Friday Charts: Student Debt, the Almighty Dollar, Blame Europe and Beware of Insiders At Facebook
It’s Friday in the Wall Street Daily Nation!
For the newbies in the group, once a week I embrace the adage that a picture is worth a thousand words. And I select a handful of graphics to convey important economic or investment insights.
This week, I’m confirming the source of the next debt crisis (hint: it’s not a European nation), raising another objection to Facebook’s IPO, helping you shuck responsibility – a new American pastime – about the current stock market selloff and, finally, I’m (gasp!) defending the U.S. dollar.
So let’s get to it…
The Danger Lurks Within U.S. Borders
Forget subprime loans. Forget European government bonds. Those debt crises have already imploded.
Instead, we need to worry about the backpack full of debt that the average college student is carrying around. (Hat tip to my colleague, Martin Denholm. He warned about frightening student debt levels a long, long time ago.)
In 2011, student debt increased 64%. It now eclipses credit card and auto debt, according to data from the Federal Reserve Bank of New York.
Tick… tick… tick… The BOOM is coming!
When it does, maybe we’ll learn that debt is bad. But, sigh… probably not.
If the Getting is So Good…
Why are the insiders getting out of Facebook (Nasdaq: FB)?
I know I’ve written ad nauseam about Facebook’s IPO. But I have to share one more thing…
Look at how much of the shares offered in the IPO are coming from insiders. It eclipses the amount sold by insiders for other big internet/social media IPOs, including Amazon(Nasdaq: AMZN), Google (Nasdaq: GOOG), Groupon (Nasdaq: GRPN), LinkedIn (NYSE: LNKD), Yahoo! (Nasdaq: YHOO) and Zynga (Nasdaq: ZNGA).
That doesn’t compute.
Danger, Will Robinson!
I recommend you join insiders and run. Run very fast – and very far away – from Facebook’s IPO.
If You Want to Blame Something, Blame Europe
Personal responsibility isn’t a strong suit these days. So if you’re in dire need of someone or something to blame for the stock selloff that started on April 2, go with Europe.
A recent decile analysis by Bespoke Investment Group found that stocks with the most international sales exposure are getting clobbered. They’re down 11.1% since the April peak.
On the other hand, stocks that have no exposure to the troubled eurozone – they generate 100% of sales domestically – are faring much better. They’re down only 3.7%.
In case you’re wondering, the S&P 500 as a whole is down about 7% since the April top.
Dollar Haters Beware!
I’m running the risk of overwhelming you with patriotism today. But cut me a break. Memorial Day is only a few weeks away. Plus, it’s justified.
Not only are USA-only stocks faring much better right now, so is the almighty dollar.
In fact, the U.S. Dollar Index, which measures the greenback against a basket of six currencies, is up for 14 sessions in a row. Somebody call the Guinness World Records honchos, because that’s the longest rally since at least 1985.
It’s worth noting, too, that the U.S. Dollar Index is up almost 10% over the last year.
Wasn’t the U.S. dollar supposed to collapse and lose its reserve status? Just curious. I vaguely remember hearing that a few times in recent years.
I’m sure I’ve angered a few readers today. But spare me the vitriol. Instead, send me a well-informed and articulated response about why I’m wrong.
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Ahead of the tape,