“Total household debt jumped by $241 billion from October through December, according to a report from the Federal Reserve Bank of New York released Tuesday…The hike was primarily driven by a $152 billion jump in mortgage debt. Total household debt rose $180 billion, the first yearly increase since 2008. Despite the increase, American borrowing stands at $11.52 trillion, about 9% below its peak reached in 2008.” And while an increase in consumer debt may be a good thing (proves that “the economy can really begin to grow again”), here’s the bad (the American economy is splitting sharply between those with good/bad credit) and the ugly (student loans continue to hamstring consumer spending/confidence for millennials).
Raising The Minimum Wage (Is Kinda Becoming A Boring Debate)
The Congressional Budget Office released a report yesterday on the impact of increasing the federal minimum wage and it contains just enough to fuel both sides of the partisan debate: “two principal effects on low-wage workers  most of them would receive higher pay,  but some jobs for low-wage workers would probably be eliminated.” Lefties argue “the most important finding is that on balance, low – and moderate – income Americans are big winners from a higher minimum wage, which would raise earnings and incomes, lower poverty and inequality, and do so at no net cost to the federal budget.” Conservatives are basically screaming “Jobs Killer!” (Also) Meanwhile, a look at employment levels in the restaurant industry over the last 24 years reveals that while the federal minimum wage increased 7 times, massive job cuts were nowhere to be found. Finally, here’s a cool looking bubble history of minimum wage related things.
US Equities: Foreigners Sell As Profits Continue To Look Weak
“The Treasury on Tuesday released its estimates of international capital flows into and out of the United States, and they indicate that foreigners were net sellers of $40.2 billion of American stocks in 2013. That is hardly a large amount, but it is the first year since 1992 that they were net sellers. Historically, foreigners have been considered to be contrary indicators in almost every stock market around the world, on the theory that they are less familiar with the market than are local investors.” Meanwhile, “Among the 82% that have reported, companies in the S&P 500 are on track to rise 8.4% from last year, according to FactSet. But the rise in profits continues to lag revenue growth. Year-over-year revenue growth is about 3% when excluding financial companies, and even less when financials are included, according to USAA investments.”
“For one thing, China’s loan-to-deposit ratio (including shadow banking), which reflects the banking system’s resilience to a sudden drop in asset prices, is the lowest for all the countries tracked — half of Korea’s level and 43% of Thailand’s level when those economies melted down in the late 1990s…Unlike nearly all the countries RBS examined, China runs a current-account surplus — a reflection both of its export dominance and, critics would say, its related determination to keep its currency undervalued.”
“The largest foreign banks, with $50 billion or more in U.S. assets, will need to set up an intermediate holding company and be subject to the same capital, risk management and liquidity standards as U.S. banks, the Fed staff said…Europe has warned of tit-for-tat action, with European Union financial services commissioner Michel Barnier saying in October that the bloc would draw up similar measures if the Fed pushed ahead with its plans.”
“On Feb. 11, an explosion at a Chevron natural gas well in Bobtown, Pa. exploded, killing one worker…In an effort to compensate the community, Chevron is giving residents of Bobtown a certificate good for one free pizza and a 2-liter bottle of soda.”
Also, the Russians are ready to hide their money in Cyprus again.