Tuesday Musings

• Two big up days last week and then the wheels came off Wednesday & Thursday as the debt crisis in Greece escalated. Worldwide traders had to unwind risky asset trades and sell everything to get liquid at any cost. It is remarkable the one asset that everyone looked to for value did not perform as expected and that was gold. The asset everyone ran to was the poor but remarkably stable dollar.


• Small biz leads recoveries but not this time as banks refuse to lend to small companies. Small biz optimism at 15 month lows. Small cap stocks suffer and values found at mature businesses with strong balance sheets.


• Drive-in Sonic sales down 28% over same period last year.


• Emerging markets suffered $1.6 billion in outflows since January 11th high.


• Whispers around the bond trading desk that the U.S. government credit may be downgraded from current Aaa by one or all of the rating agencies making it more expensive to issue debt, By the by, who else has debt problems? Greece, Spain and Portugal along with Great Britain and Japan. With eyes on Europe those in the know say be wary of Japan. Financial troubles abound.


• Ouch! Big banks have set aside mucho dinero for mortgage repurchase warranties from bond insurers along with Fannie and Freddie demanding buy-backs of bad loans. Cost?at least $10 billion.


• Worried about rate increase crushing your bond principal? Maybe not. A policy shift, according to Barrons, by the Federal Reserve that f the rate increases are gradual, allowing time to liquidate holdings this would promote stability in the market. Still risks remain for those with long-term stakes. Expect the Fed to reveal its recipe for hiking rates sometime this week.


• AOL is alive. Like Frankenstein's monster, lead by Google alum Armstrong, and spun off from Time Warner the dial up aka advertising site beat the street estimate by 8 cents. Dubbing itself a transition-brand-advertising site high hopes were being whistled in the halls of AOL.


• Unemployment fell, just barely. In a week loaded with bad news I'll take any small slice of sunshine.


• Ugly February will continue to be ugly.


• Finally, across the rive from Detroit the Canadian real estate market is doing just fine. Average home prices have increased 23% off their January 2009 lows and sales volume is up 70% over that same period.

  If you have questions on anything contained in this blog call Paul Stanley @ 877 783 7080 or write pstanley@westminsterfinancial.com