Lumesis

SEC Approves New Rule Codifying Principle-Based Rule and Interpretive Notices; SEC Approves Incorporation of Requirements in Suitability Determination.

The objective of the rule is simple: protect the retail investor. And, when it comes to the municipal market, the rule already exists. So why is Proposed Rule G-47 pending approval by the SEC, and how will it differ from the existing rule? Why is this well-intentioned and, as some believe, needed Rule the subject of an SEC Order that has delayed its implementation?

Saturday evening, I was asked by a reader (I was surprised to learn she was a regular reader) why I am always pointing out the potential pitfalls associated with data we capture and why so harsh on the good folks in our nations capital. "Things are actually pretty (darn) good - a deficit reducing budget is about to be passed, unemployment is the lowest it has been in years and the housing market is abuzz. Not to mention, the stock market has been pretty good to those that have invested." I responded that I respected her view but was truly bothered by the data, as evidenced by this weekl

What a week! Illinois passed pension legislation (I would have lost that bet) and Detroit can proceed with its bankruptcy. On the former, lets see if the long-overdue pension fix survives legal challenges from unions and helps Chicago address its pension issue. Perhaps those contemplating the legal challenge will look to Judge Steven Rhodes opinion in the Detroit bankruptcy case to find that he believes pension obligations are no different than any other contractual obligation.

Following a wonderful Thanksgiving holiday that involved way too much food, I found myself doing all I could to avoid the Black Friday masses and succeeded until I took to the highway for a journey to Albany, NY - they were leaving the malls and, perhaps it was exhaustion from their day of shopping, but the traffic and driving skills left something to be desired. Those weary shoppers amassed along I-87 brought to mind the question of how healthy (or not so healthy) is the economy?

A lot to cover as we head into the Thanksgiving holiday. Last week saw some very interesting data - some of which I will get to and the balance of which I encourage you to explore (see the last page for "Data Updates"). Before I get to the data of the week, I take a look at baseball - well, not really. I offer some perspective around the Braves picking up and moving from Atlanta to nearby Cobb County.

Recently, I spoke on a panel regarding the State of Illinois (our panel literally Under the Spotlight). Our panel touched on many topics affecting the State but, when all was said and done, it seemed that the panel uniformly recognized that Illinois needed to do something about their pension problem (we had an interesting discussion about one party rule and speculated as to why they cant seem to get anything done on pension reform can you say re-election).

The markets rallied on Friday ostensibly because of the First Friday employment data was it good news (job creation) or bad news (rate is up and the Fed will keep juicing the market). Read on. Next, it is on to a look at housing data that seems to have been under the radar screen of the media. I conclude this week with a look at my election predictions. While I hit a touch over 50% (worthy of baseball hall of fame induction) the folks at the major networks wont be inviting me to work the election map anytime soon.

Its the economy, stupid. Im sure many of us remember that statement from a few years back. With a couple of gubernatorial and many mayoral elections at hand, I thought it might be fun to provide our call on these races by looking at how the economies of those States and cities have fared over the past year. If it is indeed the economy, stupid, the below may provide some insight into where incumbents are safe and where change may come. This report will print longer due to the inclusion of more tables than usual.

I have to admit, I had a lot of trouble figuring out where to start this week -- unemployment from last week, post-shutdown observations, exports or sobering observations around expected growth of the US economy and expected implications. It was a Barrons article, Slowing to a Crawl that pushed me to address the latter first. Why? Much of what the article focuses on hit very close to home the impact of demographics and economic data on our economies.

To the brink they went and a deal was had. I dont know if I call it much of a deal I kind of feel like Ive seen this B movie before. I could go on but that would put me in the same stature as the talking heads on the left and right news channels that prophesize to their viewers without regard for the rest of us. That said, one quick digression.

I am confident that some type of deal will be reached to avert a default. And, lets keep in mind that, according to the CBO, the 10/17 deadline is really just a deadline to start making decisions about what to pay with the remaining $30 or so billion as they project another one or two weeks before the day of reckoning when there is only enough money to pay about 70% of the governments bills which bills to pay.

Driving home last week, the plight of furloughed Federal employees was on my mind. How could our elected officials in DC accept their pay for not doing their jobs while hurting folks that want to work but are told not to because the men and woman not doing their job (and still getting paid) shutdown part of the government? I was heartened to learn that Congress was going to take action but quickly realized that the fix paralleled the stupidity that got us into this mess. The legislation ensures that all furloughed employees will be paid for the furlough period.

I start this week with some observations on the follies taking place in our nations capital, then provide some data around Puerto Rico and, finally, a look at a recently released report around municipal defaults. One might argue a common thread just might run thru this commentary. Be on the lookout for a special release later this week as the Geo Score is updated for States, Counties and over 330 Cities.

This week I take a departure from form. After a few brief words around the Feds Shake and Bake maneuver and a very quick look at Food Stamp data, I return you to the capable hands of John Mauldin to dive into the Pension woes. We are honored that Mr. Mauldin based his work on DIVERs data and some of our tools. If you decide to follow Johns advice around your city, let us know if we can help. Be sure to check out the Data Released this Week as our data team was hard at work.