Category: Economy (Page 10 of 12)

      Luxury sales are rebounding

      October 18, 2010 /

      Here’s some interesting news regarding the retail sector and the luxury goods market. Luxury sales are rebounding, which probably means consumer sentiment is ticking back up.

      The luxury sector is rebounding better-than-expected this year thanks in large part to wealthy Americans replenishing their wardrobes after a year of self-denial and nouveau riche Chinese indulging in a worldwide spending spree, according to a new study released Monday.

      Sales of designer clothes, fine leather goods, jewelry, watches and other indulgences around the globe is forecast to surge 10 percent to euro168 billion ($236.7 billion) in 2010, recovering from a disastrous 2009 when sales declined 8 percent to euro153 billion, Bain & Co. said in its annual review of the sector commissioned by Italy’s Fondazione Altagamma association of high-end producers.

      Let’s see what happens this holiday season. If double-dip recession concerns are fading away, retailers might be in for a pleasant surprise.

      Economy, General Business, Retail

      Greenspan supports raising taxes

      September 16, 2010 /

      The tax debate is raging on Capital Hill, and now we have this surprise from Alan Greenspan.

      Former Federal Reserve chief Alan Greenspan, reversing a long-standing aversion to higher taxes, said Wednesday tax rates must rise and the fiscal stimulus wound down in order to reduce the U.S. budget deficit and allow private investment to expand.

      “I am in favor for the first time in my memory of raising taxes,” Greenspan told an audience at the Council on Foreign Relations in New York. He said the economy could not recover while the high deficit remains high.

      Greenspan warned that the deficit, swollen by massive stimulus spending, was crowding out capital investment. We “must find a way to simmer down fiscal activism and allow the economy to heal,” he said, adding that stimulus spending had been far less successful than anticipated.

      Conservatives won’t be happy to hear this, but the reality of the long-term deficit needs serious solutions. Greenspan is stating the obvious.

      Economy

      Junk bond sales are booming

      September 7, 2010 /

      Here’s an interesting twist in the new reality:

      With rising fears of a prolonged recession and stomach-churning moves in the stock market, corporate bond markets have performed so well this year they look like they’re part of a parallel universe.

      Banks are reluctant to lend, but large corporations with the weakest credit ratings have had little trouble finding investors happy to hand over their cash.

      Companies sold $24.6 billion in junk bonds in August, the eighth-best month ever for sales, according to Thomson Reuters data. Among those feeding in the market: Goodyear Tire & Rubber Co., Rite Aid Corp. and acquisitive power giant NRG Energy Inc.

      So how is it that companies with bad credit find it so easy to borrow in this economy?

      “A lot of that has to do with living in a world where investments pay less than 1 percent,” said Diane Vazza, head of fixed income research at rating agency Standard & Poor’s.

      More and more companies are refinancing their corporate debt, getting rid of high-interest bonds in favor of a lower interest rate. In many ways this trend is a positive as companies lower their debt costs, having the exact effect that the Fed intended.

      Economy, Finance, General Business

      Mortgage rates keep falling

      August 19, 2010 /

      How low can home mortgage rates go? They keep falling.

      The interest rate for a 30-year mortgage fell for the eighth time in nine weeks, according to a widely watched survey, with the record lows triggering the highest volume of home refinancing in 15 months.

      Freddie Mac’s weekly report on lenders said solid borrowers with 20% down payments or home equity were being offered 30-year fixed-rate loans at an average of 4.42% this week, down from 4.44% a week earlier. The borrowers would have paid 0.6% of the loan amount in upfront lender fees.

      The average 30-year interest rate recorded by the survey has not risen in nine weeks, although it remained flat at 4.57% for the weeks ending July 8 and July 15.

      One reason is the terrible housing market. Homeowner confidence in the real estate market has dipped again.

      Homeowners(i) are more pessimistic about the short-term future of home values in their local market than they have been in the past three quarters, according to the Zillow second quarter Homeowner Confidence Survey(ii). One-third (33 percent) believe home values in their local housing market have not yet reached a bottom, while 38 percent believe they have already reached a bottom.

      Clearly, the foreclosure crisis has a long way to go.

      Economy, Personal Finance, Real Estate

      The President’s economic team

      August 9, 2010 /
      Larry Summers (R), an economic advisor to U.S. President Barack Obama, and Treasury Secretary Tim Geithner attend the announcement of the President's Economic Recovery Advisory Board in the East Room of the White House in Washington, in this February 6, 2009 file photo. Blunt, brash, brainy and occasionally self-mocking. Larry Summers, the White House economic adviser, is all of these things. In a career spanning academia, government and finance, he has rubbed some people the wrong way and infuriated others. To match SPECIAL REPORT - SUMMERS REUTERS/Jim Young/Files (UNITED STATES - Tags: POLITICS BUSINESS HEADSHOT)

      Here’s an excellent article on how the White House economic team is organized. When you read about the President’s economic advisers, this article can help you understand how they all work together. It can also help you understand how different personalities work together, from Christina Romer to Larry Summers to Tim Geithner.

      Thanks to Ezra Klein for the link. Ezra also has a great post on how Larry Summers might now be the ideal candidate to run the National Economic Council, given the nature of his personality.

      Economy, Finance, General Business, Markets

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