Why is Volatility Returning?
The yield on the 10-year Treasury is at the highest level in more than a year and in 10 of the 30 trading days since the Fed's last policy meeting on May 1 the Dow has moved more than 100 points: half of the time it was up and half of the time it was down. What is causing the volatility? According to the Wall Street Journal, there are three primary issues driving the volatility. The first is the potential for the Federal Reserve to pull back on the quantitative easing it has been providing to the economy. The good news is that the pull back would be due to the belief that the US economy is recovering. The second factor driving the volatility is the slowing of the Chinese economy. Finally, Japan's economy has begun to grow at a strong clip after years of being somewhat irrelevant in the global markets. All of these factors are causing volatility as experts try to predict how strongly the global recovery could occur.
Japanese Boeing 787 has Engine Problems
A Japanese carrier's Dreamliner had engine trouble prior to takeoff Wednesday, a day after a rival airline had a problem on another 787 plane. The Associated Press reports that neither problem was with the lithium batteries that were overheating. The All Nippon Airways flight indicated the right engine would not start. A Japan Airlines flight returned shortly after takeoff due to a problem in its deicing system. Neither problem put passengers at risk.
New York Insurance Regulators Identify Industry Reinsurance Scam
Insurance regulators in New York are calling for a nationwide ban on transactions that allow publicly traded life insurance companies to alter their books by billions of dollars, according to the New York Times. The regulators have uncovered a number of cases in which life insurance companies create shell companies in either different states or other countries, outside of the regulators reach, which provide reinsurance to the companies through collateral that is generally not considered valid for insurance purposes. One company has changed its books by $48 billion through this "shadow insurance". Because there is no organization similar to the FDIC to provide insurance in this industry, regulators fear the transactions could lead to a taxpayer bailout.
Illinois' Credit Downgrade Impacts Bond Sale
Illinois paid a premium to sell $600 million of sales-tax backed municipal bonds on Tuesday after the state's credit rating was downgraded by two ratings agencies. The Wall Street Journal indicates that the general obligations were cut down a notch last week due to failure of the state to pass pension overhaul legislation. This particular bond sale was rated triple-A because the sales tax funds that support the bonds are kept within a separate account away from the State's general Treasury. But experts indicate that investors shy away from investing in Illinois due to its tarnished reputation.
PBS "NewsHour" Subject to Cutbacks
The "PBS NewsHour", the signature nightly newscast is planning on its first significant layoffs in nearly two decades, according to the New York Times. Due to declining support from corporate sponsors, MacNeil/Lehrer Production will close two offices it has outside of Washington, including Denver and San Francisco, and will lay off most of the employees in those locations. It will also eliminate several "noncritical production positions" at its main office. It is rumored that the company was facing a $7 million shortfall, a quarter of its annual $28 million budget.
Catherine S. McBreen is President of Millionaire Corner. McBreen plans and develops content for Millionaire Corner. Catherine balances editorial content to meet the informational needs of both new and seasoned investors. She designs special monthly surveys on topical issues affecting the economic environment.
McBreen has a B.S. in speech communications from Northwestern University and a J.D. from DePail University College of Law. She is a member of the American Bar Association, the Illinois Bar Association, and the Chicago Bar Association.
Well-known for her expertise in the affluent and retirement arenas, McBreen is a frequent speaker at industry conferences. She has been quoted widely by the financial media, including The Financial Times, The Wall Street Journal, Research, Private Asset Management, On Wall Street, Reuters, Bloomberg News, The Dow Jones Newswires and Worth. Cathy has appeared as a guest on CNBC Closing Bell, First Business Morning News, Neal Cavuto at Fox Business News, ABC and CBS radio.
McBreen is co-author with Spectrem President George H. Walper, Jr. of the book "Get Rich, Stay Rich, Pass It On: The Wealth-Accumulation Secrets of America's Richest Families" (Portfolio, January 2008)
Catherine is the mother of four and is involved in many school and community events.