Friday, April 9, 2010

Anecdotal Headlines

I haven’t done this in awhile, in fact not since December 2008 as the Dow was rushing towards its low during this recession – that is to highlight some of the headlines from the Wall Street Journal, anecdotal evidence of where the economy and the market might be heading. Back then we were in the thick of it, virtually every headline pointing to fraud, bailouts, bankruptcies, and rising unemployment.

Today, while the Dow basks in the glow of massive liquidity injections in a low interest rate environment, approaching 11,000 as I write this, and investment bankers are rewarding themselves with record bonuses, the economy swims on against the tide of high unemployment (much higher than reported), kicking the state/municipal finance crisis down the road, and rising foreclosures. (We still wait on the consequences of future resets of adjustable rate mortgages.) No one really has an idea of how this will resolve. The CNBC cheerleaders are on the side of a continuing rising market, while there is no shortage of Armageddon forecasters who advise buying gold and farmland and head for cover. No forecaster I, but we seem to be moving from headlining the symptoms, and are getting more to the heart of the matter. It’s interesting that “Fed Chiefs Hint at Low Rates Possibly Into 2011” can be juxtaposed to “Mortgage Rates Hit 8-Month High of 5.21%,” perhaps an indication that the government has less control over the outcome than it did when this crisis began. From today’s Wall Street Journal:

Foreclosures Hit Rich and Famous
Houses with loans of $5 million or more will likely see a sharp rise in foreclosures this year, according to a RealtyTrac study.

Greek Bond Crisis Spreads
Concern over a potential liquidity shortage at Greece's private-sector banks fueled a sharp selloff in Greek debt and equity markets

States Skip Pension Payments, Delay Day of Reckoning
The deferrals come as pension experts say the funds need the money more than ever

Jobless Claims Rise Unexpectedly

Cash Crunch Will Force Governments to Do Less

Fed Chiefs Hint at Low Rates Possibly Into 2011

Los Angeles Faces Threat of Insolvency
Dispute Between Municipal Utility and City Council Over Electricity Rates Deepens Fiscal Crisis; Bond Rating Cut

Big Banks Move to Mask Risk Levels
Quarter-End Loan Figures Sit 42% Below Peak, Then Rise as New Period Progresses; SEC Review

Mortgage Rates Hit 8-Month High of 5.21%