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Pony Up

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      by Larry Levin   When the lunatics are running the financial asylum, I will celebrate the small victories. Yesterday we learned the eight biggest U.S. banks must boost capital levels by a total of about $68 billion under new rules. The new rules are attempting to limit the big banksters reliance on debt. By 2018, banks must rely more on funding sources such as shareholder equity, rather than borrowing money. According to Bloomberg: Banks' insured subsidiaries face tougher limits and must boost capital holdings by a total of about $95 billion, … [Read more...]

Modest Bounce for Stocks Continues

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    The domestic equity markets are gaining ground for a second-straight session, continuing to rebound from the recent rout in momentum stocks, aided by stronger-than-expected profits from Alcoa, which unofficially kicked off 1Q earnings season. Meanwhile, in afternoon action, the Federal Reserve will release the minutes from its March meeting, which caused some consternation on the Street regarding the outlook for interest rates. Treasuries are lower ahead of the report, and following other U.S. data showing wholesale inventories rose, while mortgage applications declined … [Read more...]

Jobs Data

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        by Larry Levin   Even though the talking heads and the politicos tried to spin last Friday’s jobs data in countless different ways, the number was really pretty awful and the Fed isn’t coming to an immediate rescue. The hope-driven hyper-growth stocks got slammed as the Nasdaq had its worst swing since December 2011. You don’t need to be a data sleuth to realize that despite the reported “milestone” hiring figure, the labor market hasn’t fully healed and remains systemically broken. Even though the nonfarm payrolls eclipsed … [Read more...]

Momentum Malaise Manhandling Markets

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    The U.S. equity markets are lower in afternoon action as traders continue to exit momentum stocks, ahead of 1Q earnings season, which will unofficially start with tomorrow's report from Alcoa after the closing bell. Meanwhile, the weakness in momentum stocks, especially technology issues, carried overseas, with Asian and European markets posting red figures. Treasuries are higher, with the U.S. economic calendar relatively quiet today, as a final hour report on consumer credit is the lone release on today's docket. In equity news, Dow member Procter & Gamble announced a … [Read more...]

Markets Register Steep Losses

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      In a volatile trading session, the U.S. equity markets gave up early gains and closed the day sharply lower, with the Nasdaq falling hardest and momentum stocks coming under heavy pressure. Early support may have arisen from the release of the March labor report, which was mostly inline with economists' forecasts. Treasuries were nicely higher following the domestic employment data. On the equity front, Micron Technology reported quarterly earnings results that beat analysts' estimates, however, the memory chip maker offered disappointing 3Q guidance. Elsewhere, … [Read more...]

Reverse Mortgages

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      by Larry Levin   Last night I was watching TV and Henry Winkler came on talking about reverse mortgages. My first thought was, wow, the Fonz is doing commercials, how bizarre. But my second thought was more foreboding and that was if something is being pitched as a sound financial strategy late at night on cable, well then things may not be what they seem. So what exactly is a reverse mortgage? In a nutshell, it’s a specific type of home equity loan available only to people aged 62 and over, which has the added benefit of not carrying any … [Read more...]

Stocks Up After Roughly Inline Employment Growth

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      The U.S. equity markets are trading higher in early action of the final session of the week, on the heels of the March nonfarm payroll report that showed job growth was roughly inline with the Street's expectations. Moreover, the prior months' figures were revised higher, while the unemployment rate held at 6.7%. Treasuries are mostly higher following the employment data, along with gold, crude oil and the U.S. dollar. In equity news, Micron Technology topped analysts' quarterly expectations, while CarMax missed the Street's forecasts, but announced a $1.0 billion … [Read more...]

Rigged – Part III

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      by Larry Levin   Today will mark the end of the “Rigged” trilogy of newsletters. This missive is actually a video; a video of Michael Lewis at the Bloomberg studio. In the link below you will see an actual interview about the book, and not a shameful scream-fest that was allowed (encouraged?) on CNBC the day before. This one is worth your time. http://www.bloomberg.com/video/michael-lewis-on-high-frequency-trading-and-markets-U~cBjPhkSyir_u9M0N85RQ.html The timing of the “Flash Boys” book release was great in a way. The last two days of … [Read more...]

Stocks Near the Unchanged Mark After Four-Day Rally

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      The U.S. equity markets are hovering around the flatline in early action, coming off a fourth-consecutive session of gains, as traders digest domestic reports showing the trade deficit unexpectedly widened and jobless claims rose more than expected. Moreover, the Street is paying attention to action overseas as the European Central Bank (ECB) left its monetary policy stance unchanged and ECB President Draghi is beginning his press conference. Treasuries and the U.S. dollar are nearly unchanged following the data and the ECB's decision, ahead of a read on domestic … [Read more...]

Bigger is Better

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      by Larry Levin   Bigger is better, right? Consider that the American hedge fund industry has now exceeded its pre-crisis assets. Systemic problems and loose regulations clearly aren’t detriments so the trend continues to shovel truck loads of money towards the big players. Americas-based firms that each invest at least $1 billion managed a record high of $1.71 trillion as of Jan. 1, according to a report by hedge fund data and news service Absolute Return. Assets of the 293 firms on the "Billion Dollar Club" list increased $250 billion over … [Read more...]