Most Americans don't realize the market gained 30 percent last year, and only 1 in 9 call themselves savvy about investing, according to a survey.» Read More
There’s something new going on in Washington, DC.
Under the usual rules of the politics of money, high unemployment results in criticism of the Federal Reserve from the left. The Fed is usually accused of having a monetary policy of being too tight when unemployment creates political waves.
The critics have traditionally been Democrats—such as banking committee chairs Wright Patman in the late 1960s or Henry Gonzalez in the early 1990s.
But monetary policy beyond the zero-boundary at a time of high unemployment has sparked off a tidal wave of criticism coming mainly from the right. On Monday we had the open letter to Ben Bernanke from a mostly conservative and Republican affiliated group calling for the Fed to stop its latest quantitative easing program.
On Wednesday, Senate Majority Leader Harry Reid is expected to put the Pickens Plan for energy independence up before the Senate.
The bill would create a 10 year plan to fund solar, wind and natural gas initatives. Also included in the plan are tax credits which are designed to speed up the adoption of vehicles running on natural gas. Reid's plan is slightly different than T. Boone Pickens' original proposal, which emphasized wind power (an area in which Pickens hads a substantial financial stake). Pickens later changed his plan—and his investment strategy—to include a broader array of alternative energy plays, including a larger role for natural gas.
Many on Wall Street and on the Hill doubt Reid's bill will pass because the relatively low price of oil has sapped the political drive for alternative energy. In fact, one of my energy contacts told me he is telling his clients his Pickens Plan "power play" is to buy more oil companies!
I decided to sit down with two people to get their perspectives on the plan. Gregory Boyce, Chairman and CEO of Peabody Energy, the world's largest private sector coal company, and Richard Soultanian, Co-President of the utility cost management firm, NUS Consulting.
Investor exuberance as evidenced in a recent survey of fund managers may have foretold the current market selloff.
Portfolios have been reduced to a “dangerously low” 3.5 percent in cash, according to November’s Bank of America Merrill Lynch Fund Manager Survey. That coincides with 41 percent of managers saying they are overweight equities, compared to 27 percent in October.
The BofA Merrill results are in line with other sentiment surveys.
The American Association of Individual Investors reports 58 percent of investors as bullish, well ahead of the norm of 39 percent. The Investors Intelligence poll, which surveys newsletter editors, was a less frothy though still enthusiastic 48 percent bullish.
Despite legal troubles the electronic mortgage database known as MERS has encountered recently, there is no legislation rescue coming soon, according to sources on Capitol Hill.
Not only is there no legislation being drafted on Capitol Hill, there is no chance that any such legislation will come up during the lame-duck session of Congress begun this week, according to both Democratic and Republican sources.
What’s more, Republican lawmakers have indicated that they would oppose a bailout of MERS if it were to be proposed in the next Congress, according to a source familiar with the matter.
Earlier today I wrote about Kyle Bass going long on Citi and Bank of America stock.
It would seem that Mr. Bass is taking the opposite side of John Paulson's trade.
Paulson, long known to have been bullish on the financial sector , seems to be paring back some of his positions – with special notice to Citi and Bank of America, according to a New York Times DealBook post :
Appaloosa Management, the $14 billion hedge fund firm run by David Tepper, sold large amounts of financial sector stocks in the third quarter of this year—a period during which he appeared on CNBC’s Squawk Box to argue that stocks were attractive whether the economy slumped or improved.
The timing of the stock sales with Tepper's bullish remarks, revealed in Appaloosa's third quarter 2010 13F with the SEC, raised some eyebrows across financial blogs and on Wall Street. Was Tepper pulling a fast one?
The influential and secretive financial blog ZeroHedge certainly thinks so :
We've all had bad days at the office. And, if you've worked in the financial services industry long enough, it's even likely that you have made a mistake that cost a financial institution some money. (Note: The phrase "Look, bad trades happen!" Is still highly unlikely to buy you much sympathy from your boss.)
But when it comes to goof ups: Very few of us have the power to push up the borrowing costs of the federal government of the United States of America.
That's exactly what seems to have happened yesterday to Steven A. Hess, a senior analyst at Moody’s.
The Financial Times Alphaville blog is reporting that Mr. Hess made the following observation to Market News International:
Kyle Bass at Hayman Advisorsis just not an equities guy .That much has been known for a while.
Fed's Governor Dudley Seeks to Reassure on Inflation (CNBC) CNBC's Steve Liesman recently spoke to New York Federal Reserve Governor Bill Dudley about a wide range of issues including the dollar, QE2, growth targets, and inflation. Governor Dudley reaffirmed the Fed's ability to withdraw excess liquidity from the economy when higher growth returns: "We are very confident of our ability to exit when the time comes."
Ireland to Accept Bailout? (Business Week) Prime Minister Brian Cowen may be signaling a willingness to begin negotiations in earnest over the terms of an Irish bailout by the European Central Bank. Then again, he may not. Says Cowen: “There’ll be further discussions there and, I’m sure, there’ll be discussions thereafter as well.” Although the Business Week article does not explicitly make the point, we can perhaps safely assume that Prime Minister Cowen is referring to ongoing negotiations regarding Ireland's budget plans—and not engaging in a playful imitation of Ireland's celebrated 20th century absurdist playwright, Samuel Beckett.
CNBC's Patti Domm and Jeff Cox discuss the jobs report and the current dilemma of long-term unemployment.
CNBC's Patti Domm and Jeff Cox discuss the recent GDP numbers and what factors have been affecting it.
Investors give and investors take away, and nowhere has that been more true lately than in value stocks.
Robert Shiller's recent warning on U.S. stocks sent ripples through global markets, but one analyst says he is "dead wrong."
Stocks, bonds and housing might all be getting too expensive, Yale economist says.
Wednesday brings FOMC minutes, but Wall Street downplays the release and looks to the Jackson Hole symposium on monetary policy.