Happy stock highs belie bonds teetering on edge

February 21, 2012

With the Dow Jones industrial average crossing the 13,000 level for the first time since before the crisis and Britain’s FTSE 100 index headed toward 6,000, equity investors are smiling. Many may be wondering if the run can be sustained. But debt buyers may face the real danger.

New US finance sheriff carves out shadowy domain

February 23, 2012

The Consumer Financial Protection Bureau under Richard Cordray is throwing a regulatory lasso around a motley crew of cash checkers, credit bureaus, money wirers and debt collectors. As our new ’Cordray Index’ shows, they’ve had a wonderful financial crisis. That may change.

U.S. stock bubble is in profit, not value metrics

March 5, 2012

The S&P 500 trades at 14 times earnings, so valuation multiples aren’t excessive. But U.S. domestic corporate profitability is running 50 pct above the long-term average, while global profits have soared even higher. This is unlikely to last long.

Just let housing regulator DeMarco do his job

March 8, 2012

The knives are out for Frannie’s overseer for not cutting principal on underwater home loans backed by the agencies. Borrowers would hail him a hero if he changed his mind. But he has a broader duty to taxpayers. His stance as a clear-eyed regulator deserves praise, not punishment.

Facebook’s underwriter friends are cheap insurance

March 12, 2012

The social network’s IPO now has 31 banks working on it. There’s no evidence having more underwriters affects early stock performance either way, and some may be friends of convenience rather than necessity. But for Facebook it’s extra reassurance at little, if any, cost.

U.S. market rumblings point to revved up growth

March 15, 2012

Rising oil prices and interest rates are election-year bait for politicians, but in reality - along with higher stock markets - they suggest a long-awaited strengthening of the economy. But sticker-shock at the pump and more expensive debt could yet knock confidence.

Dollars everywhere – so where’s the inflation?

March 16, 2012

U.S. consumer prices rose 0.4 pct in February, but that was mostly gasoline. Year-on-year, inflation is above the Fed’s 2 pct target but not by much. But money supply is going through the roof. Either inflation is on the way, or Milton Friedman should lose his Nobel prize.

Student debt may land double whammy on US growth

March 21, 2012

Graduates are forking over far more in loan repayments than a decade ago, easily outstripping salary growth. Over time, that’ll dent GDP. Defaults are rising, too. With Uncle Sam now holding $450 bln of student debt and rising, that puts taxpayers on the hook - again.

Ally’s mortgage misery needs a clean ending

March 27, 2012

The home loan mess still ails GM’s ex-finance unit and is still hampering its ability to repay $14 bln of taxpayer aid. Bankruptcy should be the ideal solution. But as an activist investor points out, that could get messy. Without greater clarity, Ally may want to hold fire.

Europe unrecognizable from U.S. Republican rhetoric

April 3, 2012

Mitt Romney and Rick Santorum accuse Obama of leading America to “European-style socialism.” The pejorative works to a point but conveniently overlooks German trade surpluses, Dutch unemployment and Polish growth. GOP hopefuls might aspire to some of the continent’s achievements.