May 17, 2013
Consumer Confidence Swells to Almost Six-Year High in May
 The preliminary May reading of the Thomson Reuters/University of Michigan consumer sentiment index skied to 83.7 from a 76.4 reading in April, besting economist predictions of a 78 mark on optimistic views of the future, lower gas prices and better housing market. The initial May reading represents the highest level of the index since July 2007, lifting stocks yet again on Friday to test new all-time highs. The index, which is correlated to consumer spending and can be volatile, is pushing back near pre-recession levels, where it averaged 89 in the five years to the start of the recession in December 2007. The current conditions index, a measure of how Americans view their personal finances, increased to 97.5 from 89.9 in April, marking the highest reading since October 2007. The biggest gains in the index came from respondents in the (more)…
Danny Werfel Named Acting Head of IRS in the Wake of Scandal
 By now, most people are familiar with the scandal that erupted on Tuesday as the Treasury Inspector General for Tax Administration released a report titled “Inappropriate Criteria Were Used to Identify Tax-Exempt Applications for Review.” The report is as matter of fact in its language and findings as its title suggests. At the same time, given the political climate that currently prevails in the U.S., it was tailor-made for politicization, a fact that was underscored on Wednesday by the firing of IRS commissioner Steven Miller, a career IRS employee who was appointed as the acting head of the organization in November of last year. Miller was not heading the organization during the period covered by the TIGTA report. The job during the 2010-2012 period in question actually belonged to Bush administration appointee Douglas Shulman, who himself had previously denied that (more)…
May 16, 2013
Home Builder Confidence Improves in May as Future Sales Expectations Reach Highest Level in 6 Years
 Regrouping after three straight months of declines, a barometer of U.S. home builders’ confidence rose in May as builders showed an improvement in sentiment towards current and future conditions of the single-family housing market, according to the National Association of Home Builders/Wells Fargo Housing Index released on Wednesday. The NAHB/Wells Fargo index climbed to a 44 reading in May, following a downwardly revised 41 mark in April. In January, the index scored a 47, but each subsequent month recorded a decline, from 46 to 44 and then 41 last month. The May reading was basically in line with expectations of economists. Leading into 2013, the seasonally adjusted index had risen in eight consecutive months from a 28 in May to a 47 in December. Near the peak of the recession, the index had plunged as low as 8 in January (more)…
May 14, 2013
US Household Debt Drops to Lowest Level Since 2006
 The Federal Reserve Bank of New York said on Tuesday that households in the nation lowered their debt by 1.0 percent, or $110 billion, in the first quarter compared to the fourth quarter of 2012. The $11.23 trillion total now outstanding as of March 31 represents the lowest level since mid-2006. The Fed attributed the reduction in debt load to lower credit card balances and smaller amounts of housing-related debt. Total mortgage debt dropped to $7.93 trillion from $8.03 trillion and credit card balances were reduced to $660 billion from $679 billion in the prior quarter. The quarterly “Household Debt and Credit Report” from the central bank provides a snapshot of household trends in borrowing and indebtedness. It is generated through analysis of data from the New York Fed’s Consumer Credit Panel, a nationally representative sample drawn from anonymous Equifax (more)…
Bigger and Better: MicroCaps on Full Display for Wall Street
 In the wake of the global financial crisis some five years ago, small and micro-cap companies dependent upon raising capital often found themselves with little to no recourse, as investors sacrificed growth and potential by opting for preservation and defense. However, as economic conditions in the U.S. have steadily improved, the markets have been on a tear. Throughout this process, the environment for raising capital has drastically improved. Investors are demonstrating renewed excitement for companies that offer higher potential for reward and opportunities for growth, and it follows that small and micro-cap firms, in particular, stand to benefit a great deal from this new state of affairs. The 2nd Annual Marcum MicroCap Conference, held on May 30th at the Grand Hyatt Hotel in New York City, aims to correct the course within the investment community. The investor conference, created and (more)…
Thoughts from the Frontline: Skills, Education, and Employment
 “The large shortfall of employment relative to its maximum level has imposed huge burdens on all too many American households and represents a substantial social cost. In addition, prolonged economic weakness could harm the economy’s productive potential for years to come. The long-term unemployed can see their skills erode, making these workers less attractive to employers. If these jobless workers were to become less employable, the natural rate of unemployment might rise or, to the extent that they leave the labor force, we could see a persistently lower rate of labor force participation.” – Janet L. Yellen, Vice-Chair, US Federal Reserve, March 4, 2013 It is graduation time, and this morning finds me swimming in a sea of fresh young faces as a young friend graduates, along with a thousand classmates. But to what? I concluded my final formal education (more)…
May 13, 2013
Outside the Box: Is Abenomics Going to Put Japan Back on the Map?
 In a special Outside the Box today, Keith Fitz-Gerald, Chief Investment Strategist for Money Morning, dissects “Abenomics,” the radical, not to say outlandish, fiscal moves that the newly installed government of Japan is making. And Keith has a ringside seat: he spends much of each year in Japan. In an attempt to cut the Japanese a little slack, Keith comes up with four things that will have to happen for Abenomics to work – but when all is said and done, he says, Abenomics is a recipe for disaster. That does not mean, however, that there is not plenty of opportunity here for short-term profit, and Keith offers a play that is a potential money maker in this volatile Japanese environment. For a limited time, Outside the Box readers can receive a 60% discount when they subscribe to Keith’s Money Map (more)…
Economic Update: No Serious Hit to Hiring, Yet…
 In this segment, Standard & Poor’s Deputy Chief Economist Beth Ann Bovino notes that the government jobs report stood out as the showstopper this week. The Bureau Of Labor Statistics’ 165,000 job gains was in line with our forecast, but above the 140,000 expected by consensus, as the slew of weaker than expected economic reports, including the soft ADP private sector payroll survey, gave markets reason to worry.
May 9, 2013
Monthly Average of Initial Jobless Claims Drops Near Pre-Recession Level
First-time filings for jobless benefits again beat economist predictions by falling to their lowest level since January 2008 in the week ended May 4, according to a report Thursday from Washington. The four-week moving average dropped to its lowest level since late 2007. The Labor Department said that filings for initial jobless claims decreased by 4,000 to a seasonally adjusted 323,000 in the latest week from a revised 327,000 (up from 324,000) in the week ended April 27. Economists were expecting the number of claims to increase to 336,000. Suggesting a continually improving jobs market, the monthly average of claims, a closely watched measure of labor trends because it strips-out weekly volatility, dropped by 6,250 to 336,750. That marks the lowest level since November 2007, a time when the “Great Recession” was just getting underway. This new data dovetails pretty (more)…
May 8, 2013
Handicapping the Potential Successors to Ben Bernanke
 A couple of days after the Fed announced Ben Bernanke would not attend the Jackson Hole summit, for the first time in twenty five years, the New York Times (on the first page, no less) ran an in-depth profile of Janet Yellen, the heir apparent to run the Fed. Beneath her profile there were three other candidates “being discussed”: Roger Ferguson, Tim Geithner, and Larry Summers. We at QB Asset Management normally do not spend time handicapping presidential appointments. In this case, however, we think the choice for next Fed Chair may have profound economic implications, and that it would not require expertise in econometric modeling, credit policy management, and maintaining the public perception of economic stability. We think the next Fed Chairman will oversee a conversion of the global monetary regime. A thick skin, diplomatic skills, and strong relationships (more)…
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