Altruistica

"Altruistica": Seeking a return to full financial disclosure and regulatory oversight. A financial market analysis blog for "entertainment purposes" only by an experienced CFA seeking new hedge fund engagements for investment writing and analysis. The author has experience investing internationally, running a hedge fund, making angel investments, and helping launch five startup companies. Investors should do their own due diligence.

18 December 2006

Thank God for Northern Trust - They Actually THINK !



Paul Kasriel is a national resource for financial analysts seeking portfolio managers with a brain.

"I love the Fed’s quarterly flow-of-funds report. It usually is the mother lode of enlightening economic nuggets of information. And the Fed’s latest release on
December 7 of third-quarter data was rich with these nuggets. For starters, the decline in U.S. bond yields in recent months is less of a mystery when you take into consideration the sharp slowdown in the rate of domestic nonfinancial borrowing. Chart 1 illustrates the point. Relative to nominal GDP, nonfinancial domestic borrowing (i.e., the annualized dollar change in debt outstanding) peaked at 19.7% in Q4:2005, moving down to 13.9% in Q3:2006 – the lowest percentage since Q4:2003."

What happens when private equity deals end and fail to prop this charade?
http://news.yahoo.com/s/nm/20061216/bs_nm/column_mergers_dc_1

Although not the only nonfinancial sector accounting for this slowdown in borrowing, the household sector was the principal one. Chart 2 shows that after hitting a post-WWII high of 14.6% in Q3:2005, household borrowing relative to disposable personal income (DPI) dropped to 8.8% in Q3:2006 – the lowest since 7.6% in Q3:2001, when the economy was in a recession. Notice in Chart 2 that precipitous declines in this percentage tend to be followed by the onset of economic recessions (indicated by the shaded areas in the chart).
http://web-xp2a-pws.ntrs.com/content//media/attachment/data/econ_research/0612/document/ec121506.pdf

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