Housing's Toll on Inflation Measures

Housing or shelter costs make up a large part of the Consumer Price Index (CPI), accounting for 32% of headline CPI. The Federal Reserve's more favorable price index, the Personal Consumption Expenditures (PCE), weights housing at 15%.

Rising housing costs, including rent and mortgage payments, are expected to rise through 2011 adding pressure on the Federal Reserve to increase rates to manage rising inflation expectations.

Wall Street Journal, April 5, 2011
Housing Bubble Continues to Haunt Fed

Euro Gains

The euro appears to be gaining despite Eurozone debt woes over the last year. The ECB is expected to raise rates signifying a strengthened economic outlook in Europe.

Wall Street Journal, April 4, 2011
Euro Gives Back Gains on Dollar

China's Communist Government

China is happy with the status quo and the economy has seen tremendous gains over the last decade as a result. Entrepreneurs have prospered and living standards have improved. Under the current rule the country is expected to continue as a leader in the emerging markets.

New York Times, April 3, 2011
In China 'Jasmine' Means Tea, Not a Revolt

Portugal Scrambles to Avoid Bailout

Portugal sold 1.65 billion euros ($2.3 billion) of short-term government debt in hopes of raising funds to payoff debt repayments coming due in April and June. Rating agencies reacted negatively to the offering downgrading the country's debt rating shortly after the auction.

The offering is likely to be the last effort by Portugal to avoid a bailout request which would also require implementation of strict austerity measures.

New York Times, April 2, 2011
Portugal Stages Surprise Bond Auction; Ireland Is Hit With New Downgrade

Ireland's Bailout Woes Continue

Ireland was the second Euro-zone country to request bailout from the EFSF. Ireland's request came in November 2010 following Greece in May 2010. Recent stress tests for the country have revealed further capital shortfalls of 24 billion euros. The gap is likely to call for nationalization of the country's six largest banks which would allow for government aid but turn the burden to taxpayers. Rating agencies have reacted negatively to the stress test results, exemplified by an S&P downgrade to Ireland's sovereign debt from single A minus to triple B plus.

Wall Street Journal, April 1, 2011
Ireland's Never-Ending Stress Test
Ireland's Banks Get Failing Grades
S&P Downgrades Ireland One Notch
Ailing Ireland Accepts Bailout

Irish Bank Nationalization

Wall Street Journal, March 31, 2011
Irish Banks Move Toward Nationalization

Mortgage Lending Regulations

Securitization of mortgages and other loans by US banks was a catalyst for the 2008 credit crisis. Subprime loan securities were innovative and compelling but the lack of credit risk modeling and regulation lead to a nationwide bank failure. The Dodd-Frank financial overhaul law addresses the lack of regulation in this area by imposing a 5% credit risk requirement on banks for securitized mortgages and loans. Additional regulation on down payment requirements and mortgage ratings are likely to follow.

Wall Street Journal, March 30, 2011
Regulators Unveil Mortgage-Lending Rules