Economic Recovery: Determining the Undeterminable

Ask five economists what the economy will do and you’re likely to get five different explanations.  Unlike calculus which has right and wrong answers, economics is a combination of math, art, science, and divination.  That’s why there’s so much disagreement.  Where one economist’s tea leaves point up, the other economist’s pig entrails point down. Determining where we are in the cycle is just as questionable. Still, we humbly offer some thoughts for your consideration.

About a week ago, the official August unemployment report was released. According to the Bureau of Labor and Statistics (which many suggest underreports the bad news), total unemployed including “marginally…

U.S. Banks Looking to Score Profits Again

Although we’re still in the middle of the worst financial crisis in decades, a few select banks are positioned to make a boatload of profits. And if you pick the right ones, gains of 100% or more are easily within reach.

The U.S. Federal Reserve’s actions in cutting short-term interest rates to almost zero – together with a gentle rise in U.S. Treasury bond yields since the start of the year – have given us a steeply sloping yield curve, where long-term rates are about 3% above short-term rates.

What’s more, lending rates to corporate and personal borrowers are way up, far…

After Reloading With Wachovia’s Banking Business, Citigroup Takes a New Aim at the U.S. Banking Market

Citigroup Inc. (C) will acquire Wachovia Corp.’s (WB) banking operations for $2.l6 billion, a deal that will restore Citi’s title as the biggest U.S. bank by assets while transforming the once-highly regarded Wachovia into an investment-management operation.

In becoming the latest big U.S. bank to bolster its assets by rummaging through the remains of a nearly defunct financial institution, Citi agreed to buy Wachovia’s banking operations for $1 per share. The deal gives Citi a strong retail-banking network – adding 3,300 branches and offices in 21 states – as well as $2.2 billion in deposits; but the bargain also brings City…

Global Investing Roundups

Bear Stearns Shareholders Approve JPMorgan Sale; Sears Expects More Pain After Loss; Weak Economy Emboldening Costco; Pacific Rim GDP Growth; Staff Reduction at GM;

–Shareholders of The Bear Stearns Cos. Inc. (BSC) approved the government-assistant $2.3 billion acquisition by JPMorgan Chase & Co. (JPM), Bloomberg reported. The all-stock deal is expected to close today (Friday), though shareholders who sought more than the buyout’s price of $10-a-share may file suit.

–Shares of Sears Holdings Corp. (SHLD) – owner of Sears and K-Mart department stores – dropped 3.6% yesterday (Thursday) as the company posted a net loss of $56 million, or 43 cents a share, for…