Up Down! Up Down!. These markets are giving Wall Street a headache.
By Jim Cardle
Texas Insider Report: WASHINGTON D.C. The Sequester is coming! The sequester is coming!! The sequester is coming!!! was the boogeyman of just over a month ago. But a short month later can we now
focus again on the political stalemate that appears
to not be worrying the nation?
Maybe Americans or at least their respective Congressional leaders will continue over-looking the point here and remain with the escapist fantasy of Harry Potter wizardry.
As a result Up Down! Up Down! Up Down!. These markets are giving Wall Street a headache says Sandler ONeill Partners Marc L. Flaster.
Stocks continue to flirt with their 2007 peaks on the Dow Index while bond investors seek micro-yield improvements over subterranean U.S. Government Bond returns.
Even TVs talking heads are at odds as to whether now is the time for the skittish public to get back in the market or save their money and wait for the house-economy to appreciate.
And a little-noticed release from the Obama Administration last week announced a new program for seriously delinquent borrowers with mortgages owned or backed by Fannie Mae and Freddie Mac. The move announced by the Federal Housing
Finance Agency is designed to stem losses to the two U.S.-owned companies by letting borrowers who are at least 90 days behind bypass the administrative hurdles of typical loan modifications.
About 3.2 of single-family mortgages backed by Washington-based Fannie Mae and Freddie Mac were at least 90 days in arrears in January according to data from the companies.
Delinquent borrowers will be able to reduce monthly payments without documenting finances under the new program. Homeowners may still opt to give their lender documents on their financial hardships and can save more money by doing so the agency said in a statement.
This new option gives delinquent borrowers another path to avoid foreclosure" Edward J. DeMarco the FHFAs acting director said in the statement.
Fannie Mae and Freddie Mac have been operating under U.S. conservatorship since in 2008. Since 2008 theyve completed 1.3 million loan modifications and 1.4 million other foreclosure-prevention actions including short sales and forbearance plans.
At the same time the gathering of U.S. Treasury Debt begins anew as a renewed flight to safety roars out of Euro and Cyprus debt. This time not because the Euro might fracture but because the Euro-economies continue to collapse about themselves.
Over the next two years analysts expect the Euro GDP to contract and stay below zero (0) and the austerity measures forced upon all Euro-members by the IMF (
International Monetary Fund) has failed to reverse the course. They
have all now embraced the Bernanke cocktail and taken the pledge to overdrive monetary excess into oblivion.
Federal Reserve Chairman Ben Bernanke recently and again pushed against the forces of change and stood his ground but the Feds efforts have exhibited slippage. The plan now is to maybe adjust the monthly target for Treasury Bond and MBS purchases to reports of the progress of the economy.
Bernanke also said that managing the nations monetary position is no big deal and any card carrying Ph.D can assume the helm of the Fed and do a credible job. It looks like he is taking himself out of the running for re-appointment. The Fed chairman has expressed frustration with Congressional management of fiscal policy remarking that they had made his job particularly difficult and were the reason his efforts had failed to provide the traction expected for the economy.
At best he had held its head above water while Congress provided no resuscitation. The Euro zone common market was never a good idea and now it has shown its worst side . Money should be working its way out of all the member countries as time passes.
Dont be surprised to see a run on some of the banks in Spain Portugal or Italy. As someone once said -- Its all Greek to me!!
Away from the important news of the world Just to confound the pundits that age tires quickly on the basketball court Senator Rob Portman did a U-turn on gay marriage when he found out that his son was of that different persuasion.
And finally a recent column from the American Banker featured the remarks by Janet Yellen heir apparent to the Federal Reserve chairmanship saying she is on record for continuation of the Bernanke Q/E I-II-II strategies without constraint. In her view the Fed is not doing enough and there should be no termination date.
These are not thoughts to be taken lightly. The whole G-7 G-20 and Euro-zone are deeply committed to these same strategies. Yes there is an inflationary bias from a monetary point of view but without demand there is no price pull pressure.
And that
is not about to change for quite a while.
The Republican mantra during the Obama Administrations first term was to stymie the administration block all initiatives and engineer a one term administration. We all know the outcome of that strategy.
Now Republicans are looking at the mid-term election cycle for the opportunity to take control of the Senate. By the way the Democrats
are also preparing their own initiative to take back control of the House including turning the State of Texas blue.
In the meantime look for the U.S. economy to continue to suffer from a lack of direction out of Washington D.C. on tax policy and budgeting.
It is going to be a long hard slog from here.
