General News

Why are Americans not being told the truth about the economy? It would appear that we are heading in the direction of a double dip. However, you would never know this by all the positive and upbeat messages coming out of Wall Street and Washington. FACT: Consumers are 70% of the US economy. Currently, consumer confidence is plummeting; consumer confidence weaker today, on average, than at the low point of the Great Recession. The Reuters/University of Michigan survey showed a 10 point decline in March. This was the tenth largest drop on record. Part of that drop can be attributed to rising fuel and food prices. In another gauge, the Conference Board’s index of consumer confidence, just released, shows consumer confidence at a five-month low. This is due, in large part, to expectations of fewer jobs and lower wages in the months ahead. FACT: Worried and pessimistic consumers do not spend and further, do not buy as much. That means fewer sales. That means big economic...

From Bloomberg, a shocking comparison of the advantage the US corporate tax code affords online retailers and multinationals (emphasis added): Anyone who wants a Nintendo Wii console or the latest John Grisham novel can pick it up at the nearest Target (TGT) store or log on to Amazon.com (AMZN) and have it delivered. The similarities between the two retailers aren’t as apparent when it comes to taxes. Amazon’s effective rate—the total it pays in federal, state, local, and international income taxes after deductions, along with its sales and property levies—has been more than 10 percentage points lower than Target’s for the past four years. Target’s effective tax rate in 2010 was 35.1 percent, compared with Amazon’s 23.5 percent. Amazon in 2010 owed $352 million in income taxes worldwide on income of $1.5 billion, according to its SEC filings, while Target owed $1.58 billion on income of $4.5 billion. Amazon, the world’s largest online retailer, has successfully resisted efforts from politicians to make...

I wrote about Investors Title Insurance Company (ITIC) here. For those interested, there is a good write-up on the company by Whopper Investments here. With a market cap of $72.5m and ~$9m in net cash, they would trade for around 7x my projection of pretax earnings. That’s cheap. Add in the fact the ROE was consistently between 15-18% pre-crisis (despite a maybe too conservative balance sheet) and management’s history of share buybacks, dividends, and maintaining a fortress balance sheet, and I think that’s too cheap. Readers who consider the insurance industry within their circle of competence should certainly take a look at this one. Read Whopper’s full write-up here. Author Disclosure: Long ITIC  

Call me old fashioned but the idea that those engaged in abusive, and very likely fraudulent, business practices are allowed to negotiate a settlement strikes me as un-American. That said, the world of unintended consequences in our Uncle Sam and Wall Street dominated economic system brings us just such an un-American approach in terms of addressing our current mortgage mess. Negotiate? Settlement? Growing up in Boston in a family full of lawyers, I was under the impression that fraud and abuse likely got you 5 to 7 years in a medium security facility and maybe you got out in 3 to 4 with good behavior. Perhaps that form of justice still applies to you and me but for the large monied interests who run this country, we’re talking negotiations and settlement. Wow!! Little wonder why the rage in our nation directed at the Wall Street-Washington incest continues to burn so strongly. Let’s navigate. My commentary of earlier this week, Did Wall Street Violate...

The pictures and stories from Japan have shocked us all. The human aspect of this country’s struggle to cope with the earthquake and tsunami tugs at our hearts. The same applies to those in Middle Eastern countries crying out for freedom and democracy only to be responded to with bullets and bombs. While the human factor is not to be taken lightly, the economic consequences are making the most headlines. These headlines helped to bring back some market volatility that reminded me somewhat of 2008. The markets pulled back and rebounded from the news in Japan, Egypt and Libya relatively quickly. However, the indicators that track investor confidence tell us that investors are becoming more nervous about the future. What is the individual investor to do in these volatile times? I would urge you to do nothing IF your portfolio is properly allocated. Why? Investors tend to do poorly when they react to what the market does instead of preparing...

The cable has come under pressure again after the release of UK manufacturing productions of March which have come unchanged from February while the market was waiting for increasing by .5% from .9% in February and also the industrial productions of March have come weaker than expected easing back by 1.2% while the market was waiting for increasing by .4% from .3% in February and these weak data come after the recent declining of UK PMI manufacturing index which has fallen in March to 57.1 from 61.5 in February while the market was waiting for 60.9 which shows that there can be harder times in the case of further rising of the commodities and energy prices. The cable has been boosted this week by the rising of UKPMI service index of March which rose to 57.1 from 52.6 in February while the market was waiting for just 52.9 and it was 53.5 in January from 49.7 in December which shows that...

The gold has started its correction which has ended at 1410$ getting back above its previous high at 1447 to reach 1456 ahead of testing 1500$ psychological level as the tension is still on in Libya with no clear victory to each of the rebels or El Qaddafi's troops supporting the oil prices and the investors looking for safe haven stance. In this same time, there is no clear direction for hiking the interest rate ending the Fed's stimulating easing stance for containing inflation in US expecting the rising of oil and commodities prices to pass with no implication on the underling inflation over the medium term to effect negatively on the demand as what has been announced earlier this week from the Fed's Chairman Mr. Bernaneke who is expecting these rises of oil and commodities to be transitory with no effect on the long term inflation and this conclusion has been obvious in the recent meeting minutes of the Fed...

What does our economic future hold? Great question, right? Is our economy truly rebounding as much as our equity markets may portend or are we riding high predominantly due to government stimulus similar to an economic anabolic steroid? Is our future as bleak as the numerous and sundry doomsayers would proclaim? Does it appear as if our economy has a split personality or is operating in two different realms? Do you often wonder what others—especially those in Washington—may be seeing if the economic landscape in your backyard remains very challenging? I continue to believe our overall economy is and will continue to operate with a ‘walking pneumonia’ type condition. The massive debt burdens at all levels of our economy continue to serve as a drag and inhibit any sort of truly robust rebound. Let’s navigate and take the pulse of Rick Davis of Consumer Metrics Institute which captures real time discretionary online consumer activity.  Rick and his team recently put forth a fabulous...

Did you see 60 Minutes? This craziness is part of the "Fraudclosure" scandal that has been well documented by Barry Ritholtz over at The Big Picture so I’m not going to spend too much time on it other than to look at the overall trend. 37,000 people went to an event in Los Angeles for people who are in foreclosure and wanted to know their rights, 12,000 people came to a similar event in Miami, law firms are beginning to take cases on contingency in exchange for liens on the homes, which can become very valuable if the law firm successfully shoos the bank away from the Mortgage. LA and Miami are big cities so let’s say that, nationwide, only 200,000 of the 4M homeowners facing foreclosure are able to challenge their loans and let’s say only 50% are successful. That’s still 100,000 mortgages that may be written off and, at $200,000 per average mortgage, that’s $20Bn worth of bank write-offs to...

From CNBC: Moody’s Cuts Rating on Portuguese Sovereign Bonds Credit rating agency Moody’s cut Portugal’s sovereign debt by one notch on Tuesday, saying it believed an incoming government would need to seek financing support from the European Union as a matter of urgency. Moody’s cut its rating on Portugal’s long-term government bonds to BAA1 from A3 and said the country’s debt was still under negative review, with further downgrades dependent on Lisbon’s ability to secure medium-term funding. …”…Moody’s believes that the government’s current cost of funding is nearing a level that is unsustainable, even in the short-term,” the ratings agency said on a statement. …Portugal’s president dissolved parliament last week and set June 5 as the date for the next polls, meaning the country is effectively in limbo for two more months. …While Portugal can probably go on funding itself for the next eight weeks – it has to refinance 4.3 billion euros ($6.1 billion) of debt in April and 4.9...