Wall Street is slowly coming to a grips with an economy that offers not breakout growth but more of the mediocrity that could keep rates on hold.» Read More
Goldman Sachs is the best place to work on Wall Street. And Lloyd Blankfein is the most popular chief executive.
There used to be a joke that went like this. Two guys were sitting in a bar talking politics. "So what party do you support," one fellow asked. "I'm not a supporter of any organized political party," the other fellow said. "Me neither," said the first guy. "I'm a Democrat."
These days both the Democrats and Republicans seem to be fracturing under the weight of the government's budget deficit, taxes, and the still stymied economic recovery. I decided to speak with the Godfather of the Tea Party, Former House Majority Leader Dick Armey. FreedomWorks, his organization, has been a vocal supporter on the extension of the tax cuts. I asked him about the division within the Democratic Party and the Republican Party when it comes to taxes.
Many architectural purists consider Goldman Sachs' new headquarters in lower Manhattan "totally foregettable."
Mortgage Rates Up, Applications Down (CNBC via Reuters) "Applications for U.S. home mortgages declined last week as home loan interest rates rose for a fifth consecutive week, to seven month highs, an industry group said on Wednesday. Mortgage application The Mortgage Bankers Association said its seasonally adjusted composite index of mortgage application activity declined 2.3 percent to 589.7 in the week ended Dec.10. Application activity slumped as fixed 30-year mortgage contract rates rose to 4.84 percent in the week, the highest level since early May, from 4.66 percent in the prior week, according to the MBA data."
Spain's Bonds Down [Again]; Spain on Credit Watch [Again] (Bloomberg) "Spanish government bonds fell for an eighth day after Moody’s Investors Service said it may cut the nation’s credit rating, citing the potential struggle for the government to fund itself next year amid losses at banks. The decline pushed the 10-year Spanish yield up to within nine basis points of the highest since September 2000. Portuguese bonds fell after costs rose at a 500 million-euro ($664 million) sale of Treasury bills. Spain plans to sell bonds tomorrow."
Germany's Merkel Opposes Eurobond \(New York Times\) "Digging in her heels ahead of a European Union summit meeting, the German Chancellor Angela Merkel insisted Wednesday that the introduction of shared “eurobonds” was not the answer to Europe’s debt challenges. Speaking to the German parliament, Mrs. Merkel made clear that Germany was not going to bow to pressure from countries such as Italy and Luxembourg — or from former top ministers in her previous coalition government — who support issuing jointly backed bonds as a way to restore long-term confidence in the euro. The 'collectivization of risks' would be a mistake, Mrs. Merkel said."
Fed Keeps Rates the Same: Continues Easing (CNBC via Reuters) "The U.S. Federal Reserve said on Tuesday the economic recovery was still too slow to bring down unemployment, reaffirming its commitment to purchase $600 billion in bonds to stimulate growth and create jobs.
In a statement that contained little acknowledgment of a recent uptick in the economic data but focused squarely on high unemployment, the Fed characterized the U.S. expansion as 'continuing,' a modest upgrade from its November description of the recovery as 'slow.'"
Fed Announcement: Alternate Coverage (NetNet) "Household spending is increasing at a moderate pace, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. (Sigh. You could learn similar facts, stated in more accurate and less tedious language, at your neighborhood tavern.)"
Treasuries Drop on Fed Announcement (Bloomberg) "Treasuries plunged, pushing the 30-year bond yield to a seven-month high, as Federal Reserve policy makers said the U.S. recovery is continuing and maintained a $600 billion program of debt purchases.
The extra yield investors demand to hold 10-year notes over 2-year debt was the highest since April on speculation President Barack Obama’s agreement to extend tax cuts will win passage in Congress, supporting growth and stoking inflation. Retail sales rose more than forecast, and producer prices increased the most in eight months, government reports showed."
The Tequila Bubble may not be the most important economic story of the year—but, after reports of the coming bonus bloodbath , you may need all the interesting diversion you can get.
Particularly when said diversion involves premium liquor.
\(NetNet already covered Part One of the tequila bubble story . We now reaffirm our commitment to maintaining our coverage—because, in part, that distilled spirit is widely known for making the traders at your office go completely loco at the annual holiday party.\)
It's party time again on Wall Street.
For the past two years, the Grinch has reigned on Wall Street. Obviously no one was in the mood for parties in 2008, the year Wall Street supposedly died. And in 2009, many firms cancelled their official holiday parties for appearance's sake. No Wall Street firm was willing to risk the public getting hold image of bankers sipping Champagne at the Museum of Modern Art while the country sunk into the Great Recession.
Remember when you waited on tenterhooks when the Federal Reserve’s Open Market Committee was meeting. Would they raise rates? Lower them? Leave them unchanged? How should you trade the announcement?
These days are just plain boring. No one is shocked that the Federal Reserve will not alter its 0 to1 /4 percent federal funds rate target. And we knew all the back in November that quantitative easing was back on.
Even the Fed seems bored with its actions. Rather than opening their statement with an enumeration of policy actions, the Fed led with this: "Information received since the Federal Open Market Committee met in November confirms that the economic recovery is continuing, though at a rate that has been insufficient to bring down unemployment."
"No one can suck margin out of a deal faster than a banker."
This is typically said—with a wry smile—after a few cocktails.
Often by the bankers themselves.
It's an inside joke, of a kind, couched in banker speak. But the point is clear: Bankers are compensated handsomely for the deals they facilitate.
In London, that compensation is currently under fire, as Anita Raghavan reports in a New York Times DealBook post today.
Evoking a little Jack Nicholson, Steve Forbes told me the tax bill is "as good as you're going to get."
If a tax increase had been allowed to take place in January—the alternative to extending the current tax policy — “the US economy would have taken a real hit,” Forbes told me as my guest host on Worldwide Exchange this morning.
“The fact that the Republicans got a reduction in the death tax from 55 percent to 35 percent I think made the deal even better,” he said, adding that, “I’m a little surprised that some Republicans are scoffing at it.”