Davidson Kempner continues to make money by focusing on beat up loans—despite the general perception that bonds have little to offer investors.» Read More
Clear the racks! Consumers could be poised for a retreat.
That's according to a new study that is expected to be officially released tomorrow by WSL Strategic Retail, a retail marketing and consulting firm.
"It's very possible the consumer will retreat in January and we've been talking about this," said WSL CEO Wendy Liebmann. "Our data indicates that most people don't believe their personal finances will get better for another three years."
I’m always surprised—pleasantly surprised—when I find myself agreeing with Paul Krugman. Today is one of those surprising days.
Here’s what Krugman writes:
The payroll tax cut is designed to be temporary—which is one of it’s biggest defects. But Mike Konczal at Rortybomb points out that politics may cure this defect :
“It’s clear that it would be an ugly battle to raise this payroll tax in 2012 when unemployment will likely be 8%+,” Konczal writes. (Note: this is leading Konczal and other liberals to worry that the payroll tax cut might be a bad idea.)
This is a point I haven’t taken into account yet. It raises the possibility that the payroll tax actually could lead to more spending—if the public believes that it will be made permanent and therefore create a permanent increase in income. I’m still not convinced this would happen, however, because I suspect the appetite for savings and develeraging exceeds the actual ability of cash-strapped households to save.
There’s a deep irony here. The payroll tax cut might work as intended—encouraging spending—but only if the public believes that it won’t be as limited as the Obama administration plans.
The volume of pixels I’ve spilled arguing that the cut in payroll taxes will not create much economic stimulus has apparently created the impression that I’m against the cut.
So let me clear that up right now—I’m not against the tax cut.
My critique has always aimed at the assumption that Americans will spend most of the slight and temporary increase in take-home pay that results from a 2% cut in payroll taxes. The central planners in the Obama administration may wish that Americans could be counted on to respond so mechanically to turning the tax dial this way or that—but wishing doesn’t make it so.
On Thursday, The Bank of England didn't change its key interest rate or modify its monetary easing related to asset purchases.
A steady course from the central bank may sound like a vote of confidence for the economy— but the reality may be more complex.
Here is the rub: Inflation in England seems to be picking up—and, on the growth side of the equation, the future of the British recovery remains uncertain.
The language describing inflation in today's Wall Street Journal is rather restrained:
Half full versus half empty. Certainty versus uncertainty. Jobs versus spending.
Those are a few hiring battles Gary Burnison trying to reconcile as the CEO of Korn/Ferry International, the world's largest executive recruiting firm.
“It's this virtuous circle or vicious cycle, depending on how you want to look at it,” he told me after he broke KFY's earnings on Worldwide Exchange. “Out of income comes spending, out of spending comes jobs, out of jobs comes more spending.”
For that spending, Burnison has told me before \(like almost every other CEO guest host who sits next to me on set\) and tells me again that in order to create jobs, there needs to be more certainty.
In an effort to help with the expecting tsunami of foreclosures, the government is putting pressure on Fannie Mae and Freddie Mac to modify their "underwater" mortgages when people fall behind on payments. But won't this just encourage people to not make payments? I decided to get insight from James Lockhart, Former Federal Housing Finance Agency Director and Vice Chairman of WL Ross & Co.
No New Easing for U.K. (CNBC via Reuters) "The Bank of England voted to make no change to its monetary policy this month, in a widely expected decision as it waits to see how much growth next year suffers from UK public spending cuts and euro zone turmoil." Also, "Despite a debt bailout for neighboring Ireland, the economic outlook for Britain has changed little since November's MPC meeting and consumer price inflation has risen further above its 2 percent target to 3.2 percent. Manufacturing activity has been strong following robust overall economic growth of 0.8 percent in the third quarter, though trade data on Thursday was unexpectedly weak, casting doubt on the BoE's hopes of an export-led recovery next year."
Gorman True to His Words: Morgan Stanley Seeks to Reduce Payout (New York Times DealBook) "Even as Wall Street prepares to hand out rich year-end bonuses, one firm, Morgan Stanley, is mapping out a plan to reduce the pay of some of its senior executives, according to people with knowledge of the plan. The effort to rein in compensation in the management ranks — while still rewarding its top traders and bankers — is one way that Morgan Stanley is coming to grips with a quandary that has plagued it for a year."
Hacker Cyber War Widening? (New York Times) "In a campaign that had some declaring the start of a “cyberwar,” hundreds of Internet activists mounted retaliatory attacks on Wednesday on the Web sites of multinational companies and other organizations they deemed hostile to the WikiLeaks antisecrecy organization and its jailed founder, Julian Assange. On Thursday, a man identifying himself as one of the activists from a group called Anonymous, who used the pseudonym Coldblood in an interview with BBC radio, said: 'This campaign is not over from what I’ve seen. It’s still going strong.' The speaker had an English accent and said he was a 22-year-old software engineer with no specific political loyalty."
New York Mayor Michael Bloomberg Not Running for President \(CNBC\) "Despite growing rumors to the contrary, New York Mayor Michael Bloomberg says he is not running for president in 2012.In an interview Thursday morning with CNBC, the billionaire executive and head of Bloomberg LP denied that a spate of high-profile policy speeches was paving the way for a run at the nation's top elected office.'I'm not going to be running for president, he said. I have eleven-hundred and nineteen days left in my job. I'm looking forward to today and every other one of them.'"
Schwarzman is Short America (CNBC via The New York Times) Perhaps that is overstating the case. A bit. But Steve Schwarzman doesn't see much to be optimistic about in terms of domestic growth: "'The United States is going through a difficult time politically, and having other types of issues that everybody in this group knows about,' Mr. Schwarzman told the conference, adding, 'The political calculus of the last two years hasn’t resulted in a winning calculus.'" There is an upside: "At least half the world is doing really well." Sadly, not our half.
The Mad Dash out of Bonds (New York Times) "Prices on Treasury bonds fell sharply on Wednesday, continuing a sell-off that was ignited by the extension of the Bush tax cuts.
Equity markets on Wall Street looked to close slightly higher.
Financial markets have interpreted the tax cut deal, which was announced on Monday and must be approved by Congress, as contributing to economic growth over the next couple of years but also increasing the federal deficit and raising borrowing costs. Yields on the 10-year benchmark bond rose 19 basis points to 3.318 percent early Wednesday afternoon before retreating to 3.259 percent, after the Treasury Department reported the results of its sale $21 billion in 10-year notes. Wednesday’s sale attracted almost three times as many buyers than bonds sold, a ratio characterized as fairly typical."
Update: Visa's Web site is down.
The folks who launched an internet hacking campaign that apparently took down the website for Mastercard for several hours today, are now targeting Visa's website.
"WE ARE ATTACKING WWW.VISA.COM IN AN HOUR!" the twitter account for Operation Payback announced.
The co-ordinated distributed denial of service attacks have apparently been launched in retribution against financial companies that have cut-off WikiLeaks founder Julian Assange, who was arrested Tuesday in London.
Operation Payback has been linked in the media to the influential internet messageboard 4Chan, which has been blamed for attacks on other websites in the past.
Hedge funds have seen the worst start to the year since the financial crisis, as returns in January and March were both in the red.
The Fed indicated to Citi that it would get more time to fix "stress test" planning problems before rejecting its capital plan.
Goldman Sachs reported quarterly earnings and revenue that topped analysts' expectations on Thursday.