Monday, March 15, 2010 

The U.S. and the U.K. have moved “substantially” closer to losing their AAA credit ratings as the cost of
servicing their debt rose, according to Moody’s Investors Service. [Bloomberg]

Short term money rates are heading higher as the Fed starts to lay the groundwork for a withdrawal of
massive amounts of liquidity; overnight Fed Funds rates rose to the highest level since Sept; 3-month T-
bill rates are nearing multi-month highs. Bloomberg

Federal Funds Effective Rate

On the health care front, the WSJ and a few political sites are reporting that the votes don’t yet exist in the
House for passage although Dem leaders were confident support would be in place soon

Washington will be closely watched this week as the White House and Senate put pressure on the House
to pass the Senate HC bill (Obama has delayed his departure for an Asia trip from Mar 18 to Mar 21 in
order to stay in town a few extra days and push for HC). Senator Dodd is expected to unveil a financial
regulatory overhaul bill on Mon that won’t have Republican support. On Tues, the FCC is expected to
outline its national broadband policy, w/a primary goal being to expand the penetration of broadband to
larger parts of the country.

Pensions threaten many states and local municipalities – while corporate executive compensation gets all
the attention, the massive pension promises provided to millions of public sector workers threatens the
solvency of many towns, cities, and states. The cumulative gap could approach $2T and may mean more
defaults and bankruptcy filings. Some prominent money managers are shifting away from GO bonds
issued by the more troubled states to debt backed by a specific essential service (like water authorities) –
Barron’s
There is an OPEC meeting Mar 17 (there isn’t expected to be any change in output).

OPEC Oil Production as a % of World Production 
(000 barrels/day)
47.00%

45.00%

43.00%

41.00%

39.00%

37.00%

35.00%
10/1/1990

10/1/1993

10/1/1996

10/1/1999

10/1/2002

10/1/2005

10/1/2008
1/1/1990

7/1/1991
4/1/1992
1/1/1993

7/1/1994
4/1/1995
1/1/1996

7/1/1997
4/1/1998
1/1/1999

7/1/2000
4/1/2001
1/1/2002

7/1/2003
4/1/2004
1/1/2005

7/1/2006
4/1/2007
1/1/2008

7/1/2009
 

OPEC is just as significant as ever.