CNBC Interview With TX Fed Gov.

Uncertainty in "Social Cost" is holding back hiring.

Earlier on Squawk, Fmr. Gov Corzine announced unemployment + underemployment + no longer track at approximately 25%.

Fed Increases and The S&P 500

Fed Increases and The S&P 500

Months to recover

The stock market’s initial reaction in all three instances was a sell-off, with the S&P 500 Index ending down on average by 3.2% after a one-month period. During the second month the market was slightly negative on two occasions (1999 and 2004) but tumbled in 1994. In that year it took seven months for the S&P 500 to return to the pre-rate hike levels, while in 1999 and 2004 it took five months.

Source: Plexus Asset Management (based on data from I-Net Bridge).

Can the US States Default?

U.S. states face questions about possibility of default. Much attention has been given to Greece's debt crisis, but U.S. states are facing difficulty as well, prompting questions about whether default is a possibility. "For U.S. states, it is not a debt problem, it is a spending problem," said Peter Hayes, head of the municipal bond group at BlackRock. "The length and depth of the downturn is so much greater than anything we have seen that states cannot cut spending fast enough and they cannot really raise taxes further." Financial Times (26 Feb.)

Financial Times Article Link

Bank Will Profit From Greece's Default

Banks that hid Greece's debt aim to profit from default. Many of the banks that helped Greece create derivatives that concealed its borrowing are betting on default, hoping to make additional profit from the nation's financial troubles, according to The New York Times. Banks' and hedge funds' purchases of credit default swaps on Greek bonds are driving up the cost of borrowing that Greece needs to roll over its maturing debt, according to the newspaper. "It's like buying fire insurance on your neighbor's house -- you create an incentive to burn down the house," said Philip Gisdakis, head of credit strategy at UniCredit. The New York Times (free registration) (24 Feb.)

NY Times Link

Analysis: Crisis might bring discontent to EU's "Club Med": Spending cuts and other austerity measures are likely to touch off discontent, possibly creating strikes and protests, across the southern edge of the EU, called "Club Med," The Times reported. Spain, Portugal and Italy, along with Greece, have a soaring budget deficit, high unemployment and a troubled economy. "The young are struggling to find work, the middle-aged are having their earnings squeezed and the old will see pension and benefit cuts," according to the newspaper. The Times (London) (24 Feb.)

Greek Bank Face Downgrade

Greek Banks: Could Downgrade to BBB Lead to a Downward Spiral?

Fitch's downgrade of Greece's four largest banks to BBB from BBB+ on February 24 comes at a very sensitive time, when the ECB is starting to withdraw its liquidity support and tightening its credit standards. Moreover, the ratings outlook is negative, which points to the risk of further downgrades ahead. Expanding on its decision, Fitch cites the negative repercussions the austerity program will likely have on credit quality and loan demand. Fitch also notes limited access to wholesale funding and interbank markets at reasonable prices due to sovereign rating pressures. Fears of a self-fulfilling prophecy are justified given that the eligibility of Greek collateral might be at risk when the ECB tightens its collateral requirements to an A- rating (by at least one ratings agency) at the end of 2010. On the positive side, Fitch notes that Greek banks are mostly deposit-funded.

Source: RGE Monitor 2-25-2010

Bob Prechter Interview

Bob thinks we are at a top. I to am very concerned. But in the end no one truly knows where the market is heading.

The first 5 to e-mail me will receive a copy of the book. You will need to provide complete contact information for me to send a copy of the book.

Wealthtrack Asset Allocation Question

This week on Wealthtrack, Consuelo Mack poses the question: What place do U.S. Treasuries, bonds in general, stocks and alternative investments have in an investment portfolio in today’s markets?