Monday, June 7, 2010

Six Giant Banks Made $51 Billion Last Year; The Other 980 Lost Money

Focus hard on this shocking Wall Street reality: The top six bank holding companies earned an aggregate of $51 billion in pretax income in 2009. We're talking about JPMorgan Chase, Goldman Sachs, Bank of America, Morgan Stanley, Citigroup and Wells Fargo.

All of this pretax income can be attributed to their trading revenues of $59.7 billion. The proprietary trading operations of an oligopoly of banks, saved from disaster by Uncle Sam's largesse and subsidized with cheap money from the central bank, was the single driving force behind the restoration of their fortunes and the renewed surge in their stock prices. (more)

Technically Precious with Merv, June 4, 2010

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Hints of a Bottom in U.S. Stocks and Euro

The mirage of economic recovery conjured up by our political leaders and a credulous news media dimmed and flickered in the harsh light of reality on Friday, when grim employment figures for May sent stocks into one of their steepest dives of the year. Although 431,000 jobs were added last month, most of the workers were census-takers hired temporarily by the government. Even that figure evidently was ginned-up, since it appears that many of the workers had been laid off during intervals when there was little to do, only to be rehired later and recounted. But the bottom line for private-sector employment was a paltry 41,000 new hires, the smallest increase since January. (more)

Why U.S. debt matters to you

Letting U.S. debt grow unabated is often framed as an unforgivable burden to heap on one's grandchildren.

But there are plenty of reasons today's parents might be concerned for themselves and their kids.

If Congress doesn't craft a plan to address long-term fiscal shortfalls after the economy recovers, potential problems could arise sooner rather than later, debt experts say. (more)

ISM vs Employment

Back briefly to the employment report: Our friend Barry Ritholtz has found a pretty strong correlation between the employment report and the ISM manufacturing index. In April, the ISM came in at 60.4; in May, 59.7. Going back 40 years, this index turns in a reading of 60 only about 10% of the time.

So the ISM has likely topped out. Now… the year-over-year change in nonfarm payrolls tends to lag by about seven months. Move that figure up by seven months, and the resulting chart looks like this.

“ISM has rebounded to around 60,” Barry says, “while employment, though certainly up sharply year over year from the trough, still has far to go in this game of catch-up.

“The point is this -- is this as good as it gets? I have maintained that some releases (like ISM manufacturing, for example) seem to be flashing late stage before employment has had any opportunity to climb out of its ditch.

“Should this trend continue, and I suspect it may, it does not bode well for the sustainability of this ‘recovery.’”

JP Morgan Class Action Suit will lead to silver explosion

Chart of the Day

Euro 'will be dead in five years'

The single currency is in its death throes and may not survive in its current membership for a week, let alone the next five years, according to a selection of responses to the survey – the first major wide-ranging litmus test of economic opinion in the City since the election. The findings underline suspicions that the new Chancellor, George Osborne, will have to firefight a full-blown crisis in Britain's biggest trading partner in his first years in office.

Of the 25 leading City economists who took part in the Telegraph survey, 12 predicted that the euro would not survive in its current form this Parliamentary term, compared with eight who suspected it would. Five declared themselves undecided. The finding is only one of a number of remarkable conclusions, including that: (more)