Aug 29, 2011, 4:21 pm EDT
The good news is the Federal Reserve stands ready to help if the U.S. economy acts worse than expected. The bad news is the U.S. economy needs help.
Thus far, the Fed’s monetary trickery has helped to inflate U.S. stocks and U.S. Treasuries, but not much else. Fed Chairman Ben Bernanke actually went on record to say his private organization’s bond buying program could boost U.S. employment by about 700,000 over the next two years. Is he serious? If creating jobs by purchasing bonds is such a great panacea, why haven’t the 7.2 million pre-recession jobs suddenly returned?
If we were to choose a theme song for the Federal Reserve, the 1977 hit song “Three Little Birds” by Bob Marley would be it. The lyrics are immensely reassuring, not to mention repetitive. The song’s main chorus says, “Don’t worry ’bout a thing ’cause every little thing gonna be all right.” Unfortunately, everything is not all right. Read
Aug 26, 2011, 5:09 pm EDT
Hope is not an investment strategy. Yet, the stock market’s fate seems to be closely tied to Bernanke’s Jackson Hole comments and the hope of QE3.
Bernanke’s 2010 Jackson Hole comments on Friday breathed life into the markets (see chart below). But did his 2011 Jackson Hole pep talk on Friday deliver the needed hope or was it another nail in the coffin?
Below is a thorough analysis of Bernanke’s 2011 speech along with a comparison to the 2010 speech. More importantly, we will discuss what the market thinks the odds of higher prices are. Read
Aug 25, 2011, 2:47 pm EDT
Lloyd Blankfein, chief executive officer of Goldman Sachs (NYSE:GS), has hired high-profile criminal defense lawyer Reid Weingarten.
This is a game changer even if we don’t yet know where the fire is.
Blankfein has led the firm for six years and spent the past two dealing with allegations of conflicts of interest and fraud. A Senate report released in April said Goldman dumped subprime loan exposure onto unsuspecting clients during the mortgage meltdown, then in 2010 gave Congress misleading testimonials about the firm’s actions. Read
Aug 18, 2011, 12:01 am EDT
The early run-up to the Republican primary has shown the breadth of conservatives in America. But there are two things this disparate group of politicians can agree upon: George W. Bush did a bad job as steward of the American economy, and Obama is doing even worse.
Under Bush, taxes were slashed and expenses ran wild — causing our already ugly national debt to skyrocket. George W. Bush’s administration also presided over some of the lax regulations that led to the 2008 financial crisis and resulting recession.
Obama has failed to gain control of the mess, they continue. The unemployment rate is above 9%, consumer and investor confidence is flagging, especially after the August market mayhem. Disagreement over how to reduce the nation’s deficit has many worried that the United States will be up to its eyeballs in debt for generations. Read
Aug 17, 2011, 12:01 am EDT
Let’s make a crazy assumption and agree that investors are — at least in part — rational beings. Unless you exclusively worship the black magic of technical analysis, chances are your portfolio is built upon logical assumptions about the headlines and hard numbers like revenue, earnings and so on.
You know, facts.
If this is the case, then why are investors so quick to criticize Obama as bad for the market? Because the hard numbers show that the president has done a darn good job when it comes to the stock market. Yet in the face of the facts, many investors insist the president has done nothing but make their life difficult since taking office. Read
Aug 16, 2011, 9:00 am EDT
Since 1995, every president has had to deliver a salary report of White House employees to Congress and the American people. And at a time when federal spending is front and center and government employees are getting laid off left and right, I thought it would be interesting to dig into the 2011 report from the Obama administration and see who’s who on the president’s payroll.
To be clear, I’m not trying to score political points here. While some of these salaries might seem plush, as a suburban D.C. resident myself, I can say this area is one pricey place. D.C.’s workers enjoy the highest salaries of any major U.S. city, with a median household income of $85,198. And some of these folks are highly qualified individuals in grueling jobs who could make a mint in the private sector based on their resumes.
We can quibble over their political slant, but someone like Gene Sperling who attended Yale Law School and attended biz school at Wharton probably has a resume worth a bit more than $45,000 per year, even if you pooh-pooh his government experience. Read