Finance Trends Letter

Currently sinking my teeth into this new article from Northern Trust economist Paul Kasriel, entitled, "I Have Come Neither to Praise Nor to Bury Bernanke" . Kasriel begins with the question of whether Ben Bernanke might be re-nominated for a second term as Fed chairman, but moves on to discuss the current state of bank reserves and bank lending. Here's an excerpt: " No one is indispensable. There are plenty of well-qualified candidates to replace Ben Bernanke as chairman of the Federal Reserve Board of Governors. So, the Republic will survive whether or not Ben Bernanke is re-nominated as Fed chairman. But let us be objective in assessing the job he has done as chairman. In my opinion, Anna Schwartz was not objective in her July 26 NYT op-ed piece arguing for the dumping of Bernanke. Ms. Schwartz asserts that Bernanke should not be re-nominated because of his sins of commission as well as his sins of omission. It is not clear to me to what Bernanke s...

Watch legendary hedge fund manager Paul Tudor Jones at work in the 1987 documentary, Trader . See especially PTJ's comments on the importance of focusing on risk management in trading and investing (near the 33 minute mark):  "Where you want to be is always in control, never wishing, always trading. And always, first and foremost, protecting your ass. ...That's why most people lose money as traders or as individual investors because they're not focused on the money they have at risk . If everyone spent 90% of their time on that instead of on how much money they're going to make, they'd be incredibly successful as investors."  Classic stuff. Related articles and posts: 1. Paul Tudor Jones and Peter Borish on trading - Finance Trends. 2.  Paul Tudor Jones on trading macro - Finance Trends . 3. Sebastian Mallaby interview: future of hedge funds - Finance Trends .

Marc Faber recently appeared on the McAlvany podcast to discuss bubbles, US monetary policy, and the state of the US and world economy. If you think the financial crisis is about over, think again; Faber says we're in for an additional government-fueled bubble which will bring further repercussions for the economy. There's a great deal more to hear in this interview with Marc; be sure to listen to his truly big picture view on the rebalancing of global power and coming geopolitical tensions. Here's the link to that interview . Hat tip to Marc Faber News blog.

During yesterday's MacroTwits discussion on Stocktwits , Gregor Macdonald wondered aloud about the upcoming flood of US Treasury bond issuance , set for $235 billion in govt. bills and notes this week. More on that from MarketWatch : " Treasury prices declined Monday, pushing yields up for the third session in four, after the government received record-high interest from investors for its first longer-term debt sale of the week. Bonds remained in the red as traders eyed the rest of a record $235 billion in government bills and notes up for sale this week... ...The government will sell $42 billion in two-year notes on Tuesday, followed by $39 billion in five-year notes on Wednesday and $28 billion in seven-year notes on Thursday. The amount of 2-year, 5-year and 7-year notes will all be the largest-ever auctions on record. Tuesday will also bring $27 billion in 52-week bills and $30 billion in 4-week bills ." You might have also noticed a rel...

Quick note: I was catching up with Richard Russell's Dow Theory Letters last night, and Russell made prominent mention of the fact that the Dow Transports and Dow Industrials had both moved above their previous June highs, thereby signaling a bullish confirmation under Dow Theory . Prieur du Plessis at Investment Postcards has more to say about the Dow Theory bull market signal . Those who've followed this blog for some time know that your author is an interested follower of Richard Russell's newsletter and a student of Dow Theory, but certainly not an expert in this area. Excellent introductions to the subject of Dow Theory can be found in Victor Sperandeo's book, Methods of a Wall Street Master , and John Murphy's Technical Analysis . You may also wish to consult the original works of the Dow Theory pioneers (Hamilton, Rhea, etc.) listed in Russell's historical overview . Related articles and posts: 1. New bull market? - Tim Wood at Financial Sense. 2. Chart...

Peter G. Peterson talks with FT.com about healthcare, entitlement spending, US reliance on foreign lending, and much more. This is a 3 part video interview from FT's "View from the Top" series; just follow the text or image links to get it rolling. I don't always agree with Peterson's views, but I do often take the time to listen to what he has to say. Enjoy the discussion. Related articles and posts: 1. A Conversation with Pete Peterson - Charlie Rose. 2. I.O.U.S.A. (the full movie online) - Google Video.

You may have read about the sudden ratings reversals from Standard & Poors on commercial mortgage-backed securities (CMBS). I tweeted about this last night when I noticed that Bear Mountain Bull , Prudent Investor , and I were all following this story. It seems the recently downgraded bonds, which were marked down to a BBB- rating (lowest investment grade, a notch above junk status) by S&P on July 14, have now had their AAA luster restored with a quick reappraisal of their investment potential and a "stunning reversal" of that recent downgrade. Toni Straka at Prudent Investor shares the details: " Rating agency Standard & Poors (S&P) appears to do all it can to further wreck its status. According to a Bloomberg story from Tuesday S&P had downgraded three AAA-rated commercial mortgage-backed debt papers only a week ago to BBB-, the lowest investment-grade rating. Lower ratings than BBB are considered junk issues. On Tuesday S&P reversed course...