Parker, Smith & Feek

The following video from the Henry J. Kaiser Foundation provides a good overview of the Healthcare Reform Legislation. Though some of the content can be debated, we think this is a good primer and we welcome you to contact us to discuss it.

On Friday September 10th, the Ted Spread closed with a value of 16.03 bps. Two years ago, on September 10th, 2008, the Ted Spread closed at 117.97 bps, and just five days later, after Lehman Brothers collapsed into bankruptcy, the spread closed at 201.38 bps. The global financial credit crisis tsunami was underway and soon reached ‘100 foot rogue wave’ proportions. The credit melt down moved rapidly toward its’ peak on October 10th when the Ted Spread reached 463.62 bps.

The Ted Spread is considered an indicator of credit risk. It is the difference between three-month futures contracts for U.S. Treasuries (which are considered risk free) and three-month contracts for Eurodollars (which reflect the credit ratings of corporate borrowers) having identical expiration months. The Ted Spread has historically remained in a range of 10 to 50 basis points.

In the autumn of 2008 the economy was in frenzied freefall as liquidity in the markets disappeared. The Equity markets which had been at an historical high in late 2007 when the Dow Jones industrial average reached 11,400 were now at 8,400, and on the way to a 6,600 low in March 2009. Consumer and business spending declined sharply and employment collapsed. The nation’s unemployment rate went from 6.2% in September 2007 to 9.5% by June 2009.

On October 13th 2008, then Secretary of the Treasury Hank Paulsen and Federal Reserve Chair Ben Bernake and their consortium took dramatic action. Nine major domestic bank CEO’s were called to meet that weekend and all were asked to sign on to the ‘solutions’ term sheet with no CEO allowed to leave until all had penned their names to the ‘agreement’. The markets swayed and strained- Merrill Lynch, Wachovia, Countrywide, Fannie Mae and Freddie Mac were deemed unsinkable and ‘life boated’ by Bank of America, Wells Fargo and the U.S. Congress. A few weeks after the 2008 November general election General Motors and Chrysler were deemed too unionized to fail and transformed into Government Motors, auto executives were dismissed and company bond holders were considered forfeitable capital providers.

This week saw an abrupt change in the weather here in Seattle. Long gone are the 90 degree temperatures of summer and we have now settled down into the low 60’s that indicate that winter is just around the corner. Financial and economic reports over the last month have also brought new perspective to where our economy may be headed.

While news of slowing job growth has been alarming for most, I always try to look for the positive. A key indicator of global economic activity, and believe me when I say this, is the use of shipping containers.

There has been a sharp upturn in the use of shipping containers in 2010 as reported by Moller-Maersk and DP World, two of the world’s leading container companies. The upturn in traffic of goods to and from developed and emerging economies has been exceptionally strong and a surprise to shipping analysts. This indicates that international trade is on the rise, money is changing hands and there is demand for these goods.

With so much gloom around as we head into winter, we get consumed by the negative and forget to look at the positive.