Five Things You Need to Know: Bank Lending Surge a Good Thing? Not So Fast; World's Coolest-Named Index Hits Record; Greenspan Finally Worried About Dollar Plunge; Feeling Bad? Check the Zagat's!; New Jersey Looking for New Home
What you need to know (and what it means)!
Minyanville's daily Five Things You Need to Know to stay ahead of the pack on Wall Street:
1. Bank Lending Surge a Good Thing? Not So Fast
"Since midsummer, bank lending to businesses has risen at the fastest rate in more than 30 years," the Wall Street Journal reported this morning.
- Across the country, industrial and commercial lending increased at a 52% annual rate since late July, while American bank balance sheets increased at a 22% annual rate.
- This is the fastest growth rate for an 11-week stretch in 30 years.
- Sounds good, right?
- The problem is that the bulk of these record figures are not lending for business expansions... at all.
- In fact, deeper in the article the reporters note that businesses are actually struggling to increase credit lines, and finding credit more difficult to obtain.
- So what accounts for the increase?
- Typically, such a large increase in commercial and industrial lending would be a sign of economic growth and of businesses seeking to expand operations.
- However, much of the growth now is the result of banks being forced to bring asset-backed commercial paper back onto their balance sheets as SIV's run aground.
2. World's Coolest-Named Index Hits Record
The Baltic Dry Index hit a record on Friday, and is up 169% for the year, but apart from having a very cool name, what exactly is it?
- The Baltic Dry Index is a number issued daily by the Baltic Exchange, a London-based organization whose members arrange for ocean transport of industrial bulk commodities from producers to end users.
- Every day they survey brokers around the world to find out how much it costs to book cargoes of raw materials on a variety of shipping routes.
- The answers are then reformulated as the Baltic Dry Index.
- Now, why is the Baltic Dry Index considered important?
- Well, first off, it's not a speculative index. In other words, no one is out there bidding up the Baltic Dry Index because they believe shipping costs will change in the future.
- Instead, it tracks the actual cost of shipping raw materials by sea based on real cargo bookings and is therefore considered a pretty good indicator of global trade volumes.
- For those without access to Bloomberg, the Web site Investment Tools.com has updated Baltic Dry Index data available.
- According to the Journal, the main reason commodity shipping rates are escalating is that there are not enough bulk ships.
- The shortage stems from the surging volume of global trade as growth explodes in China, India and other developing nations, the newspaper says.
3. Greenspan Finally Worried About Dollar Plunge
Former Federal Reserve Chairman Alan Greenspan said the dollar's deprecation may reflect growing unwillingness among foreigners to buy U.S. debt, according to Bloomberg.
- "Obviously there is a limit to the extent that obligations to foreigners can reach,'' Greenspan said in a speech in Washington yesterday.
- The dollar's decline to its lowest since 1997 may be "an indication America is approaching this limit," Greenspan said according to Bloomberg.
- Another indication that America is approaching this limit: the 18.6% decline in the dollar from January 2001 to Greenspan's retirement in January 2006.
- The US dollar index declined more than 12% during Greenspan's overall tenure as Federal Reserve Chairman.
- Year-to-date it is down 7.5%, and about 9.5% since Ben Bernanke replaced Greenspan.
4. Feeling Bad? Check the Zagat's!
- WellPoint has teamed with Zagat Survey to let patients rate their doctors, just as diners rate restaurants in Zagat's popular guides, the newspaper reported.
- The WellPoint program will be available online to more than a million members by the end of March and ultimately rolled out to all of its 35 million members.
- Instead of Zagat's four categories for restaurants - food, décor, service and cost - the ratings guide will consider trust, communication, availability and office environment, the newspaper said.
- Minyanville has below obtained an early Zagat's review for Dr. Tim Peterson, a cardiologist in Oak Brook, IL:
- This Oak Brook "heart specialist" offers a "treasure chest" of medical procedures that have Chicago-area bratwurst and beer swillers "lining up around the block" to get in. While the wait for the "good doctor" to get busy with his "rib tickling" specialties can be "painful," customers report that a "healthy" repeat business "speaks for itself."
5. New Jersey Looking for New Home
A Monmouth University/Gannett New Jersey Poll released last week found that half of New Jersey residents would rather live somewhere else, according to Fox News.
- Poll participants cited high property taxes, the cost of living, state taxes and housing costs as the main reasons they want to leave the state, the article said.
- The poll also found that 51% of those who want to move plan to do so, with adults under the age of 50 making between $50,000 and $100,000 the most likely to leave.
- The poll has raised concern among neighboring states.
- As a Pennsylvania official explained to Minyanville, "Look, if half of New Jersey moves here, then doesn't that make us, technically, New New Jersey?"
- A larger question is this: If half of New Jersey residents leave, what would that make Old New Jersey? Rhode Island.
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