The Flinchum File
Thoughtful Economic Analysis and Existential Opinions

50 Safest Banks

08/30/2010

Each year, the highly respected Global Finance magazine publishes its list of the 50 Safest Banks in the world, and the 2010 list came out today. The highest rated U.S. bank was JP Morgan at #39. Wells Fargo was only #42. Only two U.S. banks made the Top Fifty. Bank of America was a pitiful … Continue reading 50 Safest Banks

“China, Inc.”

08/29/2010

In anticipation of my upcoming trip to China, a good friend & client graciously loaned me her copy of “China, Inc. “How the Rise of the Next Superpower Challenges America and the World” by Ted C. Fishman. Although published in 2006, it is still required reading for serious geo-political observers. Alternating between history and travelogue, … Continue reading “China, Inc.”

Totally Unscientific . . .

08/26/2010

One of the daily jobs of a financial advisor is to check on stocks that have been either up-graded or down-graded by the nerdy analysts. Normally, there are more downgrades than upgrades when the economy is weakening, but that is definitely not the case now. I’m seeing probably 5 upgrades for every downgrade, which indicates … Continue reading Totally Unscientific . . .

Summer Doldrums?

08/25/2010

August is normally one of the best months for The Market, while September is normally one of the worst. Conventional wisdom is that most traders are on vacation during August but thinking about their portfolios. When they get back to work, they start selling to re-position their portfolios, which triggers the “September Slump”. But, that … Continue reading Summer Doldrums?

“Real” Stimulus

08/24/2010

Last year, Congress approved a stimulus package of $787 billion. Since Q2 of last year through June 30th of this year, profits of the S&P 500 have risen 52%. Productivity has soared to 3.5%, compared to 1.6% in 2007 and only 1% the next year. Still, the private sector has added only 630,000 jobs this … Continue reading “Real” Stimulus

The Eye of the Hurricane?

08/21/2010

I have long been a fan of Nouriel Roubini, a highly regarded economist more commonly known as “Dr. Doom”, for having predicted The Great Recession back in 2006. He has teamed up Stephen Mihm to author the new “Crisis Economics”, which I just completed. It is not a book for the casual reader, nor the … Continue reading The Eye of the Hurricane?

The Devil in the Details

08/21/2010

I was enthusiastic about the $787 billion stimulus bill approved by Congress last year. Obviously, infrastructure development was necessary — with or without an anemic economy to stimulate. Infrastruture is a real investment in the future that increases demand in the short run and pays for itself in the long run. Unfortunately, of that amount, … Continue reading The Devil in the Details

One Step Forward but . . .

08/20/2010

Yesterday, the Conference Board said its index of leading economic indicators rose modestly in July. That’s a step forward! At the same time, the Philadelphia Fed said manufacturing fell in the mid-Atlantic region to the lowest level in a year. Even worse, the weekly unemployment claims rose unexpectedly to a nine month high. That’s two … Continue reading One Step Forward but . . .

On The Bubble?

08/19/2010

Back in 1973, when I first walked into a stock brokerage office, I saw old men watching a ticker tape cross the wall behind a black & white television. They were “stock guys”, who bet on the American economy. They made fun of the “coupon clippers”, whom they derided as being cowardly, but we call … Continue reading On The Bubble?

Where’s the beef?

08/13/2010

No question, deflation is a much worse problem than inflation. Once people think they can buy things cheaper if they wait, then they stop spending now. At one time, economists believed deflation could easily be eliminated by doing the things that cause inflation, i.e., increasing the money supply and increasing deficit spending. Ben Bernanke was … Continue reading Where’s the beef?

. . . and, the Fed said what??

08/10/2010

Today, the Fed left interest rates unchanged, which was no surprise and certainly no big deal. However, they also said they would stop shrinking their balance sheet, by using the mortgage paydowns they’ve been receiving to buy more Treasury bonds. When that happened, the dollar dropped suddenly. The reason this happened is because the increased … Continue reading . . . and, the Fed said what??

The Paradox of Thrift . . . huh?

08/04/2010

The good news is that consumers are now saving 6.4% of their after-tax income. The bad news is that consumers are saving 6.4% of their after-tax income! Because most Americans have too much debt, it is good to see them saving more. It is good for them as individuals. However, consumer spending makes up about … Continue reading The Paradox of Thrift . . . huh?

Is It Party-Time Yet ??

08/03/2010

For July, the markets were up about 7%. Yesterday, on the first trading day of the month, the markets were up another 2%. While that is always pleasant, longtime readers will recall I expect we should trade in a band between 1050 and 1150 on the S&P for most of the year, but with real … Continue reading Is It Party-Time Yet ??

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