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Category: Financial products

Methods and systems for issuing and trading securities and other financial instruments, such as debt, equity, or real estate, and essays and articles related to such.

Flow of funds analysis

US corporations still in recovery mode

The rubble of 2008 has not yet been cleaned away.

The Federal Reserve flow of funds accounts provide a general view of the financial situation of US corporations as of Q4 2009. The question that I would like to address is simply this: To what degree have US corporations been able to improve their financial liquidity since the Crash of 2008? Whereas behavior of US households indicates a shift to more conservative financial positions — with far higher levels of saving than prior to 2008 — corporations do not seem to have taken a similar course.

As goes January?

Foreigners and funds buy US stocks

Market clockwork from former times

Foreign investors and mutual fund shareholders were the primary buyers behind the Bear Market Recovery of 2009. Stock buybacks had disappeared, a significant modification in investor/issuer behavior that had been seen since 1982 and SEC Rule 10b-18.

The rally hit a peak in January 2010, reminding many of the saying, “As goes January, so goes the year”.

Bond market:

World avoids US private debt

Fed Flow of Funds Table F.107, US$ billions (annual flows) to Q2 2009

The flight to safer investments, which started with the Crash of 2008, has accelerated as the consequences of economic policies of the Obama administration have become evident.

There has been a net swing away from certain classes of private debt on the order of USD 1.5 trillion, between 2006 and Q2 2009. This money has gone into US Treasury securities, driving rates to almost zero.

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Featured articles on inside pages

Stock buybacks

Accelerating to a buyback-option blowout

By Q1 2006, stock buybacks had multiplied to five times the level of 2000. Buybacks grew by 25% in 2005, with corporate profits after taxes increasing only 5.5%. At these rates, buybacks will exceed after-tax profits by 2009.
More ...

Securities Analysis

Managing complexity

Modern capital markets have become so complex that security analysis methods of the 1930s are no longer adequate. Complexity goes beyond financial data to collateral issues such as operations, foreign and domestic taxation, and structural risks. More ...

US Politics

The decline of mainstream media

In September 2009, President Obama dominated television in his attempt to sell his government-run health plan, despite massive public opposition. Mainstream media has falling revenues and market share as people turn to unbiased sources. More ...

US equities

Do stocks offer protection against inflation?

There is a common belief that a managed, diversified portfolio of US common stocks provides protection against inflation. However, there is reason to question whether this protection currently exists.
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US Bonds

The collapse of the dollar and US bonds?

The extreme spending of the Obama government, combined with irresponsible bank lending policies promoted by Barney Frank and Chris Dodd, portend rising interest rates, the collapse of the bond market, and the end of dollar supremacy. More ...

World Economy

What Is ‘International Liquidity’?

It used to be that the term 'international liquidity' meant the relative amount of resources available to a nation's monetary authorities that could be used to settle a balance of payments deficit. In the days of the gold standard, this would mean access to gold that could be used to redeem a nation's currency held by foreigners. More ...

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