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How To Get A Quick Loan Approval

How To Get A Quick Loan Approval
If you are struggling to pay your bills and need to get some extra cash fast, you may want to start looking for companies that can give you a quick loan approval. These lenders often specialize in short-term funding and thus, their application processes do not take much time. More importantly, many of these entities are willing to issue loans to borrowers even though they have poor credit.

The key to getting what you need fast lies in dealing with the right companies. The best businesses to work with are normally found online. This is because their operations are not restricted by local lending legislation. They have the freedom to structure their offers in ways that are most beneficial to consumers.

As a result, they can offer borrowers higher loan limits and they are even able to structure their repayment terms so that these are flexible. Should you decide that you need more than the average amount of time to restore a cash advance, you can easily make these arrangements with your lender. An extensive might require you to pay an additional fee, but it will allow you to keep your account in good standing.

It is also important to note that there is a much broader selection of lenders to choose from. This means that you have a great opportunity to find financial products that are specific to your current needs. Best of all, you can shop around for companies that are able to issue approvals in mere minutes.


Applying for these products does not take much time at all and it is actually very easy to do. You simply need to supply a prospective lender with proof of age so that they can know that you are legally able to enter into the binding loan agreement. You will next need to submit your income information and the banking account to which you want your funds routed. After having verified the information that you have submitted, these companies will electronically transfer the requested monies to you.

Getting a quick loan approval will be even easier if you decide to work with the same lender again in the future. A number of online companies store the information of their clients in their databases in case they return for more money. This way, you simply let them know that you have a need and they will automatically approve your newest cash advance and send the cash right to you.

How To Pay Off Your Loan The Right Way

Understand 
How To Pay Off Your Loan The Right Way
When taking out a loan you must first and foremost make sure that you UNDERSTAND what your loan is. You'd be surprised how many people sign on the dotted line without really knowing all the terms and stipulations of their loans. Help yourself out from the get go by making sure that you have gone over every detail and ask about anything you aren't completely sure of. Communicate with your lender! Never get yourself in a situation you aren't comfortable with-- that will only lead to bad things.

Plan 
Preparation is key! Make things easier for yourself by organizing a budget and payment plan. Laying everything out will help you stay on track. It's a lot easier to repay your loan successfully when you have everything out in the open and you know what to expect. It's important to ensure that your repayment plan is realistic for you. The best way to figure this out is through solid planning and budget forming. This way you won't get yourself in a bad situation because you have a clear idea of what is going on through your outline.

Check 
Once you've got your budget in place it is crucial to check how you are following within it regularly. You must stick to your budget to ensure prompt payments. If you catch yourself falling off your path, try to save money from other areas of your budget. Are you carpooling to save on transportation costs? Have you been saving money from buying groceries rather than going out to eat? Are you using coupons when buying necessities? Do everything you can to stay in your budget and make your payments on time! Ideally, you will eventually make your payments more frequently and in larger balances. This way you won't have to pay as much in interest.

Save 
Did I just say Save? Yes, SAVE! Just because you are paying off a loan doesn't give you an excuse to not try to save at any cost. Even if you can only save $25 a month, do it! When paying off a loan you want to get your finances in order and one of the best ways to do that is to make sure you are always working on your savings. Emergencies happen and you want to make sure you can always pay all your bills on time.

Stick to these tips and you can ensure that you pay off your loan the right way!



Selecting The Best Website To Get A Online Loan Approval

Selecting The Best Website To Get A Online Loan Approval
There are many websites that will provide you with a quick loan approval, but this does not mean that you will be happy with all of their services. Consumers should always take the time to screen these entities and get more information on their funding products before applying. This helps people to get better value from these offers and to make sure that they are locking into loan terms that they can actually live with.

A number of these businesses work hard to keep their fees and interest rates as competitive as possible. This is an obvious challenge for lenders that cater to high-risk consumers. A lot of their clients tend to default on their loans. This is why the cash advance industry tends to charge higher than average fees when compared to conventional lending institutions and more conventional financial products.

Consumers can often find the lowest prices on these offers by simply using a few comparison sites. These take only a very nominal amount of time and their searching and sorting functions are very easy to use. By entering in a few, simple search terms you can review a list of companies that are well-suited to your present needs and your future ability to repay.

In addition to looking for offers that are structured to help you tackle your current financial crisis best, you also want to seek out a few detailed consumer reviews. These will tell you all about how these companies operate and they will also let you know whether any hidden fees exist. Finding and affordable cash advance offer online is just as important as making sure that you can get loans approved fast. Doing so ensures that you will not have problems repaying the monies that you have borrowed.

There are many other factors to consider, such as whether or not you are working with a legitimate business. It is important to feel safe when sharing personal and financial details over the web. This is why people do best to work with well-established lending companies that have received numerous reviews from other consumers.

In order to get your quick loan approval, however, there are a few things that you will likely need. Foremost among these is a way to prove that you are a legal adult, such as a state-issued ID number. You will also need to show the provider that you have an active banking account and have previously enrolled in a direct deposit program. The banking account information you supply will be used by the lender to route the approved funds electronically. More importantly, borrowers must show that they have regular income as this will be used to determine the funding amount and as a form of collateral to back the offer once it has been issued.

Getting A Small Business Loan Is Not Easy

Getting A Small Business Loan Is Not Easy
Today's lending climate is harsh. Getting loans is however especially difficult for a small business.

Whether you are starting a business, or want to expand the existing one, securing financing is a major factor for the business to survive.

If you're a budding entrepreneur, you will need a loan to secure operating capital for your business start-up. Banks are skeptical about lending money to start-ups, so you better prepare in advance for a tough negotiation! They are not interested in what you think a potential of your idea is - they will want to be ensured that your business will be able to pay off a loan.

When the time comes for your business to make capital investments, increase your workforce, or move to a larger space, getting a loan is almost always a must. For larger investments, a term loan may well be a better choice.

Different banks have different standards when it comes to lending money to businesses.

They sometimes require that a business is of a certain size.

But in general, to even consider your application, they require that a loan be for a solid business purpose. That means that gambling, speculating, passive investment, pyramid sales are out of question. The bank will want to know what you need the money for, and will you be able to repay - fully and on time.

That's why you'll have to prepare some documents that will show why a business loan is necessary, and that you're a good risk. Usually, the documents you will be asked for are a solid and detailed business plan, cash flow projections for at least a year, personal and business credit history, personal guarantees from all owners of the business etc.

Sometimes you'll be asked to provide past business tax returns to show how is your business doing financially, and a credit ranking report.

They will asses your ability to pay back money. Having business and personal assets is of utmost importance. You'll have to be prepared to tell the lender what you are willing to put up to secure the loan: a car, a house, or something other of value. If you'd fail to pay, those assets will be sold for the purpose of repaying the loan.

Tell them how much money you are personally willing to put into your business. This will show the lender your commitment.

Show them a proof of your professional expertise, a degree if related to the enterprise, talk about your background. Do your best to persuade a lender that his money is going into right hands!

Prepare in advance and your chances will improve.

How to Get Growth Capital for Your Business

How to Get Growth Capital for Your Business
Growth Capital searching can be a frustrating process, a seemingly endless path with a lot of rejection. The headlines in the local newspaper make the process of how to get growth capital for your business sound overly easy. Usually, the story line talks about an entrepreneur in need of growth capital and how he eventually connected with a funding source. Usually omitted from these success stories are the months of effort and knocking on doors that preceded it.

The real world answer to the question of how to get capital for your business is - through using a proven capital raising process. This process must do several things. First, it must decide on the best form of capital for your need. There are numerous forms of capital in the market - bank loans, mezzanine loans, equity investors, angel investors etc. Each of these different forms has positives and negatives which should be fully understood. Second, this capital raising process should determine the ideal amount of the funding. Often, businesses underestimate how much money is needed to execute their growth plan.

Third, prepare your financial statements and your growth story. Lenders cannot do much with companies that have sloppy or incomplete financial statements. Quality financial information and descriptive information about the history, customers, products, industry and management team are needed by the lender. In order to get growth capital, lenders want to see a level of sophistication and professionalism in the company. The fourth important element in getting capital is having a strategic growth story. Lenders want to know what you will do with the money and how you plan on growing. In order to help the company manage these steps, it pays to bring on an M&A advisor.

These professionals will help guide you through the decision steps and various stages of preparation. Once everything is in place, the official capital search process begins. The M&A advisor will have a confidential information memorandum on your company and a list of funding sources to approach. Funding sources have different criteria such as deal size, deal type, industry and location. It is important to focus on funding sources that provide capital on a direct basis to companies. Often, the deal preference of a lender prevents it from lending directly to non-private equity owned companies.

This is to say, mezzanine lenders, a popular type of lender, often will only fund companies that are owned by a private equity group. This makes the growth capital targeting process even more important. In short, there are multiple steps and requirements to securing growth capital for your business. For most mid-sized companies, an outside advisor is needed to organize and lead the process. The pay-off to this process is considerable though. Growth capital can transform your business and dramatically increase the value of your company through allowing you to make acquisitions or grow at an accelerated rate. So in short, the answer to the question of how to get growth capital for your business is - secure the representation of an M&A advisor to manage the process.

About Attract Capital, LLC Attract Capital is a financial advisory firm dedicated to the growth of mid-sized companies throughout the United States and Europe.

How to Successfully Refinance Your Mortgage Debt

How to Successfully Refinance Your Mortgage Debt
Falling behind on mortgage payments is one of the most intimidating financial struggles that most homeowners will experience. Since late mortgage payments can ultimately lead to a foreclosure, homeowners are eager to look for solutions once mortgage debt becomes a problem. While loan modifications where homeowners can negotiate the terms of their existing loan are a popular solution, they aren't the only option on the market. Now, many homeowners are considering the benefits of refinancing to successfully repay their mortgage debt.

Refinancing allows homeowners the opportunity to replace their existing loan with a new loan that has lower interest rates and friendlier terms. These benefits are some of the reasons more and more homeowners are seriously considering refinancing over a loan modification. While refinancing poses its benefits, there are many challenges such as declining property values, late payments, or a loss of income. By knowing the considerations for a successful refinancing, homeowners will be one step closer to eliminating mortgage debt.

5 Important Elements for Successful Refinancing

Homeowners seeking to eliminate mortgage debt should weigh the pros and cons of refinancing versus loan modification. If you select refinancing, be sure to:

1. Shop around. Since refinancing gives you the opportunity to replace your existing loan with a new one, truly do all your research and discover all of the options available. Mortgage rates vary wildly, so don't just settle for a deal that's better than your current loan - find the best deal, period! Consider the fees, quality of service, company reputation, and referrals from family and friends. In other words, look at more than just the interest rates.

2. Determine your break-even point. You'll have to pay fees for refinancing. Ensure that your break-even point is within site and that you'll actually save money by going through the hassle of refinancing. In general, if you can get the rate to drop by at least 0.5 percent, then you should consider refinancing.

3. Don't trust "No-Closing-Cost." If a lender claims no closing costs, then be sure to look for those costs elsewhere. They can appear as upfront charges, "rolled-in" closing costs, or as low-cost refinancing. It's up to you to determine which scenario is best for your financial circumstances. By keeping this in mind, you'll be able to save more money to put towards eliminating your mortgage debt.

4. Consider cash-in refinancing. Just as you can cash-out refinancing, you can also cash-in, where you swap for smaller mortgages instead of larger ones. With today's low rates, it's a good time for homeowners that qualify to take advantage of this opportunity.

5. Confirm and lock-in your rate. Be sure to lock-in your rate and have it confirmed when refinancing. If the rate is variable, you could end up with higher rates than your current loan, which defeats the purpose and strategy of refinancing. By keeping this in mind, you'll be able to truly save money and eliminate your mortgage debt!

Finding the Best Home Loan For You

Finding the Best Home Loan For You
Owning a home is a big commitment. It takes up your Saturdays with gutter cleaning, lawn mowing, pressure washing and window cleaning. It is also worth it because at the end of the day, it's yours. The type of home loan you have makes a big difference on how quickly you can own your home out right. A home mortgage is a tool that you can use to purchase a home, but the loan needs to fit within your financial plan. A home is a long term asset that you will own for years to come. The mortgage can determine how long it will take for you to pay the bank off and hold the title free and clear.

If you are considering buying a home or refinancing speak with a mortgage lender about the current interest rates and your loan options. Make sure that you tell them about your financial goals. For example if you need to keep money aside for sending kids to private school, your mortgage payment should be lower. If you are empty-nesters that want to retire, you should pay more monthly so that the home loan can be paid off sooner.

When securing a home mortgage you should compare the following things:

Interest Rate - A small change in interest rate, makes a big difference. Anything over 0.125% should be carefully evaluated. For example on a $300,000 mortgage with a 30 year term a 6% interest rate would have a payment of $1,798. That same loan at 5.5% would have a monthly payment of $1,703. That saves your family $96 a month, enough for a cell phone or cable bill. More importantly, over the life of the loan that small change could cost you over $34,000 more in interest.

Term - The term, or life, of your loan is essential for calculating your monthly payment and for understanding how quickly your home will be paid off. Most people secure a standard 30 year mortgage but that is not always the best solution. A 30 year mortgage is ideal for keeping your monthly payments low. If you are worried about personal cash flow it is a good option. They are terrible for people with a financial plan to pay off their home or to retire. If you are over the age of 30 you should seriously consider a shorter term to give you flexibility as you age. For example a 50 year old, refinancing with a 30 year mortgage, would not pay off the house until they were 80! A fifteen year mortgage would be a much better solution in that circumstance. Evaluate your long term goals when choosing a loan term.

Fees - Some mortgage lenders will place additional fees on your mortgage loan. In order to see how much they are charging, review the Good Faith Estimate. This will list out the closing cost fees, buy down fees, origination fees and more. Get a GFE from more than one mortgage banker to see who is offering you the best loan. The more fees that are charged the higher your APR will be. You can compare this by looking at your Truth and Lending Statement.

Your home loan should be a tool for accomplishing your financial and housing goals. Do not let your loan dictate terms to you. Instead decide what your objectives are and find a loan that fits within them. You can retire when you want to, have your home paid off early, and obtain a low interest rate by working with a knowledgeable mortgage lender that can help you accomplish your goals.

Online Cash Advance - A Quick Way to Get Rid of Financial Problems

Online Cash Advance - A Quick Way to Get Rid of Financial Problems
How to Choose an Advantageous Online Cash Advance?

The best option is not to borrow as much as you can, but to apply for the amount you strictly need and you can pay back on time. From this point of view, you must consider several important aspects, such as the fee charged by the lender for the provided services, the interest rate attached to the short term credit and the period within which you must pay back the money.

The fee you have to pay to the payday loan provider is of 25-30 dollars for every $100 you borrow using this method. It is advisable that you browse several online cash advance sites, in search of the most accessible offer. Also, it is good to always opt for direct lenders instead of choosing the services offered by brokers, because the last variant may imply additional costs.

The instant personal loans are considered a risky business by many lenders, who try to cover their eventual losses by applying interest rates higher than the market average. However, if you succeed to repay the entire debt at the due date, the financial effort is considerably smaller than if you ask for an extension and you pay delay penalties.

From all these points of view, it is always better to do a thorough research and compare various offers before choosing a particular type of online cash advance. By doing this, you can plan your household budget in a more effective manner and you can successfully avoid falling in a debt trap.

Quick Online Loans Requirements

The eligibility requirements for the credits in this category are very easy to meet, especially if they are compared with the selection criteria for a bank-granted loan. One of these mandatory requirements stipulates that, in order to qualify for an online cash advance, you must be a citizen or a resident of the US and you must be at least 18 years old when you apply for the loan.

You must also provide your current address and phone numbers from your home and your work place. The existence of a valid and active bank account is also one of the eligibility requirements for this type of credit, because the money you obtain is instantly wired to it. Usually, at the repayment date, the amount you owe is withdrawn directly from your bank account.

In order to benefit from an online cash advance, you must also have a regular, decently sized source of income. This can be of any nature, from the salary you get from your job to the compensation you receive after suffering a work-related accident. The unemployment benefit is also considered a reliable income by the online emergency credit providers.

When it comes to getting a loan from the banks, a poor credit score can be regarded as a major obstacle and a reason why many money lending institutions may deny your application.

However, having a "clean" financial record is not mandatory when you apply for an online cash advance. From this point of view, if you fulfill all the above requirements, you will certainly get the money you need, even when you have a history of filing bankruptcy or failing to repay your debts on time.

Also, online credits are usually not secured, so you do not have to bring any valuable possessions as collaterals. The general practice is to secure the loan against your next paycheck, and this is the main reason why the amount you owe and the costs of the credit are directly debited from your bank account.

Considerations

Although some people consider the repayment period for payday loans too short, it offers enough time for the borrower to cover his or her needs until the next paycheck. If you use the amount you obtain only to solve your emergencies and you plan your household budget with great attention, you should have no problem repaying the debt on time.

Online Loans - The Easiest Way of Getting the Money You Need

Online Loans - The Easiest Way of Getting the Money You Need
Online Loans
Online Loans - Essential Information

Basically, these loans can be divided in two categories: the short term loan and the instant personal loan. The main difference between them is represented by the length of the repayment period. While the loans in the first category are granted for periods from 1 week to 14 days, those in the second category are granted for periods varying from 2 weeks to 30 days.

Another significant difference between the two is the amount of money that can be borrowed. Usually, you can receive more money if you apply for an instant loan than if you apply for a short term one.

When you apply for a bank loan, you usually have to bring in something valuable as collateral, such as a car or even a house, in order to secure the credit. However, you do not have to present any guarantees when you apply for online loans. Your next paycheck is the only collateral you offer to your lender.

How to Get Instant Cash?

The application procedure is very simple and, above all, it takes a short time to complete. This is mainly because the paperwork is reduced to minimum and the information required is only basic.

In order to become eligible, you must be at least 18 years of age and a citizen or permanent resident of the US. Also, you have to demonstrate that you have a permanent source of income, consistent enough to enable you to repay the loan.

Some online loans providers ask you to submit a proof of employment, showing the period since you have been working at your current job, but most of them only ask for a phone number and specific information about the employer and confirm your employment status by phone.

Given the shallow and fast procedure of granting easy payday loans, the lenders are exposed to considerable risks. Their need to verify your employment status is, therefore, understandable, and so is their tendency to apply higher interest rates.

A wide spread misconception about online credits is that they are instantly granted, the pre-approval stage being completely eliminated. This step exists, the only difference between bank-granted credits and those you obtain online being the duration of the procedure. In the latter case, everything lasts a lot less, because it does not involve extensive verifications or faxing.

What to Consider When Searching for Online Loans?

When it comes to getting quick payday loans, throwing at the first offer you see is not the wisest thing to do. You must carefully analyze the repayment conditions and the costs of the credit. Only by making an extensive comparison you can choose the loan that suits your needs and repayment possibilities.

The fee charged by the lender for the provided services or the interest rate is very important, because it adds to the sum you have to pay back. Usually, its quantum is of about 25%-30% from the borrowed amount, but, if you search carefully, you should be able to find online loans at lower prices.

Indeed, payday loans and all short term credits have sensibly higher interest rates than the classic, bank-granted personal loans. This is partly justified by the higher risks these loans pose for the lender due to the fact that fewer verifications are made and the eligibility requirements are much easier to meet and more flexible.

From this point of view, you must carefully calculate your household budget before you apply for one of the many existing varieties of online loans. Asking for more money than you actually need is a way for you to fall into a debt trap, especially if you fail to repay the whole amount you owe within the stipulated period.

However, a short term credit, no matter its specifics, is a financial instrument designed to help you when an emergency situation appears and you have no one and nowhere to turn to. The easy to meet, minimal requirements and the rapidity with which the needed money is granted are the main characteristics that recommend quick payday loans as the right solutions for urgent financial difficulties.

Need Fast Cash - Apply For Low Doc Loan

Need Fast Cash - Apply For Low Doc Loan
If you're self-employed or have multiple sources of unorganized income, you may find it overwhelmingly difficult to convince banking institutions and scores of other online lenders that you're indeed an eligible loan applicant. Even if someone knows you're financially stable and in a position to pay back a loan amount on time in full, they'd still want you to reduce paper records!

The Problem 
You want fast cash and you can pay back the loan on time. But, nobody is prepared to loan you money! The problem is, banks and other lenders want you to produce solid proofs of income sources, savings, expenses etc. and it's not always possible. So, a bank may not be prepared to loan you 50,000 bucks to buy a home when you can actually afford to buy a home worth 300,000 dollars! That's when low doc home loans come handy!

The solution 
The solution to the problem stated above is pretty simple - self declare the income and apply for a low doc loan right away! Yes, it's that easy and it doesn't take much time either. You can have a bank statement or accountant's letter support your self-declaration of income. It's fairly easy to arrange for either of the two, isn't it?

You can save yourself from the trouble of arranging for tax returns and other financial records in order to arrange financing. Low doc home loans are approved very quickly and within no time, you can close a deal without any headache at all!

Nowadays, even specialized low doc loans are available for applicants who do not happen to have a perfect credit history. Others willing to build new dwellings or extend existing ones too can avail the benefits of home loans that require low documentation.

What does it take to get fast cash with a low doc loan? 
In a nutshell, you need to be a self-employed person (freelancer or own business, for example) in order to be in a position to self-declare your income. You need to have an active ABN too. You'd to submit either of the following to support the income figure declared by you:

1. Accountant's Letter 
2. Business Banking Statement 
3. BAS

Low doc loans are as good as other loan schemes 
Just because low documentation home loans are approved easily and involve little or no hassles at all does not imply they are less useful/flexible as compared to traditional loan schemes. These loans can be used for all kinds of residential/commercial property transfers or purchases. Whether you're an individual or a business organization looking to buy or refinance a property, you can avail Low Doc Loans without having to worry about lengthy paper work and ambiguous approval procedures.

The message of rising yields is very good



Over the past year, both Treasury yields and stocks have risen significantly, and therein lie some important messages. One, that the Fed's QE program has totally failed to lower Treasury yields; yields are up despite the Fed's monthly purchases of $85 billion of Treasuries and MBS (MBS yields are actually up much more than Treasury yields since the Fed started its current QE program). Two, that the Fed was never able to control or artificially lower Treasury yields—the market controls the level of Treasury yields. Three, that the Fed never did distort or artificially depress yields, and never did artificially "stimulate" the economy. Four, that rising interest rates are not bad for stocks. Five, that interest rates and stocks are rising because the underlying economic fundamentals are improving—even though this remains the most miserable and weakest recovery in U.S. history. 



It's also very important to note the message of TIPS. Real yields on TIPS have risen a bit more than nominal yields on Treasuries, which means that the market's inflation expectations have declined a bit. That's another way of saying that the rise in Treasury yields has been dominated by a rise in real yields, not by a rise in inflation or inflation expectations. Higher real yields confirm the message of stocks: what has been happening over the past year is an improvement in the economic fundamentals. Even though (I repeat) this remains the most miserable and weakest recovery in history.

UPDATE: Reader "Sil Sanders" notes that it's not obvious from my charts and my explanation (admittedly brief) above that QE has failed to keep rates low. For a more complete explanation, see my post from last month, "Why QE was a successful failure." The chart below is an updated version of one of the charts from that post:


As I said back then, 10-yr yields ended up higher at the end of each QE program, and were unchanged at the end of Operation Twist. Yields only fell during periods when the Fed was not engaged in buying bonds—surely a counterintuitive result.


As I argued in the post linked above, and on many other occasions (here, here, here, and here), the only result the Fed could hope to achieve with QE was to raise, not lower rates, by responding to the world's demand for safe assets and thus alleviating a potential liquidity shortage which likely would have led to a weaker economy. As I've argued many times in the past, interest rates are fundamentally determined by the market's perception of economic growth and inflation. The chart above shows how real yields on TIPS tend to track the economy's growth rate, and the chart below shows how nominal yields track inflation.


I would argue that it makes much more sense to view the decline in yields over the past 5-6 years as a response to the market's expectation that economic growth would be very weak and inflation very low, rather than as the result of the Fed's bond purchases, which after all only represented a small fraction of the outstanding amount of bonds and MBS. That same logic, combined with a modest decline in inflation expectations in recent months, argues that the recent rise in yield is therefore the result of the market's improving expectations for economic growth in the years to come. As the second chart above shows, however, current 10-yr yields suggest the market now feels comfortable with economic growth of about 1% per year. Not too long ago, 10-yr yields were consistent with growth expectations of zero or even a modest recession. Even with the recent and rather impressive rise in 10-yr yields, the market's outlook for future economic growth is still quite modest.

One final point: if I'm right, and QE never artificially lowered rates nor directly stimulated the economy, then the "tapering" and eventual reversal of QE should not pose any threat to the economy as so many seem to fear, so long as the Fed's efforts have satisfied the world's demand for "safe assets."

Interest rates are up because the economy is stronger

Within the past 4-5 months, 10-yr Treasury yields have jumped by 140 bps, and 10-yr TIPS real yields have shot up by almost 190 bps. Most observers attribute this huge repricing in the Treasury bond market to the anticipation of a sooner-than-expected tapering of the Fed's Quantitative Easing bond purchases, and the rise in short-term rates which will inevitably follow. While that's a fair description of what's happened to market psychology, the more important driver of higher yields is simply the fact that the economic fundamentals have improved considerably.


The above chart shows my interpretation of the intrinsic value of 10-yr TIPS. Real yields that are guaranteed by the U.S. government are a very special animal: nowhere else can you find a fail-safe real return on your money. When real yields were deep in negative territory not too long ago, it was a sign that investors were so worried about the prospects for the economy (and the real profits to be found in alternative investments) that they were willing to forgo any chance of a positive real return. TIPS became extremely expensive because fear was rampant. Now TIPS are approaching what might be considered "fair value" territory. Investors' fears are subsiding, and confidence in the future is returning. This is extremely important because one of the hallmarks of this recovery has been a lack of confidence.


The chart above compares the real yield on 5-yr TIPS to the growth rate of the U.S. economy. Normally, the two ought to bear some resemblance to each other. When the economy was booming in the late 1990s, real yields were 4% because they had to compete with the very strong real returns that investors expected from alternative investments. Today, real yields are returning to levels that suggest the market now believes the economy can grow by 2% a year. That's hardly impressive, but it is a lot better than zero.

We've seen plenty of evidence of a stronger economy in recent months: corporate profits are very near record highs, both in nominal terms and relative to the economy; employment is rising at a fairly steady pace of 190K per month; weekly claims for unemployment have fallen to very low levels; car sales continue to increase at double-digit rates; and conditions in the manufacturing and service sectors have improved, both here and abroad. Federal revenues are up almost 13% in the past year, and they have risen at a 15% annualized pace in the six months ending in July; tax revenues don't rise like this unless there is some real improvement in jobs, incomes, capital gains, and corporate profits.


What's not to like about this? Weekly claims have fallen steadily for four years and are now down to very low levels. Businesses have trimmed just about all the fat they had. Labor market conditions have improved dramatically.


Car sales have been rising at strong double-digit rates for the past four years, and have almost returned to pre-recession levels. This is a picture of a powerful V-shaped recovery. Car sales have exceeded all expectations, and that in turn has caused manufacturers to ramp up production, hiring, and purchases of materials and parts. There are ripple effects from this that have benefited many sectors of the economy already. Housing starts have experienced a similar double-digit recovery in the past two years.


The service sector of the U.S. and Eurozone economies has experienced some surprising strength in recent months. The Eurozone is clearly pulling out of its 2-year recession, and the U.S. economy appears to have regained a surprising amount of strength.

Meanwhile, despite all these signs of improvement, the equity market is still plagued by doubts. The Vix Index rose from 12 to almost 17 recently, while the S&P 500 index dropped 4% from its all-time high. High-yield bonds have shed over 5%, leveraged bond and preferred equity funds are down 15-20%, equity REITS plunged almost 20%, and home builders' stocks gave up 10-25%. Taken at face value, these indicators suggest that the market believes rising interest rates will short-circuit any nascent improvement in the economy and derail the housing recovery that began some two years ago.

This is the sort of "good news is bad news" thinking that is symptomatic of a market that suffers from a shortage of optimism. It's also rather short-sighted, since we know that the economy has been very strong in the past when interest rates were far higher than they are now.

The market's concerns are undoubtedly rooted in long experience with business cycles: e.g., booms are followed by busts, and falling rates are followed by rising rates. But we are still in the very early stages of the current business cycle expansion, and therefore these concerns arguably are premature. After all, it's still the weakest recovery ever, and it will take at least another year or so before the number of jobs exceeds its early 2008 high. And although the Fed seems likely to begin its "tapering" operation soon, the Fed is likely to wait until at least next year before starting to raise short-term interest rates. If the economy should sputter as the market seems to fear, then the Fed could easily postpone any plans to tighten. At this juncture, there is little to fear from the upcoming changes to monetary policy because there is as yet no reason for the Fed to take any dramatic actions; inflation is under control, economic growth is still relatively modest, and the dollar has enjoyed a modicum of support in recent years.

If the market is making a mistake, it's in thinking that low interest rates are stimulative, and high interest rates are depressing; that interest rates are the tail that wags the dog. In reality, however, the economy is the dog that wags the interest rate tail. Low interest rates are symptomatic of a weak economy, and high interest rates go hand in hand with a strong economy, just as low inflation results in low interest rates, while high inflation pushes interest rates higher. I've detailed before why it is that the Fed's QE is not stimulative; it's primary purpose has been to satisfy the world's demand for safe assets. As the demand for safe assets declines, and as confidence returns, then it is entirely appropriate for the Fed to first taper and then reverse its QE program. The market is now realizing this, and that is why interest rates are up. It's not scary, it's a breath of fresh air.

ISM manufacturing report encouraging


The August ISM manufacturing report beat expectations (55.7 vs. 54), and was generally strong. As the chart above suggests, this is consistent with an acceleration of economic growth in the current quarter relative to the second quarter's 2.5% growth, possibly to something in the range of 3-4%. This is quite encouraging, even if it means that the recovery is still only modest and sub-par.




Export orders were relatively strong (top chart), and this suggests that conditions overseas are improving. As the second chart above shows, conditions in the Eurozone are indeed improving. As the third chart shows, manufacturing conditions in China also have improved, albeit only marginally. Nevertheless, this is a positive, since the world has feared that conditions in China are deteriorating. China's economy is probably growing at a 7% rate; although that is only modest by Chinese standards, it is still more than twice the growth rate of developed economies. A growing China is supportive of global growth in general.


The prices paid component of the ISM report shows neither inflation nor deflation concerns.


The employment sub-index was marginally positive, and still reflects a business climate that is lacking in confidence. Although business conditions are improving, things could be a whole lot better.


As I've noted dozens of times in the past several years, swap spreads are good leading indicators of economic health; a healthy financial system is, after all, a necessary condition for a healthy economy. As the above chart shows, Eurozone swap spreads have indeed been excellent leading indicators of Eurozone manufacturing activity. Swap spreads are still somewhat elevated in the Eurozone, but they are declining on the margin, suggesting that manufacturing activity is likely to continue to improve.


Finally, the new orders sub-index was quite strong in August, and that augurs well for manufacturing activity in the coming months.

It is ironic—but symptomatic of a market that is still lacking in optimism—that risk assets should be struggling of late despite the relatively widespread improvement in the global growth outlook. The logic driving the market these days seems to be that better-than-expected news means higher-than-expected interest rates, and that in turn means that growth will be worse than expected in the future. I don't buy it (I think higher interest rates in today's environment imply stronger growth in the future), but that seems to be the current mood of the market: good news is somehow bad news.

Corporate profits continue strong

Today's first revision to Q2/13 GDP growth (which was revised up from 1.7% to 2.5%) brought with it the first look at corporate profits for the quarter, and the news was excellent. After-tax corporate profits rose to a new all-time of $1.68 trillion, up 7% from a year ago. This is actually within the realm of astonishing if one considers that this measure of profits (arguably the best measure of "true" or economic profits) has increased 218% since the first quarter of 2000 (when the S&P 500 hit its peak for the year), yet the S&P 500 is up only 7.5% since then. With the benefit of hindsight we know that stocks were grievously overvalued in 2000—but that can hardly be the case today.


Note how strong corporate profits have been since 2000, despite the current sluggish recovery (actually the weakest recovery in history).


The chart above provides a long-term perspective on how corporate profits behave relative to nominal GDP.


Relative to nominal GDP, corporate profits today are just shy of an all-time high.


Using the methodology explained in my post last week, the chart above shows the PE ratio of the stock market using the NIPA measure of after-tax corporate profits instead of trailing 12-month earnings. This suggests that stocks currently are trading about 25% below their historical average PE. This is also astonishing since PE ratios tend to track interest rates inversely (i.e., PE ratios tend to be low when market interest rates are high, and vice versa). 10-yr Treasury yields are still extremely low from an historical perspective, yet PE ratios are quite low from the same perspective. This suggests that the market has hardly any confidence in the ability of corporate profits to maintain current levels. Instead, it seems like the market is priced to the expectation that corporate profits will "mean revert" to their long-term average of 6-6.5% of GDP.


But as I've argued before, it is not necessarily the case that corporate profits have to, or are likely to, revert to some historical mean relative to GDP. U.S. corporations are increasingly operating in a rapidly-expanding global economy and marketplace. As the chart above suggests, corporate profits relative to global GDP are still fairly close to their long-term average. Thus there may be little reason to think that profits need to decline significantly or that they are at unsustainably high levels today.


NIPA profits and reported earnings tend to track each other over time, with NIPA profits tending to lead trailing earnings. This suggests that reported earnings are likely to continue to grow.

At the very least, the news on corporate profits provides solid support to the current level of equity valuations. Viewed from an optimistic perspective, stocks would appear to have lots more upside potential and could be considered significantly undervalued.

How scary is Syria?

The Obama administration has been busy preparing the world for a likely and imminent attack (most likely via drones and/or cruise missiles) against Syria in retaliation for Assad's use of chemical weapons on his people. Markets are nervous.

Things could certainly get worse, if, for example, Iran carries out its threat to attack Israel in retaliation for a U.S. attack against Syria. But for now, let's let key market-based indicators tell us how scary the current situation is:


The Vix index of implied equity volatility has jumped to almost 17, its fourth-highest level this year. Earlier this month it sat at a relatively tranquil 12.


But from a multi-year perspective, today's jump barely registers.


Comparing the Vix Index to the 10-yr Treasury yield shows the current threat to be more substantial than just looking at the Vix in isolation. That's because 10-yr Treasury yields are still quite low from an historical perspective—which is symptomatic of a pretty weak economic outlook. Markets are nervous and the economy is weak, so that is more threatening than if the market were equally nervous but the economy were stronger. Still, the current Vix/10-yr ratio pales in comparison to the level registered during other major events in the past two decades.


The chart above shows Bloomberg's calculation of the PE ratio of the S&P 500. It's down today because everyone is nervous, but it's only a bit less than its long-term average of 16.6. That's neither over- nor significantly under-valued.

On balance, it would appear that the market today is saying that while the Syria issue is certainly something to worry about, it is not likely to have much of an impact on the economy.

We'll soon know if the market has correctly estimated the gravity of the Syria situation.

Housing recovery slows down



It's nice to see housing prices clearly on the rise, as shown in the chart above. It's about time, considering that housing has suffered through a four-year consolidation after three years of a terrifying decline. Housing starts collapsed, falling by more than 75% from early 2006 through 2009. Dramatically lower prices and an almost-complete halt to new construction were necessary to "fix" the oversupply of homes, and enough time has now passed to think that the process of recovery is finally underway.


But as the chart above shows, the pace of improvement is slowing. The chart shows nonseasonally adjusted prices for 2011 (red), 2012 (orange) and 2013 (white). Prices this year are not following the typical seasonal pattern we've seen in other years—there has been some weakness of late (April and May). This has probably continued, since we know that new mortgage applications have dropped a little over 10% in the past two months, mainly in response to a sharp increase in mortgage rates. It's going to take several months for the market to adjust to the new reality of higher interest rates.


On an inflation-adjusted basis, the recent rise in home prices has been only slightly more than necessary to make up for the past several years' worth of inflation. We're seeing a recovery in nominal prices, but only a modest rise in real prices from the nominal lows of 2009. I doubt we're going to see any actual weakness in the housing market, but the recovery has lost some of its steam, so improvement in the months to come will likely be much less exciting.

20 optimistic charts

I continue to believe that the market is dominated by pessimism rather than optimism. Or, if you will, that there is a shortage of optimism.

What follows are some 20 or so charts, in random order, which highlight optimistic developments in the economy and financial markets which I believe are underappreciated. They paint a picture of an economy that is stronger and more durable than the skeptics seem to believe. There's still plenty of room for improvement, to be sure, but there are few if any signs of deterioration.


Banks have increased their lending to small and medium-sized businesses by almost $400 billion in less than 3 years. This reflects increasing optimism on the part of banks (who are more willing to lend) and on the part of businesses (who are more willing to borrow). There are undoubtedly many businesses that have been unable to obtain loans for worthwhile projects, but their number is definitely declining on the margin. One of the key factors holding the economy back in recent years is a lack of confidence; banks have been reluctant to lend, and businesses have been reluctant to borrow. This is all symptomatic of the deleveraging that has been the national pastime for most of the current recovery but which is slowly fading away.



Consumers have also been working to deleverage, and it shows in the three charts above. Delinquency rates on credit cards and consumer loans in general have fallen to the lowest level in recent history, while credit card loan chargeoff rates have plunged to levels rarely seen in the past. Households' financial burdens (monthly payments as a % of disposable income) have fallen to their lowest level in many decades. Consumers on average are in much better financial health these days than they have been for a long time.


Credit spreads are excellent indicators of the health of corporate balance sheets and cash flow. Spreads today are very near their post-recession lows, which marks significant progress from the terrifying heights of the past recession. But spreads are still substantially higher than they have been at their previous lows. We've made great progress, but there is still room for improvement. It's worth noting that even with the current scare over the approaching "tapering" of QE, credit markets reflect absolutely no increase in systemic risk. Investors and analysts may be spooked by tapering, but the bond market is behaving as though it is going to be a non-event. 


The number of people receiving unemployment insurance has been declining steadily and significantly for over four years. There are 1.15 million fewer people "on the dole" today than there were a year ago, and that's a sizable reduction of over 20%. This is creating healthier incentives in the workforce, since it means many of the unemployed have a stronger incentive today to find and accept a job.





Mortgage rates are up sharply in the past few months, but they are still extraordinarily low from an historical perspective. While this raises the bar for new homebuyers, most are still in good shape to qualify, as the second of the above charts shows. A typical family earning a median income today still has about 66% more income than needed to qualify for a conventional loan for a median-priced house.


The above chart shows Bloomberg's Financial Conditions Index, a composite of a variety of key indicators of financial market health (e.g., implied volatility, general liquidity conditions, credit spreads). This index is now at a new high. Healthy financial markets are necessary for a healthy economy, but not sufficient, of course. We are still lacking in the confidence department, and government is still placing excessive regulatory and tax burdens on the economy. That's terribly unfortunate, but having healthy financial fundamentals does mean that the right combination of growth-oriented policies could unleash a new wave of economic growth.




Several months ago, I noted that one of the biggest changes on the margin was the rise in real yields. That's still the case today, and the above three charts help explain why. The big rise in real yields has tracked closely with the decline in gold prices (see the first of the three charts above), and that tells me that the market's appetite for "safe assets" has declined. Gold is the classic refuge from geopolitical and monetary uncertainty, and its decline tells us that the world is worried less about the possibility of a Fed-induced hyperinflation. The measure of the decline in real yields I've used is 5-yr TIPS, because they are another type of "safe asset": default-free, relatively short-term in nature, and immune to inflation. Rising real yields are the flip side of declining demand for TIPS. A decline in the demand for safe assets mirrors an increase in the world's confidence, and that bodes well for future growth.

As the second chart above shows, real yields have a strong tendency to inversely track the earnings yield on stocks. Very low real yields and very high earnings yields are symptomatic of a market that is deeply pessimistic about the prospects for economic growth and corporate profits. The recent reversal thus marks a key improvement in the market's outlook for the future.

The third chart above shows how real yields tend to track the economy's growth rate. Very high real yields are typically found at times when economic growth is very strong, and low real yields are symptomatic of weak growth. The recent rise in real yields means the market is now somewhat less pessimistic about the future.



The world still agonizes over U.S. budget deficits, but the above charts document the huge improvement there has been in the just the past few years on this front. Most of the improvement has come from stable and even declining levels of federal spending, since that shrinks the burden of government and gives the private sector more breathing room. Strong growth in revenues has also contributed, but that is more symptomatic of an improving economy (e.g., more jobs, higher incomes, higher profits) than it is of higher tax rates. It all adds up to a huge reduction in the burden of the deficit, from a high of over 10% of GDP to the current level of just over 4%. This is very positive for the future, since it dramatically reduces the likelihood of the need for higher tax rates and even opens up the possibility of tax rate reductions.


Swap spreads are critically important and sensitive indicators of systemic risk. Currently below 20 bps, they signal very healthy financial market conditions and an almost complete absence of systemic risk.


Architectural billings have been increasing for most of the past year, a clear sign that the economy has recovered enough confidence to once again begin major construction projects. The improvement here is still in its infancy, however, but that does nothing to take away from the importance of this development.


Mortgage rates typically follow the yield on 10-yr Treasuries. The spread between the two averages about 80-100 bps, and that's pretty close to where we are today. Mortgage rates have jumped along with Treasury yields, but both are still very low from an historical perspective. The recent rise in rates is very unlikely to snuff out economic growth; it's much more likely to be symptomatic of the economy's improving (though still relatively weak) economic growth fundamentals. Interest rates tend to be driven by economic activity, not the other way around. Three cheers for higher rates!


Since late last year, Japan's monetary policymakers have been making a concerted effort to reverse the deflationary forces that have plagued its economy for decades. This shows up first in a substantial devaluation of the yen. That this is a positive development shows up in the sustained rise in equity prices which has accompanied a weaker yen. What's good for Japan is going to be good for the whole world.



Thanks to new fracking technology, U.S. production of natural gas has soared and the price of natural gas has plunged, both in nominal terms and relative to the cost of oil. Since natural gas is not readily exportable, this has given energy-intensive U.S. industry a key low-cost advantage relative to overseas producers that is likely to endure for at least the next few years.

Contrary to what so many bears seem to believe, I think these charts provide convincing evidence of an economy that is gradually improving. There is nothing fictitious about the data here, and most of the charts use market-based data that is not subject to revision or faulty seasonal adjustment factors. This is real.