The Securities Industry and Financial Markets Association (SIFMA) today issued the results of its Quarterly Government Securities Issuance and Rates Forecast. The median survey response forecast total net Treasury bill, note and bond issuance to be $399.0 billion in the third quarter of 2010, compared with the net $343.6 billion issued in the second quarter of 2010 and the net $392.5 billion issued in the third quarter a year ago. The quarterly projected increase may reflect increasing worries regarding stagnant unemployment, a cooling economic recovery, deflationary pressures and the potential need for additional stimulatory measures by the U.S.

Survey respondents anticipate that benchmark Treasury yields will increase going through the third and fourth quarters of 2010, but this increase is from lower baseline yield levels during the second quarter. The lower baseline is due to a combination of international sovereign debt worries, deterioration in some housing markets, and continuing high unemployment rates that contributed to driving the demand for relatively safe-haven Treasury debt.

The U.S. Commodity Futures Trading Commission (CFTC) today announced that a federal court in New York entered a consent order of permanent injunction and equitable relief against Paul Greenwood of North Salem, N.Y. The CFTC charged Greenwood with operating a $1.3 billion investment scam in which he and co-defendant Stephen Walsh, of Sands Point, N.Y., misappropriated at least $553 million from commodity pool participants in connection with entities they owned and controlled, such as Westridge Capital Management, Inc., WG Trading Investors, LP and WGIA, LLC (see CFTC Press Release 5621-09, Feb. 25, 2009).

The Securities Industry and Financial Markets Association (SIFMA) today issued the following statement on H.R. 5823, the United States Covered Bond Act of 2010, from Sean Davy, managing director and leader of SIFMA's U.S. Covered Bond Council:

"SIFMA supports the development of a covered bond market in the U.S. and applauds the action taken by the House Financial Services Committee today. Covered bonds can provide a substantial and stable source of long term private capital and liquidity to fund mortgage, public-sector, and small business loans. In doing so, this product has the ability to positively impact our financial system by providing an alternative source of funding and, in turn, increase the availability of consumer credit.

The Securities and Exchange Commission today charged Citigroup Inc. with misleading investors about the company's exposure to subprime mortgage-related assets. The SEC also charged one current and one former executive for their roles in causing Citigroup to make the misleading statements in an SEC filing.

Most people who invest in the stock market are optimists by nature - you have to be to tolerate the wild gyrations in prices.

The question you must asked yourself is "am I an optimist because I believe in the historically robust U.S. economy or am I an optimist because acknowledging some of the truly dreadful facts is about the stock market is too frightening?"

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The prime directive for doctors is "do no harm." Economists and policy makers are also concerned with not harming an economy that can only be described as anemic at best.

The fear that a policy decision (letting the Bush tax cuts on the rich expire, for example) will do more harm than good is worrisome. In the end, policy makers may decide that maintaining the status quo is the safest policy. It may be the safest political policy, but it is not necessarily the best policy for the economy.

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Do you always follow the crowd? Do you feel more comfortable going with the current flow - or do you prefer to go on your own regardless of conventional wisdom?

If this is your investing philosophy, you are what the stock market calls a contrarian. Contrarians look for stock investment opportunities on the opposite side of what the majority of the market is doing.

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The massive financial reform bill signed into law by President Obama begins a new and very uncertain era of financial regulation.

While clearly the most sweeping financial reform legislation since the Glass-Steagall Act following the Great Depression, the actual effect on financial markets, banks, stock markets and consumers is not so clear.

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Deflation, the deep and persistent,  drop in prices is a more dangerous threat to the economy than inflation.

Yet, political leaders in the U.S. and around the globe, seem intent on driving down huge deficits than the threat of deflation.

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California Dreaming of a Stable Economy originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day."

The Namibian Oil Rush originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day."

After a few conspicuous flops, a private-equity firm gets back to its roots

“PEOPLE were prematurely writing the epitaph of our investments and our firm,” says Mark Neporent of Cerberus, a private-equity firm and hedge fund. “Hopefully it’s pretty apparent to people that we’re back.” The firm, named after the three-headed dog in Greek mythology that guards the gates of the underworld, has spent the past two years trying to claw its way out of hell. Two of its largest and best known investments tanked. Chrysler, a carmaker, filed for bankruptcy and GMAC, General Motors’ financing arm, had to be rescued by the American government, which now owns most of it. For Cerberus, an intensely private firm, these were very public embarrassments.

Some wondered whether the embattled firm would go the way of those two investments. But Cerberus’s flagship private-equity fund rebounded last year, making up for its 25% fall in 2008. (Its main hedge fund was still down by around 4% in 2009.) Its recent sale of Talecris Biotherapeutics, a blood-plasma company it bought in 2005 for $600m, to a Spanish health-care company for $3.4 billion has added to a sense of revival. Nor has the firm given up hope on Chrysler. Cerberus still has control of Chrysler Financial, the company’s finance arm, and there is talk of turning it into a diversified financial firm. Some say Cerberus may be able to recoup its money or even record a profit on its $7.4 billion investment in Chrysler if it plays its card right on Chrysler Financial. ...

A useful new way to capture the many aspects of poverty

WHAT IS poverty and when is a person poor? Most would agree that poverty involves not having enough of certain things, or doing without others that richer people take for granted. But what is “enough”, which goods and services really matter, and who should decide these questions—researchers, governments or international agencies—are less tractable issues. Perhaps the poor themselves should have the final word. But this presents its own problems. Tabitha, a 44-year-old woman from a slum outside Nairobi, told researchers from Oxford University that going without meals was “normal for us”. Diminished expectations are only one of the effects of dire poverty.

In the world of international development, most have rallied around the “dollar-a-day” poverty line (or more precisely, the $1.25-a-day measure) and its less acute cousin, $2-a-day poverty. These World Bank measures judge a person to be poor if his income falls short of a given level, adjusted for differences in purchasing power. In principle poverty rates based on these measures count the fraction of people in a country who lack the resources to buy a notional, basic basket of goods. ...

Correction: Burger-lovers in Argentina were enjoying a special discount on Big Macs when we collected data for our index (July 24th 2010). At nornal prices the peso is undervalued by 5% not 52%. Sorry for the whopper. This has been corrected online.

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Europe’s stress tests were a mixed affair. Many banks still face an uphill struggle to finance themselves

“IT’S an analyst’s wet dream,” says one banker of the European stress tests announced on July 23rd. If financial detail is what turns you on, then the exercise delivered in style with hundreds of pages of information on 91 banks’ solvency and their exposures to the bonds of under-siege governments in the euro zone. As a piece of organisation, if not quite a triumph, it was an impressive feat. But whether all that new disclosure or the tests’ conclusion—that seven European banks need a piffling €3.5 billion ($4.5 billion) of new capital—help the banks escape their funding problems remains to be seen.

The initial signs were modestly encouraging. Credit-default-swap (CDS) spreads, a proxy for banks’ borrowing costs, improved slightly across Europe, according to Markit, a research firm. Banks’ share prices rose too, although that had as much to do with the news on July 27th that the new Basel 3 rules on the sector’s capital and funding would be watered down. Still, wide differences remain. Five of the seven banks to fail were Spanish savings banks (see article): many of the cajas still face CDS spreads many times those of safer firms. On July 26th Bankinter, a midsized Spanish commercial bank that just scraped through the tests, paid a record spread of 240 basis points to issue a mortgage-backed bond. ...

Time to reassess how fund managers are rewarded

FUND managers have been some of the biggest beneficiaries of the financial sector’s growth over the past 30 years. Bankers may routinely earn million-pound bonuses but some hedge-fund and private-equity managers have become billionaires. Seldom has so much been earned by so few.

These riches have been generated despite the ability of investors to take advantage of low-cost exchange-traded funds and index-trackers. Investors have surged off-piste in search of higher returns. In aggregate, however, they will merely end up paying higher fees (typically, a 2% annual fee plus 20% on performance), a phenomenon this column has described as “catch two-and-twenty”. ...