Brain Bubble — The 900-Billion Pound Gorilla in the Room (YahooFinance)
On Wednesday, the TransUnion credit reporting agency announced the total amount of student loans outstanding has reached $900 billion. And roughly 33% of that enormous figure — approximately $300 billion — has been categorized as subprime student loans. Subprime loans are those that fall 90 days behind repayment schedule and are considered the riskiest of all loans, in terms of recovery. So, as the number of jobless recent grads increases, and the number of subprime student loans spirals up, what pressure will that situation put on the dollar, and the markets? Maybe we’ll find out when school resumes next fall.
California Economic Rebound Rewarded by S&P (Bloomberg)
If California’s economy could talk, it no doubt would have mimicked a line from its most recent former governor’s Terminator movie, “I’ll be back.” And it would have been a straight shooter, as America’s most populous state is expected to sport an $851 million budget surplus when its fiscal year begins on July 1. In recognition of the state’s improving economy and deficit turnaround, Standard & Poor’s raised California’s credit rating to A (the sixth-highest ranking in total). As a result of the higher rating, investors put more of their funds into the state’s 30-year debt.
S&P 500 Posts Best January in 15 Years (Reuters)
Even though the S&P 500 ended the month by pulling back slightly, the index still gained 5.1 percent in January — the largest monthly rally since October 2011. And the 5.1 percent pop was the best January performance in 15 years — since 1997. Many analysts believe that the market upswing was due to stronger than expected Q4 earnings and the exuberance created by the government’s 11th hour actions to push back the fiscal cliff. The next event that could be another strong catalyst for a market upswing is the U.S. jobs report that will be released today. Here’s hoping jobs were job one last month.