Financial News

[Balta1701]

The bolded is the issue, to me.

They almost certainly told him about it in one of tehir many account updates. No one reads through all of those.

[NorthSideSox72]

You do realize the scale of what we're talking about here right? It's balloned from a couple billion to about $40 billion in fees annually.

All the more reason to NOT simply tell the banks what they can charge. That would be you'd be getting hit with $40B some other way, even if you were being responsible. The better approach here is two-fold. One, protect the consumers by requiring the banks to be forthcoming on what "features" their accounts have and what fees will be charged, and two, to put the responsibility AT THAT POINT on the laps of the consumers, who are at fault if they are overdrawing their accounts.

 

[NorthSideSox72]

They almost certainly told him about it in one of tehir many account updates. No one reads through all of those.

Then that is not the fault of the banks, AS LONG AS the updates are understandable by someone other than a lawyer with too much time on their hands.

 

[Balta1701]

Then that is not the fault of the banks, AS LONG AS the updates are understandable by someone other than a lawyer with too much time on their hands.

None of those are ever comprehensible, you knwo that.

[NorthSideSox72]

None of those are ever comprehensible, you knwo that.

Then THAT is the problem. Insisting that private business charge people differently solves nothing, and makes things worse.

 

[Texsox]

I am trying to reconcile a few things in my mind (pun intended)

 

• I agree with NSS that people should be responsible for their actions, deliberate or otherwise.
• When someone overdrafts their account, and the bank covers the check, in effect banks are entering into a loan agreement with the account holder.
• We set limits on the interest that companies can charge on loans.

Therefor it seems to me that the overdraft charge(s) should not be more than the maximum interest rate allowed by law, regardless what names you put on the fees.

[StrangeSox]

Jobless claims slightly better than expected.

 

But still over half a million.

[kapkomet]

Update on unemployment:

 

The agreement would give an additional 14 weeks of benefits to jobless workers in all 50 states. Workers in states with an unemployment rate at 8.5 percent or above would receive six weeks on top of that.

 

This is on top of the 20 weeks that is above and beyond the regular 26 weeks.

 

[NorthSideSox72]

Jobless claims slightly better than expected.

 

But still over half a million.

The big surprise today, to me, was that retail store results across the board were better than expected, and actually went up a slight amount. I don't think anyone expected that, and it wasn't a couple stores pulling everyone up - it was broad-based. Not sure I understand why that happened.

 

[Balta1701]

The big surprise today, to me, was that retail store results across the board were better than expected, and actually went up a slight amount. I don't think anyone expected that, and it wasn't a couple stores pulling everyone up - it was broad-based. Not sure I understand why that happened.

If it's a same-store sale number, then one thing that is making a consistently large difference this year is the number of stores that have been shut or the number of companies that went out of business. Circuit City gone = better same store sales for Best Buy, for example. Also, it's difficult to tell how gas sales play in to that; last year gas prices were through the roof and that was affecting demand on that product.

[NorthSideSox72]

If it's a same-store sale number, then one thing that is making a consistently large difference this year is the number of stores that have been shut or the number of companies that went out of business. Circuit City gone = better same store sales for Best Buy, for example. Also, it's difficult to tell how gas sales play in to that; last year gas prices were through the roof and that was affecting demand on that product.

Makes some sense, sort of... its a measure of performance at same stores open at least a year. Now, if it were a matter of business coming to fewer stores, that shouldn't cause a jump NOW, different than recent months and different than expectations. Maybe part of it, though. Gas prices aren't part of this, gas sales aren't in the measure.

 

I personally think that part of the dip in retail business was an overcorrection by consumers. I think people, in the spring and summer this year when news really was getting bad for consumers, and also even before then during the market crash, panicked. They retrenched their spending more than most can realistically maintain, and their old habits are coming back. This doesn't apply to the 5% more people that are unemployed right now than before, of course. Just my theory.

 

[NorthSideSox72]

Also, continuing on the fickle consumers angle, the last couple months have seen a steady barrage of financial news in the media that are all singing a chorus of "recession abating". People read that, and start to cautiously come out of their shells.

 

X factor is still how bad unemployment will get. If it keeps flirting around 10%, I think we're going to have a decent beginning of a recovery in 2010. if it goes well above that, certainly if well over 11%, then we may double-dip. the 10% number has a big psychological impact too of course, a sort of round number resistance type effect (though not quite the same). If it goes from 9.8% (now) to 10.0% on the next reading, that's not a huge increase, but it might scare people.

 

[kapkomet]

Also, continuing on the fickle consumers angle, the last couple months have seen a steady barrage of financial news in the media that are all singing a chorus of "recession abating". People read that, and start to cautiously come out of their shells.

 

X factor is still how bad unemployment will get. If it keeps flirting around 10%, I think we're going to have a decent beginning of a recovery in 2010. if it goes well above that, certainly if well over 11%, then we may double-dip. the 10% number has a big psychological impact too of course, a sort of round number resistance type effect (though not quite the same). If it goes from 9.8% (now) to 10.0% on the next reading, that's not a huge increase, but it might scare people.

Don't make the mistake of correlating a double dip based on unemployment percentages. Next year at this time, despite all of the extra benefits, there's going to be a ton of people that are cycled out of that 9.x, 10.x, and 11.x number.

 

[Balta1701]

Makes some sense, sort of... its a measure of performance at same stores open at least a year. Now, if it were a matter of business coming to fewer stores, that shouldn't cause a jump NOW, different than recent months and different than expectations. Maybe part of it, though. Gas prices aren't part of this, gas sales aren't in the measure.

 

I personally think that part of the dip in retail business was an overcorrection by consumers. I think people, in the spring and summer this year when news really was getting bad for consumers, and also even before then during the market crash, panicked. They retrenched their spending more than most can realistically maintain, and their old habits are coming back. This doesn't apply to the 5% more people that are unemployed right now than before, of course. Just my theory.

It depends on how the number you're reading is calculated. If it is a year over year same store sales thing, then yes, it can absolutely cause a jump now, because you're comparing it not to last month but to the same period last year.

 

Worth noting, increasing same store sales has been a common feature this year. Here's the report from April. Here's Augusts's data, which also shows an increase even after you exclude cash for clunkers. At the same time, total retail spending was down 5% despite the same store sales.

[StrangeSox]

Were the store results sales or profits? Could be desperation sales/ clearances to move inventory if its not reflecting higher profits.

[NorthSideSox72]

Don't make the mistake of correlating a double dip based on unemployment percentages. Next year at this time, despite all of the extra benefits, there's going to be a ton of people that are cycled out of that 9.x, 10.x, and 11.x number.

Two responses to this. No wait, three responses.

 

1. I understand the different numbers.

 

2. Regardless of the other numbers, the main reported core number is still what people look at, and it has a psychological effect.

 

3. When I was using the measures on unemployment, I should not have been that specific in numbers - I was really meaning more generally, the employment picture (except the part about round numbers, that IS about the core number). If the UE rate stays in the same territory or up just a little, I think we are good for growth in 2010. If it goes up significantly, then we may be in trouble. that is really what I meant.

 

[Balta1701]

CEPR co-director, Blogger, and guy who was calling the housing bubble back in 2001 Dean Baker on those numbers we were discussing last night. Seems to agree with me that it's a same-store sales number that was being touted yesterday.

There are two reasons why this increase is less promising than it may appear. First, September 2008 was the month of the financial panic following the collapse of Lehman. Sales fell sharply that month. It is much easier to show a year over year gain measured against a very weak month than against one of the months that predated the September falloff.

 

The second reason why this gain is less positive than it may initially appear is that the chains opened few new stores in the last year and may have even closed some stores. In addition, many smaller retail outlets also went out of business in the last year. This means that the stores open at least one-year that comprise this index are likely to be a larger share of the total retail market in September of 2009 than in September of 2008.

 

For these reasons, the modest uptick in year over year same store sales should not be taken as evidence that recovery is on the way.

[NorthSideSox72]

CEPR co-director, Blogger, and guy who was calling the housing bubble back in 2001 Dean Baker on those numbers we were discussing last night. Seems to agree with me that it's a same-store sales number that was being touted yesterday.

I agree with his second point, but the first one is suspect. Forecasters would have known such a basic mathematical fact, and yet, sales beat expectations resoundingly across the board.

 

[Balta1701]

I agree with his second point, but the first one is suspect. Forecasters would have known such a basic mathematical fact, and yet, sales beat expectations resoundingly across the board.

And yet, based on the articles I posted earlier, they've been "Beating expectations resoundingly across the board" for several different months of this year.

 

I really don't trust forecasters to understand things like seasonal adjustments or the reality behind their data. the best example I can give is the huge job gains we always record in January after a terrible X-Mas season that winds up spurring a big stock run-up, because a bad X-mas season means fewer seasonal hirings and therefore fewer workers laid off in January.

[NorthSideSox72]

And yet, based on the articles I posted earlier, they've been "Beating expectations resoundingly across the board" for several different months of this year.

 

I really don't trust forecasters to understand things like seasonal adjustments or the reality behind their data. the best example I can give is the huge job gains we always record in January after a terrible X-Mas season that winds up spurring a big stock run-up, because a bad X-mas season means fewer seasonal hirings and therefore fewer workers laid off in January.

Forecasters will generally know enough to understand what happened a year ago. I just don't buy your guy's first argument, though I think the 2nd one makes sense for part of it. The other part, IMO, is what I stated earlier.

 

[NorthSideSox72]

Retail sales generally (not store specific, but overall numbers) beat expectations for September. Overall sales decreased 1.5%, but that was due to a 10%+ drop in auto sales as expected - all other retail actually rose 0.5%, beating expectations. This lends further credence to what I espoused earlier, that the American consumers took the pendulum further back than was realistic long term, and they are correcting a bit.

 

Markets are rallying on this and some better than expected earnings news, pushing to yet more year highs, breaking past some important technical resistance. Dow is now around 9980, just below the psychologically important 10k line.

 

Still not seeing this run-up go much further, but, economic news continues to indicate a lessening of the recession overall. Hopefully this will help keep unemployment from rising a lot more (still likely to rise a bit more though). That is still the key to whether we double dip.

 

[NorthSideSox72]

Retail sales generally (not store specific, but overall numbers) beat expectations for September. Overall sales decreased 1.5%, but that was due to a 10%+ drop in auto sales as expected - all other retail actually rose 0.5%, beating expectations. This lends further credence to what I espoused earlier, that the American consumers took the pendulum further back than was realistic long term, and they are correcting a bit.

 

Markets are rallying on this and some better than expected earnings news, pushing to yet more year highs, breaking past some important technical resistance. Dow is now around 9980, just below the psychologically important 10k line.

 

Still not seeing this run-up go much further, but, economic news continues to indicate a lessening of the recession overall. Hopefully this will help keep unemployment from rising a lot more (still likely to rise a bit more though). That is still the key to whether we double dip.

DJIA10K

 

But then back down to 15 points below it.

 

[Balta1701]

[kapkomet]

For once, I agree with you. The DJIA is ridiculous.

[NorthSideSox72]

US House committee passes legislation similar to Senate provision, by a decent margin, to regulate OTC derivatives. Forces swaps and other OTC derivatives to use clearing houses, and firms trading as market makers or large-scale hedgers are now going to be subject to regulated capital requirements, and the SEC and CFTC are given more horsepower to monitor and investigate.

 

I'm glad they are doing this, and I'm glad someone was smart enough to keep this to the OTC world, and not pass some sort of panic-driven overarching bill.

 

But, this provision in the bill confuses me:

 

In a concession to the business community, Mr. Frank, a Massachusetts Democrat, included provisions in his bill that would allow companies that use swaps to post noncash collateral and avoid the clearing and trading requirements if they are only engaged in hedging.

 

That is incredibly vague, and I hope the language in the bill is more explicit in defining that usage, what constitutes viable liquid non-cash collateral, and who are pure hedgers.