Financial Armageddon

Even More Fodder for the Bulls?

(Image: source)

As I noted in "More Fodder for the Bulls," Wall Street really seems to love bad news these days. Given that, here's a story that should really get them pumped up:

"Economic Gloom Gathering, Credit Managers Suggest" (CFO.com)

The latest poll of credit managers reports a dip in collections and sales, adding to the year-over-year trend of an optimistic beginning that weakens as the year progresses.

Economists have said many times since the 2008 financial crisis that the recovery will be a long time coming and that it will be hard. So far, optimistic signs have predominated during the first half of a given year, followed by reasons for pessimism about the U.S. economy.

The latest monthly barometer from the National Association of Credit Management (NACM) reinforces that fact, dipping in April for the first time in five months to 55.1 compared to 56.2 in March.

The trade association surveys about 900 credit managers each month on a range of favorable and unfavorable factors. In its report released today, NACM said “the robust growth that started the year has faded somewhat, provoking concerns that the economy will start to retreat for the third time in as many years.”

Partly feeding the concern is a slowdown in payments between companies, which is one of the first signs of a downturn, according to Chris Kuehl, an economist for NACM. For the most part, he says, companies are acting cautiously by putting some of its late-paying customers on their watch lists. But they're not yet turning away customers because of slowed collections.

Making the Best of a Bad Situation

Admittedly, I spend a lot of time at Financial Armageddon discussing the downside risks ahead. But that doesn't mean it's time to throw in the towel and give up. Undoubtedly, most of those who buy into my view of the world will want to try and make the best of a bad situation.

And as much as I believe there is little we can do to change things at the macro level, despite -- or because of -- the interventions of central bankers and other overconfident fools, that's not necessarily the case in our own lives. When it comes to whether we will survive or thrive, I believe creativity and human ingenuity can still be of tremendous value to us as individuals.

In that regard, the clever ideas detailed in a Slope of Hope post, "Opportunities EVERYWHERE (Market Sniper)," on ways to make money from the kinds of situations I believe will be increasingly commonplace in the days ahead, represent interesting food for thought.

The basic concept is to find businesses with dormant or grossly under utilized assets. I have found around 30 different categories in which you can find these under utilized assets in the typical business. I am sure there are many more. What is important here is you get your creative juices flowing. What you will be doing is to find ways your "client" can make more money and/or save money. This works anywhere and in any part of the business/economic cycle. In fact, during times of economic distress, you will find that business owners are even more open to what you can offer them. When times are good, some narrow minded business owners are in the "don't rock the boat" mindset.

Here is the basic proposition  you will present to business owners and decision makers: "IF I can, at absolutely no cost to you, increase your net cash flow, would you be willing to pay me 15% of that net positive cash flow that I create for you?" And/or "IF I can save you a significant amount on your operating costs, at no cost to you, would you be willing to pay me 15% of what I save you?" If I cannot help you, you are under no obligation and we will part as friends......now think about that. What business owner in his right mind would say NO to such a proposition? If he/she does, you would not want to do business with them anyway! As an aside, that 15% is somewhat arbitrary. You can make it any percentage you wish. I have found that 15% is a good rough guideline. Do not ask for too much and do not discount the service you will be providing either. Depending on the type of deal, you can set yourself up as a toll booth operator. You can create substantial monthly cash flow from your deals. Often, that is not possible and you can receive decent lump sum payouts. The more deals you do, the more deals you will be able to do! I call this "Business Combinations." Perhaps the best way to get you thinking along these lines is by illustration of some of the deals I have done and am doing.

Call Center Operation. Call centers are expensive to set up and not cheap to operate. I found a rather large call center that was dealing strictly with businesses. It is on the West Coast and its hours of operation were Monday through Friday, 6 am local time until 5 pm local time. I went to the owner and asked him: "IF I could increase your cash flow, at no cost to you, would you give me 15% of that new cash flow I bring you?" His answer was: "Of course I would!" I then found another, smaller, operation that was marginal and the owner was thinking about shutting it down. It dealt with consumers and was running him $25,000 a month to operate. His hours of operation was 5 pm to 9 pm Monday through Friday and on weekends. My question to him was: "If I could find a way to save you a substantial amount of money in your operation, would you be willing to pay me 15% of what I save you?" His answer was: "Of course I would!" So here was the deal: The call center selling to consumers was moved to the other call center dealing with businesses who was paid $10,000 per month for that use. I recieve $1,500 per month from him. I saved the other owner $15,000 per month and every month he cuts me a check for $2,250. This is a good example of a toll booth operation.

Non-competitive Manufacturing And Delivery: I found two manufacturers in the City Of industry, CA. They were non-competitors. That is very important. They manufactured and then delivered to the Western United States. As business conditions worsened, both were sending out trucks half full. So, for a fee, Manufacturer A agreed to also deliver for manufacturer B. Then, manufacturer B was able to dispose of its delivery fleet. This type of deal cannot be monitored. My fee for putting this deal together was 25% of the total fleet sale from manufacturer B. The check came to $178,600. This is an example of a lump sum payment type deal.

Exchange of Services and Adding New Business Lines: I have a good friend who is a young MD type doctor. He was loaded down with student loans and he operates his own office in Encino, CA, a fairly wealthy area. It costs him $225 per hour to keep his office doors open. He had to do hospital rounds at night to survive. Radio time is now going begging. So, I worked a deal for him with a local radio station. He gets advertising air time and even has his own medical "show" on that station. He is also now the personal doctor for the station owner and the few employees. This was an exchange of services. I did not charge for putting this deal together but it lead to a new business line for him that I proposed and share in that revenue. He is located in a wealthy area. There are a lot of wealthy older people in the area who do not like going to see the doctor but from time to time, need medical help and attention. So we set up a medical concierge service that also gets advertised on that radio station. We make house calls and the fee is not cheap. We now have eight doctors on call and business is brisk.

The Mailer: I have not personally done this but know a person who did and this is brilliant! This took some money for postage costs and he got a financial backer to put up the small sums required to do this kind of deal.  He got a directory of all the independent CPA's, PA's and bookkeepers in the State of California. Around 30,000 names and addresses. He then set out a letter of inquiry to all of them. Basically: ANYBODY WANT TO SELL? He received over 1400 positive responses. He subtracted those from the list and to the rest, keeping it geographically specific, he sent out another letter of inquiry. Basically: ANYBODY WANT TO BUY? From this, he put together over 700 transactions! Many were cash transactions and he got paid. Many were non-cash transactions where the new owner pays the old owner a specific percentage of the billing on the "retired" owner's clients. He gets paid on that as well. The deals were all done over 9 years ago now. He has made over 5 million from these deals and is still getting checks. Think of the possibilities!

Click here to read the rest.

More Fodder for the Bulls

Given that stock market likes loves bad news (which is not surprising when you have a trading crowd infected with dot-com-era delusions and the likes of Helicopter Ben Bernanke in charge), I reckon the following collection of items from today's news trawl could easily send the Dow up a thousand points on Monday.

"The Pinocchio Recovery" (MarketBeat)

It’s been nearly three years since the recession’s official end, and the economy remains mired somewhere between stall speed and escape velocity. Nobody can quite figure out how to keep it away from the former and get it past the latter. The usual prescriptions aren’t working.

What we’ve got on our hands is a Pinocchio recovery, a puppet that wants to be a real boy, but remains just a wooden toy that moves only when somebody’s pulling the strings. It needs massive amounts of stimulus — government spending, cheap interest rates, tax holidays, tax breaks on equipment purchases, and so on  – to move it.

"More Americans Find Aging Is a Gateway to Poverty" (Macroscope)

Over the last several years, more Americans have found that aging has left them in the clutch of poverty. Between 2005 and 2009, the rate of poverty among American seniors rose as they aged, as did the number of people entering poverty, according to a new report from the nonpartisan Employee Benefit Research Institute (EBRI).

Poverty rates fell in the first half of the last decade for almost all age groups of older Americans (defined as age 50 or older) but increased since 2005 for every age group.

"Wage Growth in the U.S. Will Feel Effects of Great Recession for Years to Come" (Conference Board)

The Great Recession has confronted U.S. workers with an extended buyer's market in jobs, according to a new Executive Action Report from The Conference Board, leading to overall wage growth between 2008 and 2010 that was the weakest since the 1960s. Feeling the Pain: Wage Growth in the United States examines prevailing trends in recent U.S. Bureau of Labor Statistics data, and finds workers and wages still reeling from the downtown, with significant disparities across states and demographic groups in how strongly wage pressures have been felt.

Said Gad Levanon, Director of Macroeconomic Research at The Conference Board and a co-author of the report: "While there were signs of modest overall wage improvements in 2011, the severe depression of wage growth during the Great Recession — turning negative in the hardest hit regions — is likely to impact consumer spending, inflation, corporate profits, income inequality, and employee engagement for many years to come. Moreover, the uneven distribution of this pain among different groups may carry deep social and political implications for the future development of the economy."

"U.S. Financial Comfort Falls to New Low" (Gallup)

Sixty percent say they make enough to live comfortably, down from 65% in 2011

PRINCETON, NJ -- Americans' financial comfort is the lowest Gallup has measured to date, with 60% saying they currently have enough money to live comfortably and 39% saying they do not. Americans' peace of mind with their finances was fairly stable at a high level from the first asking of the question in 2002 through 2007, but has since faltered.

"Expected Retirement Age in U.S. Up to 67" (Gallup)

Average expected retirement age was 60 in mid-1990s

The average nonretired American now expects to retire at age 67, up from age 63 a decade ago and age 60 in the mid-1990s.

The results are from Gallup's annual Economy and Personal Finance survey, conducted April 9-12.

...

The same poll finds a new low of 38% of nonretirees saying they will have enough money to live comfortably in retirement, down slightly from 42% last year. When Gallup first asked the question in 2002, 59% thought they would have enough. The percentage dipped below 50% during the recession and has remained below since.

No Punches Pulled

(Image: source)

In a must-read interview with King World News, Bloomberg Brief senior economist Richard Yamarone doesn't pull any punches:

When asked what’s really happening with the US economy, Yamarone responded, “I think people are just running out of money.  We have contracting, real disposable incomes.  Most of the job creation that we have is from minimum wage type jobs.”

“I’m fortunate enough to travel and speak to chambers of commerce with 300 to 500 people in the audience.  They all tell me, ‘Hey, listen, I am letting go of workers.  I’m hiring them back at a fraction of what I used to pay them.’

You hear from the other side, ‘Hey, I finally got a job after two years of being unemployed.  I used to make $100,000 (each year), now I’m making $45,000 or now I’m working part time.’  Or (you hear), ‘I used to make $500,000 and now I’m making $200,000 or making $125,000.’....

“So you are actually seeing this collapse, contracting on a real basis, of real disposable personal incomes.  If you don’t have the money, you can’t facilitate expenditures.  So that’s the core of the problem.  That’s what’s really going on in the US economy.

Wow, I'm impressed -- an economist who makes me feel like a bit of a softie!

(To read the rest of "Yamarone - We Are Literally Witnessing a Collapse," click here.)

Weak Equals Weak

While there have been a few exceptions, five decades of data suggest ("unexpectedly") weak durable goods orders will soon translate into ("unexpectedly") weak employment conditions.

Recovery? I think not.

Reprehensible Behavior a Cornerstone of its Business Model

Time for a rant.

Although I (and many others) have long been critics of Wall Street's incredibly sleazy, recklessly psychopathic, and relentlessly self-destructive underbelly, there is another corner of the financial services industry that seems to have made reprehensible behavior a cornerstone of its business model.

As the New York Times reports in, "Insurers Alter Cost Formula, and Patients Pay More," the insurance industry seems intent on making Congress look like a bastion of honesty and ethical behavior.

Despite a landmark settlement that was expected to increase coverage for out-of-network care, the nation’s largest health insurers have been switching to a new payment method that in most cases significantly increases the cost to the patient.

The settlement, reached in 2009, followed New York State’s accusation that the companies  manipulated data they used to price such care, shortchanging the nation’s patients by hundreds of millions of dollars.

The agreement required the companies to finance an objective database of doctors’ fees that patients and insurers nationally could rely on. Gov. Andrew M. Cuomo, then the attorney general, said it would increase reimbursements by as much as 28 percent.

It has not turned out that way. Though the settlement required the companies to underwrite the new database with $95 million, it did not obligate them to use it. So by the time the database was finally up and running last year, the same companies, across the country, were rapidly shifting to another calculation method, based on Medicare rates, that usually reduces reimbursement substantially.

“It’s deplorable,” said Chad Glaser, a sales manager for a seafood company near Buffalo, who learned that he was facing hundreds of dollars more in out-of-pocket costs for his son’s checkups with a specialist who had performed a lifesaving liver transplant. “I could get balance-billed hundreds of thousands of dollars, and I have no protection.”

That's not the end of it, of course. In fact, all it takes is about 10 minutes of Googling to come up with plenty of other stories about an industry that apparently feels really good about doing bad:

"MetLife Settles Suit Over Missed Beneficiary Payments"

"Insurers Probed by New York Over Force-Placed Coverage"

"Hartford in $24 Mln NY Insurance Settlement"

"Will Farmers Insurance Settlement Turn into a Good Deal For Customers?"

"A Class Action Lawsuit Alleges Wells Fargo Partnered With Insurers To Rip Off Homeowners"

"ANALYSIS: Health Insurers Try To Fool Congress With Fuzzy Math"

"Adjusters: Insurance Companies Preventing Policy Payouts"

"Insurance Company Ordered to Pay $34 Million For Kicking 90-Year-Old Arlene Hull Off Plan"

"As Weather Gets Biblical, Insurers Go Missing"

"Insurance Company Sued By Sewage Plant Owners: Binghamton, Johnson City Say Company Improperly Withheld Payment"

"Aetna Rate Hike Is Deemed 'Excessive' By California Regulator"

"Maryland Law Would Ban Insurers From Requiring Consumers ‘Bundle’"

"Class Action Lawsuit Filed Against Citizens Property Insurance Corp."

"MetLife Must Defend Lawsuit Over Retained Asset Checkbook"

More Than Just Skint

In spite of the relentless cheerleading by Wall Street "strategists" and other alleged experts, many Americans have refused to play along with the "it's a bull market" song. A chart at Zero Hedge, which has for some time been chronicling the exodus by small investors from the U.S. equity market, reveals in colorful detail just how disinterested they have been:

An article in the New York Post, "No-Confidence Vote: Main Street Shunning Markets," offers a few explanations as to why individuals have been unwilling to jump on the train, including the fact that so many are, as the British slang expression goes, skint:

“I think most people are taking money out of these funds because they either need the money to live — because they’re out of work or underemployed — or they’re supporting their kids, who are out of college and not getting jobs,” Mogavero said. “There is also a fear factor about the economy that is causing them to keep money in the bank and out of the markets.”

Still, given my inherent cynicism  -- yes, it's true -- I can't help but think that the view espoused by an Instapundit reader, who is apparently a professional money manager, ironically enough, represents a more accurate assessment of what's been going on:

Professional financial market activity is also way down these days. The drop in volumes is damning. The Fed’s financial repression – forcing market yields below inflation – is one reason. The tsunami of administration diktats is another. And the Chinese-style theft of customer account capital by John Corzine and JP Morgan is the last nail in the coffin. The economics of investing make little sense, and even if you can thread the needle of profitability, you risk having your property seized by regime buddies. Why do anything with your money but stash it under the mattress, or try to get it offshore?”

Business Is Booming...

...in at least one area of the economy, according to the Washington Times:

The economic impact of the firearms industry is up 66 percent since the beginning of the Great Recession, providing an unexpected shot in the arm for the economy, according to a new study.

The National Shooting Sports Foundation says the economic impact of firearm sales — a figure that includes jobs. taxes and sales — hit $31 billion in 2011, up from $19 billion in 2008.

Jobs in the firearms business jumped 30 percent from 2008 to 2011, when the industry employed 98,750.

The industry paid $2.5 billion in federal taxes in 2011, up 66 percent in three years.

“Ours is an industry with a rich history and heritage that remains vital and important to the American economy today,” NSSF Senior Vice President Lawrence G. Keane said in a statement. “To millions of Americans our industry’s products represent liberty, security and recreation.”

...

Although there is no single indicator that tracks the number of firearms sold in the country, the FBI reported that a record 14.4 million criminal background checks were requested for gun purchases in 2010, and that preliminary numbers project the figure to be above 16 million for 2011.

According to the NSSF’s numbers, requests for gun-related background checks was up some 17.3 percent for the month of January 2012 compared to the same period a year earlier — the 20th straight monthly increase in background check requests.

FBI officials say that just over 1 percent of such background checks result in denials, and not every background check results in a final gun purchase. But the numbers are widely considered a reliable proxy for gun sales trends generally.

As the saying goes, there's always a bull market somewhere!

Bang-bang.

Not Much Better than at the Peak of the Bubble

In "Knee-Jerk Relativism," I highlighted a Philly Post article detailing how incomplete, inconsistent, or irrelevant statistical comparisons serve to paint a distorted picture of where things stand in today's economy.

As it happens, an article in today's New York Times, "Debt Burden Lifting, Consumers Open Wallets a Crack," makes what I believe is a similarly misleading claim about Americans' financial health:

The bursting of the real estate bubble and the ensuing credit crisis forced American consumers to do something that they had little experience in trying: reduce their debt.It has been a painful process both for borrowers, who have faced foreclosures and bankruptcies, and for lenders, whose have had to take losses vastly in excess of what they thought possible.

But the process is working far faster in the United States than in countries like Britain and Spain, which also faced plunging real estate prices. And now it appears to be contributing to an economic recovery that has gained a little momentum, despite facing headwinds from the European debt crisis. This week’s report that retail sales grew faster than expected in March was the latest sign that consumers — or at least a substantial number of them — are growing more optimistic.

One measure of the financial health of householders is the level of financial obligations, like required mortgage and credit card payments [as well as pay day loans], to disposable income. By the fall of 2007, those obligations took up 14 percent of disposable income, more than at any time since the Federal Reserve began calculating the statistic in 1980.

But now the situation has turned around. The latest figures, for the final quarter of 2011, show that required debt service payments now make up just 10.9 percent of disposable income, the lowest proportion since 1994. A broader measure — which adds in such obligations as property tax and insurance premiums for homeowners, and rent for those who do not own their homes — has fallen to the lowest level since 1984.

While it's all well and good to say that monthly outlays are less than they were, this development likely reflects the fact that, thanks to the Fed's machinations, interest rates are at historic lows, while maturities for certain kinds of financing, including cash loans, have generally increased as lenders try to keep payments at manageable levels.

The reality is, if you compare the financial obligations ratio cited in the Times article to the ratio of average household debt to median household income, as I've done below, it's apparent that the financial position of U.S. consumers is not much better than it was at the credit bubble's peak.

In the end, it's not just the amount that people shell out each month that matters; the amount they owe also has a strong, if not stronger, impact on their willingness to spend. Under the circumstances, I wouldn't hold out much hope that a consumer recovery is on the way.

Clouded by Knee-Jerk Relativism

Although relative comparisons are quite useful, the absolute numbers matter, too. In my experience, Wall Street "analysts" tends to give short shrift to the latter. That's why, for example, they can argue (with a straight face, no less) that stocks are cheap vs. bonds -- without making reference to the fact that bond yields are at artificially-depressed extremes as a result of unprecedented Federal Reserve assistance.

In "Don’t Be Fooled by These 10 Misleading Economic Indicators,"  The Philly Post's Gene Marks highlights a number of instances where knee-jerk relativism has clouded the bigger picture.

What reports like "consumer confidence" and "housing starts" really mean.

We all hear plenty of economic data every week. And recently, the news reports have been generally positive. Increased retail sales. Decreasing unemployment. A higher stock market. But it’s all relative. Sure, we’ve been seeing better numbers lately. But compared to what? The recession? A lot of the economic news is more than a little misleading. Let me give just a few examples, using data and charts from the very excellent Calculated Risk blog written by Bill McBride.

1. Gross Domestic Product
Gross Domestic Product, or GDP, is a measure of a country’s industrial output. During the recession, the U.S. had a negative GDP. So people are high-fiving because the Fed is predicting growth of 2 to 2.3 percent this year, which is up from the 1.7 percent growth recorded in 2011. This is not something to cheer about. China’s economic growth has slipped to (gasp!) only 8 percent! India is growing at a 7 percent rate. Even Sweden—Sweden, for God’s sake—is predicted to grow at more than 3 percent next year. How bad are we doing? If our economy’s projected growth rate doubles to 4 percent it would still be 30 percent behind its growth rate from before the recession, and half of what it was back in the ’80s.

2. Housing Starts and 3. Home Sales
Did you know that housing starts are about to cap their best quarter since 2008? Whoopee! But hold on a sec … let’s look a little closer. Yes, the real estate and construction industries are slowly starting to recover. But for small businesses in those places you’ve got a long, long way to go. For example, that fantastic housing starts number? It’s still at one-third the level of housing starts back in the mid-2000’s. Yes, you read right: one-third. New home sales are hovering around 300,000 per month compared to 1.4 million (yes, million) back in the mid 2000’s. And today’s existing home sales are about 35 percent less than they were back at the same time.

4. Unemployment Rate and 5. Weekly Unemployment Claims
People were slightly concerned the other week when it was announced that the unemployment rate only fell to 8.2 percent. We should be very concerned. Ask any economist, and they’ll tell you that a “natural” rate of unemployment (where the supply of labor is near where the demand of labor is) should be about 6 percent. That’s because there will always be a percentage of people unemployed—seasonal employees, etc. Today, our unemployment rate is much higher than it should be. We still have more than five million people less employed than before the recession started. In early April, everyone was excited because weekly unemployment claims were at 375,000 … a four-year low. That’s really nothing to cheer. Before the recession, weekly unemployment claims were consistently below 300,000. Last month, the economy added 120,000 net new jobs. At that rate, it would take 42 months to get back to the level we were at before the recession. That’s three-and-a-half years!

Click here to read the rest.

Divergent Reality

The way I see it, there are only two explanations for the incredible divergence we've seen in recent years. Either 1) the payroll data or sentiment readings are highly suspect (as to which is more likely, I would note that only the former is compiled by the U.S. government); or, 2) the quality of the jobs that many people have nowadays is significantly less than it was before the recession "ended."

On a separate note, sentiment isn't exactly great among those who should be enthralled by the relentless, Fed-driven rise in stock and other financial asset prices.

"Wealthy Investors Are More Worried About Economy Than One Year Ago"

The prolonged economic downturn has become the top worry for most wealthy investors, according to new research report released Tuesday by Chicago-based financial research firm The Spectrem Group.

An estimated 80 percent of millionaire investors surveyed cited the sluggish first-quarter economy [Editor's note: Wait, what? I thought Treasury Secretary Timothy Geithner said the economy is getting stronger?] as a concern compared with 70 percent in the same period in 2011. Similarly, an estimated 81 percent of mass affluent investors with net worths between $100,000 and $1 million were concerned about this year's first-quarter economic performance compared with 74 percent last year.

Not a Good Sign

While it is not an infallible signal, the recent trend in federal tax receipts suggests the economy is not, as Treasury Secretary Timothy Geithner claimed on Sunday, "getting stronger." If anything, it would seem to be the opposite.

(Hat tip to Global Economic Intersection.)

Still On Life Support

A Financial Times report, "World Economy Still on Life Support," pours more cold water on the notion that conditions are returning to "normal."

The world economy “remains on life support” from central banks and has deteriorated since last autumn, the latest Brookings Institution-Financial Times tracking index shows, despite some recent signs of stabilisation.

Economic weakness extends across the Group of 20 leading economies, according to the TIGER (Tracking Indices for the Global Economic Recovery) index, but advanced economies have deteriorated more than developing countries.

...

Although financial markets recovered significantly in the first quarter of the year as investors welcomed the European Central Bank’s massive injection of liquidity into the eurozone’s banks, the outlook for growth and jobs has become more precarious almost everywhere except in the US.

Professor Eswar Prasad of the Brookings Institution said: “The global economic recovery is still sputtering due to a lack of robust demand, policy tools that are stretched to their limits and unable to muster much traction, and enormous risks posed by weak financial systems and political uncertainty.”

No doubt highly-paid pseudo-analysts and the usual contingent of permabulls will zero in on the claim, noted above and later in the article, that the U.S. is faring better in relative terms than the rest of the world.

But they'll probably forget to mention two things: 1) our economy also remains on substantial life support from the Fed (if not, why have they kept interest rates near zero and allowed their holdings of securities to balloon to nearly $3 trillion?); and, 2) a great many of the export markets that helped keep U.S. businesses afloat (in the face of weak domestic demand) are likely to be hit by recession in Europe, slowing growth in China, Europe, and weakening demand everywhere else.

I know, I know. I just need to be a bit more positive -- right?

Ignorance...or Arrogance?

If the following headlines are any guide, a sizeable cohort of Wall Street types expects addditional Fed easing:

"Fewer Investors Rule Out QE3, Citi Survey Shows" (Businessweek)

"Gross to Gundlach Lead Bond Investors Seeing QE3 From Fed" (Businessweek)

"POLL-Most US dealers see Fed QE3 stimulus later this year" (Reuters)

"QE3 Is Still Coming" (TheStreet)

And yet, we have this:

"Flurry of Fed Comments Suggest Less Chance of Easing" (CNBC)

A week of voluminous Fed speak has confirmed market suspicions that the Federal Open Market Committee has subtly shifted towards a more hawkish stance on additional easing.

Comments from nine of the 17 FOMC members this week did not, on balance, suggest any imminent shift from the current easy money policy.

But they did underscore the belief that began to take hold with the March monetary policy statement that the central bank, given the current forecast, is not planning a third round of quantitative easing.

Even more significantly, it may not even be planning to extend "Operation Twist," the Fed’s current program under which it sells short-term securities in its portfolio and buys longer-dated paper in order to try and drive down long-term rates. The program ends in June.

Under the circumstances, some might wonder whether the "smart money" types are deluding themselves -- or whether they are the ones who are actually running the (monetary policy) show.

What do you think?

Housing: Still A Broken Market

Aside from everything else -- including a still-massive overhang of properties for sale -- the fact that ultra-cheap financing is not enough to induce a suffcient number of buyers to step up and take the plunge makes it apparent that we are nowhere near a bottom in the housing market.

And yet, Wall Street keeps piling into homebuilding stocks (I guess fundamentals don't matter when you're the "smart money" -- right?).