Monday, March 22, 2010

* Health Care - House passes Senate bill 219-212 Sun night. In the final roll call, no House
Republican voted for the bill, and 34 Democrats voted no. The House followed up w/a 220-211
vote to pass the companion reconciliation bill. A deal was reached w/antiabortion Dems to get
their support for the final legislation and will involve Obama issuing an executive order
affirming the existing policy that Federal Funds couldn't be used for abortion. The Senate this
week is expected to vote on the reconciliation bill. Passage was pretty much expected as of late
on Fri although certain elements of the final legislation may receive more attention this week and
spook investors (inc. the tax being imposed on earned income, the overhaul of student lending
that was tucked into the HC bill, etc).

US Treasury Net Outlays on Medicare - Annually

* In Europe, Germany's Merkel downplays speculation of a Greek bailout, saying officials

shouldn't allow market expectation to get ahead of themselves on the issue; Merkel said the
subject of a Greek aid package was not even on the agenda at this week's Summit meeting. The
German gov't issued a statement saying Merkel spoke to Greek Prime Minister George
Papandreou on Sunday and he told her Greece does not need financial help* To watch for the
week coming up - all eyes will be on Greece as the EU Heads of State Hold a summit on 3/25.
There were press reports this week (citing sources) that Greece may seek out IMF assistance if a
formal aid package from Europe isn't forthcoming after this summit (Greece denied the report)
* the Fed's ability to keep the identity of discount window borrowers private may be limited
going forward after a Fri court ruling; an appeals court ruled on Fri that the Fed must disclose
documents related to individual firm borrowing from its discount window and other "last resort"
lending programs - WSJ
* Bernanke argues against "too big to fail" banks in a speech made over the weekend -
"Among the most serious and most insidious barriers to competition in financial services is the
too-big-to-fail problem... It is unconscionable that the fate of the world economy should be so
closely tied to the fortunes of a relatively small number of giant financial firms. If we achieve
nothing else in the wake of the crisis, we must ensure that we never again face such a situation
* USA paying higher yields on TSYs than some US corporations - debt sold by such
companies as Berkshire, J&J, and Procter have seen yields lower than TSYs of comparable
maturities in recent weeks. The Bloomberg article is entitled - "Obama paying more than Buffett
as bonds show US losing AAA" – Bloomberg – a very rare occurrence.

Berkshire Yields minus Treasury Yields – Two Year Notes

* Municipals - there is a growing fear that smaller municipals could see increasing amounts
of stress as larger state governments choke off funds to smaller towns and cities. "I prefer large
states and cities, as problems within those areas are pushed to local governments," Larry Fink,
chief executive of BlackRock. "The assumption that an investment-grade rating is merited for all
municipal debt is less tenable every day," said Kenneth Buckfire, CEO of investment-banking
firm Miller Buckfire & Co. "This is eerily reminiscent of the early days of the subprime crisis,
where everybody was comforted by the investment-grade ratings but nobody did any analysis."
WSJ