News Posts

Obama Cancels Ozone Rules After Lobbying Push From Business

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Sept. 2 (Bloomberg) — President Barack Obama quashed proposed rules on ozone from the Environmental Protection Agency, agreeing with Republicans and industry to withdraw the costliest regulation being considered by the administration. Obama said he is seeking to reduce regulatory burdens as the economy recovers, and said the EPA would weigh tighter standards on ozone, which causes smog, in two years. “Ultimately, I did not support asking state and local governments to begin implementing a new standard that will soon be reconsidered,” Obama said today in a statement. The EPA’s proposed regulations for ground-level ozone would have revised rules issued … Read more

Banks Overwhelmed by Mortgage Refinancing After Job Cuts

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Sept. 2 (Bloomberg) — Mortgage rates near historic lows have sparked a refinancing boom that has U.S. lenders struggling to handle the surge. “There’s just so much volume,” said Kristin Wilson, a senior loan officer in Bloomington, Minnesota, for Fairway Independent Mortgage Corp., who has seen clients seeking lower rates climb to about half of her business from 20 percent a month ago. “We can’t just ramp up by hiring inexperienced people because they don’t know what they’re doing.” The lending logjam extends to the nation’s biggest banks, which fired thousands of mortgage workers after interest rates rose in November … Read more

Stocks plunge after US hiring dries up in August

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NEW YORK (AP) — Stocks tumbled Thursday after a dismal report on the job market renewed fears of another recession. No new jobs were created in the U.S. last month, the government said early Friday. It was the worst report in 11 months. The unemployment rate held steady at 9.1 percent. It has been above 9 percent in all but two months since May 2009. “It’s certainly ugly,” said Jeff Kleintop, chief market strategist at LPL Financial. Kleintop said the report didn’t change his view that the economy was headed for a stretch of weak economic growth, not a recession. … Read more

Achieving Growth in Europe

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Achieving Growth in Europe Eurozone manufacturing activity contracted for the first time in almost two years in August, underlining investor concerns about a deteriorating global growth picture. In a worrying sign for policymakers, the regional slowdown appeared to be spreading. German factories, which have supported growth in the bloc for some time, hit the brakes in August and France’s manufacturing sector contracted for the first time since July 2009. Speech by Jean-Claude Trichet, President of the ECB at the Jackson Hole Economic Symposium Panel: Setting priorities for long-term growth Jackson Hole, U.S.A., 27 August 2011 The title of our panel … Read more

White House sharply cuts growth forecast

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(Reuters) – President Barack Obama on Thursday sharply cut estimates for U.S. economic growth, underscoring the difficult challenge he faces in spurring a stronger recovery and creating more jobs. The president, who must curb high unemployment to improve his chances of winning re-election in 2012, will give a major speech on September 8 on how he plans to lift hiring and growth. “The economic projections make clear there is a real need in the short term to kick start economic growth and get on a sustained higher growth path,” White House budget chief Jack Lew told reporters on a conference … Read more

US Dollar to Come Under Pressure

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The United States has the least balanced maturity schedule of any major nation. Over 70 percent of its bonds mature within 5 years, compared with an average 49 percent for the 34 member countries in the OECD. The U.S. Treasury has succeeded in extending the average maturity of its debt to 62 months, out from less than 50 months in 2009. That process needs to continue. One sign that investors are more nervous about longer-dated bonds is that the yield gap between 10-year notes and 30-year bonds, currently the longest U.S. maturity, is trading at 137 basis points. This gap … Read more

S&P rates Subprime Mortgages higher than the USA

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S&P rates Subprime Mortgages higher than the USA MHP Standard & Poor’s gives a higher rating to securities backed by subprime home loans, the same type of investments that led to the worst financial crisis since the Great Depression, than it has assigned to the US government debt. S&P is poised to provide AAA grades to 59% of Springleaf Mortgage Loan Trust 2011-1, a set of bonds tied to $497-M lent to homeowners with below-average credit scores, and virtually no equity in their properties. New York-based S&P took away the US’s Top rank on August 5, saying Washington politics were … Read more

The Noise About a Gold Bubble

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Red’s POV on all of this Noise about a Gold Bubble Gold may be a bit over extended in, but it is not a place to make a Bearish call IMO. The Gold Bears had a shot the Gold price last week, when Gold put in a temporary Top at 1911 oz and began it healthy correction. It tapped 1709 three days later. That 10.5% fall did not drive the Gold Bulls away, the Gold players saw the dip as technical mark to start buying again, and Gold’s has rallied 7.3% off that low. And during the rebound the CME … Read more

Investors slash equities in August melt

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Reuters) – Global investors slashed their holdings of equities below 50 percent this month and piled into cash, reflecting what was lining up to be the worst August for world stocks since 1998. They also lifted exposure to bonds in North America, Britain and, to a lesser extent, the euro zone, where Germany is considered a safe haven. Reuters polls of 57 leading investment houses in the United States, Europe ex-UK, Japan and Britain showed the average stock holding in a balanced or model portfolio falling to 49.2 percent. It was the lowest since at least February 2009, when the … Read more

Global stocks at two-week high, rally may stall

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(Reuters) – Global shares edged up to their highest in nearly two weeks on Tuesday, but the rally looked to be running out of steam on the back of concerns over Europe’s debt troubles and U.S. growth. World stock markets, as measured by MSCI, were up 0.17 percent, but European markets were mixed, with Germany’s DAX index down half a percent and U.S. futures pointed to a weaker open for Wall Street. With big-ticket data like U.S. job numbers due later this week, many investors remain uncertain about a recovery in the world’s largest economy, leaving risk for a correction … Read more

Lehman to seek creditor vote on $65 billion payout

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(Reuters) – Lehman Brothers Holdings Inc will ask a bankruptcy judge on Tuesday to let creditors vote on its $65 billion payout plan, a key step toward ending the biggest bankruptcy in U.S. history. The investment bank, under Chapter 11 bankruptcy protection since September 2008, will present its plan outline at a hearing in U.S. Bankruptcy Court in Manhattan. If Judge James Peck deems the outline sufficient, creditors will vote on the plan on November 4. The plan would pay creditors an average of 20 cents on the dollar, with some groups receiving more, including derivatives creditors who would take … Read more

Strauss-Kahn meets with IMF

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Strauss-Kahn meets with IMF Chief and staff members The Washington-based International Monetary Fund (IMF) said Monday that its former boss Dominique Strauss-Kahn paid a visit to the Global lender and met with its Chief and staff members. He visited IMF headquarters Monday afternoon, and current IMF Managing Director Christine Lagarde met him prior to his meeting with Fund staff, an IMF spokesman said in a short statement. “These were private meetings, arranged at his request. We have no further comment to offer,” the statement said. IMF spokesman David Hawley said on August 25 at an IMF press conference that Mr. … Read more

Brazil raises primary surplus target

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Brazil raises primary surplus target Brazilian Finance Minister Guido Mantega said Monday that the government will raise the primary surplus target for Y 2011 to minimize the effects of the Global financial crisis. The surplus will be raised from 117.8 to 127.8-B Reais (US$73.6 to 79.9-B), representing some 3.3% of the nation’s GDP. In the 1st 7  months this year, Brazil’s primary surplus amounted to 92-B Reais (US$57.5-B). “We are taking precautions against a possible escalation of the crisis to prevent Brazil from suffering the same fate as the affected countries,” Mantega said. “We want Brazil to continue in a … Read more

Japan Unemployment Rate Rises as Noda Becomes Prime Minister

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Aug. 30 (Bloomberg) — Japan’s jobless rate rose for a second month and retail sales dropped, underscoring the challenge for incoming Prime Minister Yoshihiko Noda in securing Japan’s recovery from the March 11 earthquake. The unemployment rate rose to 4.7 percent in July as payrolls fell by 40,000 from a month earlier, the statistics bureau said today in Tokyo. Retail sales slid a seasonally adjusted 0.3 percent from June, a Trade Ministry report showed. Noda, who was elected premier by the lower house of parliament today, inherits a recovery under threat from an advancing yen and a global slowdown. A … Read more

Gross Says Look Elsewhere as U.S., Europe Face Recession

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Aug. 30 (Bloomberg) — The global economic crisis is leading to a possible “developed economy” recession in the U.S. and Europe, which may be hard to alleviate, according to Pacific Investment Management Co.’s Bill Gross. In this environment, the world’s biggest manager of bond funds favors investing in Australia, Mexico, Brazil and Canada, along with non-dollar currencies that have strong ties to the Asian continent, Gross, co-chief investment officer and founder of Pimco, reiterated. Although global equities are attractive because dividend yields in many cases are higher than bonds, they’re vulnerable to faltering growth, Gross wrote in a monthly investment … Read more

Central Bankers Urge Governments on Expansion

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  Central bankers gathered at an annual retreat in Jackson Hole, Wyoming, this weekend had a message for political leaders: monetary policy alone can’t keep the global expansion going. Federal Reserve Chairman Ben S. Bernanke urged adoption of “good, proactive housing policies” to reverse the depressed U.S. real estate market and warned lawmakers to avoid steps that may hurt short-term growth. Ewald Nowotny of the European Central Bank Governing Council said euro-area governments should expand the powers of their regional bailout fund. “Most of the economic policies that support robust economic growth in the long run are outside the province … Read more

Industries Prone To Bubbles and Why

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A bubble (sometimes called an asset bubble, financial bubble or investment bubble) exists when the market prices of assets in a particular class far exceed those assets’ true value. These inflated values are unstable and eventually fall dramatically. Dozens of bubbles have inflated and burst over the course of history. While some bubbles appear to be one-time events, certain industries have seen bubbles form repeatedly, with investors seemingly never learning from past mistakes. Let’s examine a few of these industries and what appears to make them bubble-prone. Precious Metals In times of economic turmoil, many investors view precious metals as … Read more

The Fed’s Toolkit Revealed

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The slowdown in US growth has raised speculation the US Federal Reserve may have to provide additional monetary support to the economy, and the Fed Chairman say they are monitoring the issues and standing by. With interest rates already effectively Zero and the Fed’s balance sheet at a record US$2.85-T, US central bank officials has not acted yet to stimulate economic activity further yet. Persistent unemployment and new turbulence in financial markets has added pressure on the Fed to do something. US Fed Chairman Ben Bernanke noted last week that the Fed is prepared to respond to possible further weakness. … Read more

Greek Banks to Merge

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ATHENS—Two of Greece’s largest lenders, Alpha Bank SA and EFG Eurobank Ergasias SA, Monday announced plans for an estimated €7 billion ($10.15 billion) tie-up that would create the country’s largest bank, in a bid to address mounting problems in the Greek banking sector. “I am confident that the new combined entity will act as an important agent for the economic development of the country,” Eurobank Chairman Efthymios Christodoulou said. “It is also well placed not only to withstand the current economic turbulence, but to create new opportunities and play a pivotal role in the future growth of the region.” According … Read more

Obama to Tap Krueger as Top Economist

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President Barack Obama on Monday plans to nominate Princeton University’s Alan Krueger to be chairman of the White House Council of Economic Advisers, a White House official said. If confirmed by the Senate, Mr. Krueger, a labor economist, is likely to provide a voice inside the administration for more-aggressive government action to bring down unemployment and, particularly, to address long-term joblessness. Mr. Krueger, 50 years old, returned to Princeton a year ago after serving as assistant Treasury secretary for economic policy during the first two years of the Obama administration—which means he has recently cleared the sometimes treacherous Senate confirmation … Read more

‘s Jackson Hole Fed Meeting Remarks

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For one weekend every year, the economic world turns its watchful eyes away from New York and Washington and to Jackson Hole, Wyo. This weekend, the Kansas City Federal Reserve will again host the annual Federal Reserve conference in the valley just outside Yellowstone National Park. Recent economic troubles have brought intense scrutiny to the meeting, and markets will be watching Fed Chairman Ben Bernanke’s Friday morning speech particularly closely for the barest hint of future policy moves. Full article available @: http://finance.yahoo.com/news/Markets-Await-Bernankes-usnews-3591226210.html?x=0&sec=topStories&pos=main&asset=&ccode=

Buffett’s Berkshire to Invest $5 Billion in Bank of America

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Aug. 25 (Bloomberg) — Warren Buffett’s Berkshire Hathaway Inc. agreed to invest $5 billion in Bank of America Corp., aiding a lender hobbled by costs tied to subprime mortgages. Buffett’s company will get a 6 percent dividend on his preferred stock investment and warrants to buy 700 million common shares about $7.14 each, according to a Business Wire statement today from Omaha, Nebraska-based Berkshire. –Editor: Dan Kraut   Full article available @: http://www.businessweek.com/news/2011-08-25/buffett-s-berkshire-to-invest-5-billion-in-bank-of-america.html

Treasuries Advance as Report Shows U.S. Jobless Claims Rose

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Aug. 25 (Bloomberg) — Treasuries rose as a government report showed initial jobless claims unexpectedly increased last week, fueling concern the economic recovery is slowing and stoking demand for U.S. debt. Treasuries snapped three days of decline speculation Federal Reserve Chairman Ben S. Bernanke may disappoint investors betting on a commitment to step up stimulus. European and Asian stocks rose a day before Bernanke’s remarks at a conference in Jackson Hole, Wyoming. Pre-auction trading indicates today’s $29 billion government offering of seven-year notes will produce a record low auction yield. “The Treasury market is reacting to the headline number being … Read more

VIX Falls as Sentiment Turns on Wall St

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TVIX, a measure of stock market volatility, fell 5% percent to 33. The VIX traded as high as 48 Aug. 8 after staying below 20 for much of the year. VIX is the ticker symbol for the Chicago Board Options Exchange Market Volatility Index, a popular measure of the implied volatility of S&P 500 index options. Often referred to as the fear index or the fear gauge, it represents one measure of the market’s expectation of stock market volatility over the next 30 day period. The VIX is quoted in percentage points and translates, roughly, to the expected movement in … Read more

‘s cuts Japan rating, blames politics

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(Reuters) – Moody’s Investors Service cut its rating on Japan’s government debt by one notch to Aa3 on Wednesday, blaming a build-up of debt since the 2009 global recession and revolving-door political leadership that has hampered effective economic strategies. Japan is preparing to elect its sixth leader in five years to replace unpopular Prime Minister Naoto Kan, under fire for his handling of the response to a March tsunami and subsequent radiation crisis at a crippled nuclear power plant. The downgrade, while not out of the blue, served as another reminder of the debt burdens that nearly all of the … Read more

Investors trade in tight range ahead of Bernanke speech

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(Reuters) – World stocksedged up and oil advanced on Wednesday as investors tried to position themselves ahead of a Federal Reserve Chairman Ben Bernanke’s key speech. The gains follows weeks of market turmoil, with disappointing U.S. economic news and escalating worries about the debt crisis in Europe hitting sentiment. Benchmark stock indexes are on track for their worst month since the fall of 2008, after the Lehman Brother fall. World stocks as measured by MSCI .MIWD00000PUS were up 0.1 percent on the day but were on track for a 10.3 percent year-to-date loss. The U.S. benchmark Standard & Poor’s 500 … Read more

Students Need ‘Bs’ to Keep Parents’ Cash Flowing, Fidelity Says – Bloomberg

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Students Need ‘Bs’ to Keep Parents’ Cash Flowing, Fidelity Says By Alexis Leondis Two-thirds of U.S. parents said they’ll only pay for their children’s college education if they maintain minimum grades of B, on average, according to a survey by Fidelity Investments. The average grade point parents will require to pay tuitions is 3.1 out of 4.0, or about a B, once their kids are in college, based on the survey of almost 2,400 families released today by the Boston-based mutual-fund company. Seventy-five percent of respondents said they don’t want to burden their children with college loans compared with 65 … Read more

FRBSF Economic Letter: Boomer Retirement: Headwinds for U.S. Equity Markets? (2011-26, 8/22/2011)

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Boomer Retirement: Headwinds for U.S. Equity Markets? By Zheng Liu and Mark M. Spiegel Historical data indicate a strong relationship between the age distribution of the U.S. population and stock market performance. A key demographic trend is the aging of the baby boom generation. As they reach retirement age, they are likely to shift from buying stocks to selling their equity holdings to finance retirement. Statistical models suggest that this shift could be a factor holding down equity valuations over the next two decades. via FRBSF Economic Letter: Boomer Retirement: Headwinds for U.S. Equity Markets? (2011-26, 8/22/2011).

Markets Rally Ahead of Fed News

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US shares add to gains on anticipation of Fed action US Stocks are rallying Tuesday, with the S&P 500 and the NAS up more than 2%, as buyers emerged before a highly anticipated address by US Federal Reserve Chairman Ben Bernanke later this week. Technology and other growth stocks drove much of the market’s gains, with the S&P Information Technology Index .GSPF up 2.4%. A weaker-than-expected reading of the US housing sector was the latest in a string of discouraging data that has raised expectations the US Fed will take measures to prop up the economy. New US single-family home … Read more

Obama Talks to Buffett About Economy

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President Barack Obama, preparing for a post-Labor Day speech with plans for stimulating the economy, talked with billionaire Warren Buffett about how to boost job creation and spur growth. “The president and Mr. Buffett discussed the overall outlook on the economy and the reaction to the headwinds we’ve experienced over the last couple of months,” said Josh Earnest, an administration spokesman. “They talked a little bit about some possible measures that would spur investment and increase economic growth and they also talked about some measures that could address the long-term fiscal situation in this country.” Obama placed the call yesterday … Read more