Is Gridlock good for stocks?

There have been a number of questions recently about gridlock in Washington and if this is positive or negative for equities. This piece from NYT walks through some of the data. The more recent periods of gridlock (Reagan and Clinton) seem mostly positive but longer term timeframes provide different results. The best paragraph is about halfway in where he quotes some research that says "more than 90% of the price gains in the 108 year history of the Dow Jones Index through 2006 came on days when Congress was out of session". That sounds just about right.

Debt of All Kinds

We are focusing a lot of effort currently on managing the liability side of the ledger for clients . This article on student loan debt is emblematic of what is facing many in their 20's and 30's today. Fun fact- the total of all student loan debt (government backed and private) exceeds $800 billion which is fairly close to the total amount of residential mortgage debt. The big difference of course is on one hand there is an asset (the house) worth something securing the mortgage while with student loans there is only a claim on present/future earnings (which in many cases is insufficient). This is a big looming problem on the horizon that very few even realize exists.

Housing ideas

Saw an excellent article in NYT today on the need for bold ideas to solve the continuing (i.e. not yet addressed in a comprehensive way) problems in the residential housing market. While I certainly see healthy increases in activity , in many places (Nevada, Florida, California) deep fissures remain. The most troubling aspect is the $1 trillion of subprime loans that mostly are non performing that are still on the books of banks . These are toxic and won't likely go away without some of the ideas thrown around in the article.

Saving or Spending

Shawn Tully at Fortune has written an insightful article on the macro economic impact of saving (consumer and business) versus fiscal spending . He makes some valid points which have been mostly ignored by policy makers. He walks through the basic math that says savings end up in GDP as well as spending. Good reading.

Cash for Clunkers- the Unintended Consequences

Saw this article which breaks down the cost and consequences of the Cash for Clunkers program . I thought about this when looking at the year over year decline in car sales since this program was operational last summer . You may have noticed that most brands are down 20% or more from the year ago figures but as this article points out the federal program created some substantial problems that we are living with now.

15 Year Mortgages

A very interesting article on the growing popularity of 15 year mortgages. Good to see home equity being built the old fashioned way...by paying down the debt. Perhaps this signals a change in attitude about housing and debt. Hope so.

When Bad means Good

Industry observer Mark Hulbert writes today about how bad sentiment may actually be a good thing. Maybe so but over-pessimism (or over optimism for that matter) can be a problem in maintaining the balance and discipline needed for a long term focus. People seems to be attracted to doomsday scenarios and prognosticators in skittish times.