to continue to hold cash or dry powder.We also continue to look to hold assets that can perform well in an inflationary environment, as dollar debasement seems to be the political path of least resistance out of our current problems.The politicians appear happy to solve the problems maana. We on the other hand are happy to make hay when the sun shines.
Why We Think the U.S. Wont Default on Its Debt
We believe its highly unlikely that the U.S. government will miss any of its scheduled debt payments in coming months, or that related market uncertainty and volatility will cause our money market funds to break the buck (be forced to transact share purchases and redemptions at prices less than the usual $1 per share). To help explain market behavior under unstable conditions, we often repeat the following adage: investment markets hate uncertainty. We tend to be leery of uncertainty because it can trigger investor skittishness, irrational behavior, and volatility.
Are the Housing GSEs and TBTF Banks Blocking the Economic Recovery?
The housing GSEs and the largest banks are blocking the economic recovery by denying Americans from refinancing their home mortgages. If the Obama Administration wants to see the US economy recover, then we must start the real process of restructuring that Washington & Wall Street have been avoiding since 2007. Obama may not be able to turn things around before the 2012 election, but he will be remembered more kindly in the history books if he has the courage to do the right thing. As always, we are available to help in this process.
On Your Mind: Debt Ceiling and the US Dollar
The uncertainty surrounding the upcoming decision on the debt ceiling has been a negative factor for the dollar. A US default and/or a downgrade of the US credit rating would almost certainly be negative also. It could weaken confidence in the dollar and cause it to fall. However, there are many global factors driving demand, including support of Japan and China, which continue to be large holders of US Treasuries. It would not be in their interest to sell dollar-denominated assets, including Treasuries, if there was simply a rating change or short-term default.
Global Overview: July 2011
The most recent economic indicators suggest a moderation in global economic activity growth, and forecasts for the current year have been lowered. Manufacturing activity decelerated for the second successive month in June across most major economies, except the U.S. Even Japan, which was expected to bounce back, reported slower growth. Among the emerging economies, economies suggest a decline in the pace of expansion. Consumer sentiment has weakened across the developed world over concerns about income growth as the labor market slipped again in select countries, most notably in the U.S.
Equity Investment Outlook
As evidence of a global economic slowdown accumulated, the stock market suffered a correction during the second quarter. This is hardly surprising given the market?s strong recovery from the depths of the 2008-2009 financial meltdown. After surging just over 100% from its low in March of 2009 and nearly 30% since August of just last year through the end of the first quarter 2011, the S&P 500 Index needed a breather. The 7% correction that occurred from the April high through the June low looks relatively modest to us in light of how far and how fast the market has rallied.
Fixed Income Investment Outlook
The equity and high yield markets seem to be reacting to renewed fears of sovereign debt defaults in Europe and slower economic activity in the U.S. The duration and ultimate severity of our economic slowdown is still in question, as inflation fears seem to have temporarily abated and the yield curve in the U.S. is steep, which has historically preceded economic growth. We are avoiding highly leveraged companies and longer-dated bonds, which may be vulnerable if a double-dip recession were to occur. There seem to be many sellers of shorter-dated bonds from which to choose.
We See This Slowdown as Temporary Too
We?re experiencing another mid-year economic slowdown, with renewed fears of a double-dip recession. Will the recovery regain momentum, like last year? The fixed income team, thinks so. Two years after the Great Recession ended, we?re still struggling to escape its lingering grip. Major facets of that struggle include the market and financial extremes the recession generated. U.S. economic growth and financial market benchmarks are striving to shift back to more normal/average levels. These cyclical shifts from historic extremes interest us as sources of potentially value-adding positioning.
Pacific Basin Market Overview ? June 2011
Faced with the imminent withdrawal of the Fed?s QE2 policy, the ongoing sovereign debt woes in the Euro-zone, and concerns over a slowdown in China, the Asian equity markets were at best only able to range trade during the second quarter. The broad indices remained relatively flat, with the MSCI AC Asia Pacific Free Index declining by 0.50% while the MSCI AC Asia Pacific declined 0.87%. As the immediate concerns over the sovereign debt crisis in Europe subsided, a steady recovery in domestic production also helped to lift the Japanese market and trigger a late rebound in equity prices.
Ben Bernanke channels Genworth Financial; Chris Laursen on bank trading under the Volcker rule
This week we republish an important article by Christopher Laursen, NERA Vice President, on bank trading under the Volcker rule. And we ask whether Fed Chairman Ben Bernanke knew he was saying about the conforming loan limit yesterday before the House Financial Services Committee.
Americas: Economic Review June 2011
The economic growth outlook in the region has moderated, as both global demand and domestic consumption growth are slowing down. Consumers are less confident than earlier this year, public spending remains restricted due to continuing fiscal challenges, and businesses have become more cautious in their hiring and investment plans. Commodity and energy prices have corrected, while manufacturing activity growth has slowed down. Even in this environment, inflation risks remain significant in some of the large emerging economies where monetary policy is being tightened further.
Middle East/Africa: Economic Review June 2011
The Arab Spring brought with it waves of revolution, disrupting economies of almost all the countries in the Middle East and North Africa (MENA) region. While governments of Tunisia and Egypt look to pick up the pieces, continued rumblings of unrest are heard from Bahrain, Libya, Syria and Yemen. The World Bank expects the lowest growth in Egypt and Tunisia, clocking in at 1 percent and 1.5 percent respectively, in 2011. However, despite uncertainty, these two economies are projected to improve in 2012 and witness economic expansion of around 5 percent in 2013.
Developed Europe: Economic Review June 2011
The economic data reported from Developed Europe during June were mixed. According to the European Union?s statistics agency Eurostat, annual wage growth in the Euro-zone during the first quarter of 2011 was 2.3 percent compared to 1.4 percent in the last quarter of 2010. Although the figures reflect some degree of optimism in the labor market, they are a cause of worry in the context of inflation. In order to sustain their spending power amid rising prices, workers may continue to demand higher wages, which in turn may force producers to hike prices further and spark off a wage-price spiral.
Emerging Europe: Economic Review June 2011
In an update to its Global Economic Outlook published in April, the IMF sounded a cautionary note on the global economic recovery due to the slowing growth in the U.S. and the Euro-zone debt crisis. The Washington-based lender said it sees global activity slowing in the second quarter of 2011, though a rebound is expected in the second half of the year. Despite this forecast, the IMF exuded confidence that the strong growth in Germany, Italy, and France would offset the economic slackening in the U.S. and Japan.
Developed Asia Pacific: Economic Review June 2011
Developed Asia Pacific economies continued to face headwinds in June as the outlook for demand from both developed markets such as the U.S. and Europe, and emerging markets cooled. In the U.S., a lukewarm labor market caused concerns about the pace of economic recovery. In the emerging markets, persistent inflation fears were prompting higher interest rates. Both these factors are putting pressure on exports from Developed Asia Pacific economies. Japan, which specializes in exporting machinery and consumer durables, is feeling the heat of a slowdown in demand from consumer countries.
Emerging Asia Pacific: Economic Review June 2011
Emerging Asia Pacific economies continued to be troubled by persistent inflation in June. Almost every country in the region had to either hike benchmark interest rates or bank reserve requirement ratios to rein in lending and credit growth. The monetary tightening effects are largely expected to make capital more expensive and this in turn is expected to crimp growth across many emerging markets. Inflation, which thus far has been more pronounced among food and fuel items, now seems to be spilling over to structural inputs like labor as well.
On Your Mind: Debt Ceiling and the US Dollar
Theres been a lot of media attention on the US debt ceiling and the outlook for the US dollar. Here we'll answer some of the questions weve been receiving from clients. The US debt ceiling: What are the chances of the U.S. defaulting on its debt? Will the United States automatically default if the debt ceiling isnt raised? When can we expect a resolution? What will happen if the United States does default? What does this mean for investors? Outlook for the US dollar: Is there a risk of the dollar collapsing in the short term? Is the world going to abandon the dollar as a reserve currency?
Lessons from Investor Behavior Studies: Better to Have Patience and a Plan
Recent studies raise important questions about investor behavior and the likelihood that investors will successfully reach their financial targets. It seems that the best way to increase the odds of investing success is to take a balanced approach, providing exposure to the broad asset classes without leaving investors overexposed to any single area. Risk and financial reward exist in relation to one another. But diversification works on the principle that the relationship is not linear?you have the potential to get more return for each unit of risk you take by spreading out your investments.
Exit Interview: FDIC Chairman Sheila Bair
This week in The Institutional Risk Analyst, we feature a conversation with FDIC Chairman Sheila Bair as she nears the end of her term. Bair has been in and out of public service for three decades, including working for Congress, the Treasury and lastly the FDIC. She spoke to IRA co-founder Chris Whalen before the July 4th break.
The Drudge Headline Indicator
The Drudge Report is not a financial news site, so whenever a financial news story grabs the Drudge headline, it means that the story has crossed over from just a financial news story to a mainstream news story. And when a financial news story crosses over into the mainstream media, it means that those that don't follow the market on a regular basis are suddenly following the market. This nearly all of the time occurs when the market (or economy, etc.) is going down and not up.
There are a little over 30 days left before the U.S. will technically default on its debt. Congress is still playing Russian roulette with the economy and the stock markets. We have seen what this type of Russian roulette has done to the stock market over the past eight weeks. The Republicans have talked about tax cuts and spending cuts, while the Democrats have pushed for increased taxes and smaller spending cuts. Although this would have been a perfect time for a serious debate on tax reform at both the individual and the corporate level, both of these seem to have been pushed to the side.
Results 1,751–1,800 of 2,118 found.