Archive for April, 2009
Thursday, April 30th, 2009
At the risk of sounding like the black cloud in the room, I am amazed at what I am reading regarding yesterday’s Federal Reserve’s statement following its April Federal Open Markets Committee (FOMC) meeting.
We noted here yesterday how we were a little confused with the positive response to the poor Gross Domestic Product report showing back to back quarterly GDP declines of greater than 6% for the first time in more than 50 years.
Then yesterday afternoon the Fed released its statement. The Fed kept the target Fed Funds rate between zero and 0.25% and noted they would continue buying debt at the levels set at its previous meeting (some had expected/hoped they would increase purchases of Treasuries).
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Tags: Economic outlook, FOMC
Posted in Regulatory/actions, economy | No Comments »
Wednesday, April 29th, 2009
The Bureau of Economic Analysis released the advance first quarter Gross Domestic Product (GDP) report this morning, which showed a contraction in GDP of 6.1%. That is considerably worse than the expected decline of somewhere between 4.7% and 5.1%.
This was the worst performance by the economy in consecutive quarters in more than 50 years. Despite this the market rallied as numerous economists saw positive signs in the news. They referred to declining inventories and an increase in personal consumption expenditures of 2.2% in the first quarter as signs of hope. How that latter figure coincides with the 7.8% drop in purchases by U.S. residents of goods and services for the same period is unclear but suffice it to say, this was a bad number. See for yourself.
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Tags: Add new tag, economic crisis, GDP
Posted in economy | 1 Comment »
Monday, April 27th, 2009
While the long-term impact of the Swine Flu epidemic on the markets and trading is still to be determined, CME Group is taking necessary precautions on the matter. In response to the outbreak, CME Group put out the following statement: ”We have an established business continuity team that coordinates specific plans for a variety of scenarios, including a pandemic, across all of our departments and locations. We are distributing CDC information on the swine flu outbreak and other flu prevention tips to our employees and members.” CME Group had no further comment, but continues to monitor the situation closely, according to a spokesperson. U.S. stocks ended lower on Monday, with the Dow falling 0.6% to 8,025, according to Market Watch.
Tags: CME Group, Swine Flu
Posted in Markets | No Comments »
Thursday, April 23rd, 2009
Transparency is one of the basic tenets of capital markets. Publicly-traded companies have a legal obligation to disclose material facts about the value of their company. Unless the Federal Reserve and Treasury Department muzzle them, that is. The Wall Street Journal reported today that Bank of America chief executive Ken Lewis was prompted by Federal Reserve Chairman Ben Bernanke and then-Treasury Secretary Henry Paulson not to discuss the financial woes of Merrill Lynch as Bank of America negotiated its government-backed purchase of Merrill. (more…)
Tags: bailout, Bank of America, Ben Bernanke, Federal Reserve, Henry Paulson, Merrill Lynch
Posted in economy | No Comments »
Wednesday, April 22nd, 2009
Documents from New York University’s lawsuit against former GMAC non-executive Chairman Ezra Merkin and the hedge fund, Gabriel Capital LP, which Merkin is the general partner, were made public last week revealing that he was warned regarding the credibility of the returns from investments with Bernard Madoff. Merkin through Gabriel Capital invested $24 million of the NYU endowment with Madoff according to the New York Times.
I don’t know if the fact that the allegation about Merkin’s knowledge comes from a convicted felon detracts from the case or simply provides an added level of irony to this sordid episode but one thing is for sure, there will be many more lawsuits and there probably should be.
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Tags: Clawback, Madoff
Posted in General, Trader/Managed Funds | No Comments »
Thursday, April 16th, 2009
Major banks facing insolvency, rapid growth in unemployment, frozen credit markets, exploding government deficits; what else can happen? The University of Indiana news room put out the following headline: “Bedbugs are back.”
Apparently there has been an outbreak in the U.S. and globally of the reddish brown insects that attach themselves to mattresses and bite us in our sleep that we know only from the short poem our grandmothers may have said to us before we went to bed. According to the report bedbugs were nearly eradicated in the U.S. after World War II, but they have made a comeback, spread by increasing world travel.
Is there anything we can learn from this?
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Posted in General, economy | No Comments »
Tuesday, April 14th, 2009
The headline in today’s Financial Times was “Goldman push to repay US taxpayer.”
The story detailed how Goldman Sachs was planning to sell common stock to raise $5 billion to pay back the $10 billion in money it received through the TARP (Troubled Asset Relief Program) bailout. No where in the story did it talk about paying back the $12.9 billion it received from the bailout of AIG provided by US taxpayers.
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Tags: AIG, Federal Reserve, TARP
Posted in Regulatory/actions, economy | 5 Comments »
Tuesday, April 14th, 2009
Federal Reserve Chairman Ben Bernanke is providing some answers (sort of) about the current worldwide state of economic turmoil. Today USA Today published a conversation with Bernanke ahead of his speech on the economy at Moorehouse College.
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Tags: Ben Bernanke, economy, Federal Reserve
Posted in economy | 1 Comment »
Wednesday, April 8th, 2009
In today’s New York Times, Maureen Dowd explored the new real-life gold rush in California. With the economy approaching rock bottom, some are hoping to strike it rich panning for gold, just like in days of yore. Here’s an excerpt from her column:
With the dollar diminished and financial institutions in the doghouse, a hard nugget suddenly seems a safer bet than an ephemeral derivative. (Gold is trading at about $880 an ounce.) News reports are heralding a neo-Gold Rush from Modesto to the Mojave Desert, a revival in prospectors at California’s streambeds, spurred by the sputtering national economy, the state’s 10.5 percent unemployment rate leaving many with free time and the weighty price of gold.
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Tags: gold, New York Times
Posted in General, economy | 1 Comment »
Wednesday, April 8th, 2009
The Wall Street Journal reported on Wednesday that the Treasury Department is planning to extend Troubled Asset Relief Program (TARP) funds to the life insurance industry. According to the story insurers who own Federally chartered banks would qualify for the program.
The news caused the stock of numerous life insurance companies to rally sharply this morning. It is hard to see how that is a good thing. But as one commenter to a wire story citing the WSJ article noted, “Failure is the new success.”
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Tags: Fed, TARP, Treasury
Posted in Regulatory/actions, economy | No Comments »
