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Obama in Monday’s FT Interview: World Needs to Promote ‘Unity’

PAPER: In comments that appear to diverge from recent remarks by Ms Merkel, who has all but ruled out more deficit spending in Germany, Mr Obama said: “With respect to the stimulus, there is going to be an accord that G20 countries will do what is necessary to promote trade and growth.”

He added: “The most important task for all of us is to deliver a strong message of unity in the face of crisis…”

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Filed under: Media, Obama, , , , , , , , , , , , , , , , , , , , ,

19,000 Credit Card Details Accessible by GOOGLE

PAPER: The credit card details of up to 19,000 British shoppers were published on the internet – where they could be found using a simple search on Google. The list, obtained by the Mail, includes the names, home addresses and full card details of thousands of Visa, Mastercard and American Express customers…

Filed under: Crime, World, , , , , , , , , , , , , , , , , , , ,

Economy Shrinks 6.3%, Worst Since 1982

WIRE: The U.S. economy shrank at a 6.3 percent annual pace in the fourth quarter, the worst performance since 1982, in what may be the depths of the recession.

The contraction in gross domestic product was larger than the previously estimated 6.2 percent drop, the Commerce Department said today in Washington. A report from the Labor Department showed the number of people collecting jobless benefit this month climbed to a record 5.56 million…

Filed under: Economics, , , , , , , , , , , , , ,

Obama Admin. Set to Propose Largest Expansion of Government Tomorrow

REGULATE

PAPER: The Obama administration’s plan, described by several sources, would extend federal regulation for the first time to all trading in financial derivatives and to companies including large hedge funds and major insurers such as American International Group. The administration also will seek to impose uniform standards on all large financial firms, including banks, an unprecedented step that would place significant limits on the scope and risk of their activities…

Filed under: Economics, Politics, , , , , , , , , , , , , , , , , , , , ,

New Zealand Economy Will Contract 2% in 2009, Says IMF

In a report filed by the International Monetary Fund (IMF) the Washington-based body said that the New Zealand economy will contract by 2.0% this year. “The near-term outlook is weak,” they mentioned. “Households are constrained by high debt levels, falling house and equity prices and uncertain employment prospects,” they added.

The startling words come after Bill English, New Zealand’s Minister of Finance, said that the current account gap is “uncomfortable large”. Indeed, the actual figure for the current account balance in the final quarter of 2008 came in at -4.026, surprisingly better than in the three-month period prior. Despite what would look to be as a positive sign, the deficit-GDP ratio actually became weaker, coming in at -8.9% from -8.6% the period prior.

Claims of weakness in the country are legitimate. Now, in its fifth straight quarter of contraction, the New Zealand economy has shed thousands of job. In the final three months of 2008, their unemployment rate jumped 0.4 percentage points to 4.6%, the highest level since 2003. Their Treasury department predicts that it will get worse. They have forecast that by early 2010 the jobless rate may jump to an 11-year high of 7.2%.

One “key vulnerably” is the country’s substantial level of short-term financing from abroad. With the central bank slashing rates by 5.25% since July, foreigners have been continuously disincentivized to invest in these debts with maturities of less than one year. The IMF may have been too cautious here. Albeit this may seem to be a risk on an absolute basis, the fact that short-term rates abroad are much lower than those in New Zealand may actually direct a greater amount of these foreign cash flows towards this South-Pacific economy.

Now, since Mid-March the New Zealand Dollar has fallen by as much as 40.4% against it’s U.S. counterpart. Generally, such a bearish movle would lead investors in domestically denominated short-term debt to flock away in hysteria. But what if their was an expectation that the currency would begin to rise in value? Under such a case, one would expect exchange rate risk to be of less of concern.

We are seeing such a pattern now. From the low on Mar. 3rd, the currency has rebounded 17.95%. This may be due to the inflationary fears that the Federal Reserve, with its plan to buy $1.2 trillion in treasury and agency/mortgage securities, has sparked among global investors. During this time we have also seen gold rally 7.43% and crude (West Texas Intermediate) break out of a range bound environment and rally 37% to as much as $54.18.

Historically we have seen a strong correlation between the New Zealand currency and commodities. A 180-day rolling correlation with the S&P Goldman Sachs Commodities Index shows that these two instruments have a correlation of .9688, a very substantial relationship.

Thus, if inflationary fears are correct (which the commodities markets seem to believe) then the New Zealand Dollar is likely to continue rising. Hence short-term financing from abroad may actually increase and not decrease.

– LG

Filed under: Global Economics, World, , , , , , , , , , , , , , , , , ,

House Democrats Slash $100 Billion from Obama’s $3.45 TRILLION Budget

PAPER: House budget leaders today unveiled a $3.45 trillion budget blueprint for fiscal 2010 that slices more than $100 billion from the spending plan President Obama proposed last month…

Filed under: Politics, , , , , , , , , , , , , , , , , ,

Geithner Open to China Using Non-Dollar as Reserve; Dollar Plummets

WIRE: Geithner was initially asked at a Council on Foreign Relations event in New York about proposals from People’s Bank of China Governor Zhou Xiaochuan for a new international reserve currency. He said “as I understand his proposal, it’s a proposal designed to increase the use of the IMF’s special drawing rights. And we’re actually quite open to that…”

geithner

Filed under: Global Economics, Politics, , , , , , , , , , , , , , , , , ,

Stocks Surge After Geithner Unveils Taxpayer Guaranteed Toxic-Asset Plan

US Session Key Developments

  • Treasury Announces $1 Trillion Toxic Asset Purchase Plan
  • S&P Surges 7.1%, Most Since Oct. 28, Biggest 10-Day Gain Since 1938
  • February Home Resales Rise 5.1%

Stocks Surge After Geithner Unveils Taxpayer Guaranteed Toxic-Asset Plan

Stocks surged 7.1% with the S&P 500 advancing by the most since Oct. 28 after U.S. Treasury Secretary Geithner’s toxic-asset plan jolted Wall Street. The sharp move ushered in the largest 10-day gain since 1938. Geithner’s plan will use $1 trillion to incentivize private investors to purchase many illiquid assets including mortgage securities and agency debt. The deal will employ 10% of this money to work as a taxpayer subsidy to many of these investors while also providing government guarantees in case the securities continue to falter. Not surpassingly, financials in the blue-chip index bulled-ahead 22.91%, marking a 50.1% advance in the sector over the last two weeks. JPMorgan and Wells Fargo performed the strongest gaining on average of 24% with Citigroup seeing its shares traded the most of any company in the index. But this rally may be short-lived. If the real economy continues to falter, the consumption habits of the public may continue to be dwarfed, disabling much wealth creation that would truly enlighten the banking sector.

Dow 30            7775.86                +497.48                  +6.84%
Financials in the blue-chip index rose surged 22.91%, led by JPMorgan’s 25% move. Industrials were the second-best performing sector with Caterpillar advancing 9.46%.

NASDAQ        1555.77                 +98.50                      +6.76%

Information Technology advanced 6.38% with leading names such as Microsoft and Cisco jumping 7.44% and 6.73%, respectively. Sun Microsystems was one of the few stocks that slipped, as investors took some of the profits earned from the IBM take-over news.

S&P 500         822.92                   +54.38                       +7.08%

Consumer Staples was the worst performing sector in the Standard and Poor’s index, managing to gain a still impressive 3.77%. Only seven stocks slipped on the day. Implied volatility on the index fell 2.66 points, or 5.8%.

Filed under: Stocks, , , , , , , , , , , , , , , , , ,

Sell Financial Stocks, Says Bank of America Analyst and Hedge Fund After Historic Rally

WIRE: “The history of bubbles shows quite well that financial sector consolidation is inevitable,” Bernstein, Bank of America’s chief investment strategist, wrote in a research note. “Financial stocks will be attractive when the government tries to speed up that inevitable process. However, to the contrary, the government continues to attempt to stymie that inevitable consolidation…”

WIRE: BlackRock Inc.’s global macro fund, the world’s second-best performer over two years among hedge funds that invest based on economic trends, is betting against this month’s equities rally and buying bonds as a recovery from the worst credit crisis since the Great Depression falters…

Filed under: Stocks, , , , , , , , , , , , , , , , , ,

ACORN Behind Protests at AIG Exec. Homes (Video)

PAPER: So why not pack a bus with community activists, invite a representative from every media organization in the free world and see the Fairfield County mansions of the “filthy rich and most recently infamous” — American International Group executives. After all, these are the people who packed their wallets with millions in taxpayer bailout bonuses for helping take their company and the U.S. economy down the tubes, organizers said.

And that’s exactly what the Working Families Party and ACORN did Saturday morning…

acornaig

Filed under: Politics, , , , , , , , , , , , , , , ,

Treasury Continues With $1 Trillion Government Fund, ‘Public Investment Corp.’

SOCIALIZED INVESTMENTS

Paper: The Treasury Department will unveil the next step in its financial rescue efforts tomorrow, announcing that it intends to create a government body, called the Public Investment Corp., to finance the purchase of as much as $1 trillion in soured loans and toxic assets from ailing banks, according to sources…

Chip Somodevilla/Bloomberg News
Chip Somodevilla/Bloomberg News

Obama’s $1 Trillion ‘Detox…’

Filed under: Economics, Politics, , , , , , , , , , , , , , , ,

The Economist: Barney Frank Doubts Federal Reserve’s Future Ability to Regulate Banks

U.S. Representative Barney Frank spoke to “The Economist” and said: “The Fed has taken a bit of a hit over this AIG issue…[the] political case for the Fed as systemic risk regulator is going to have to be rebuilt, re-examined.”


Filed under: Politics, , , , , , , , , , , , , , , ,

HOUSE PASSES 90% TAX ON AIG BONUSES

90% TAX

“Spurred on by a tidal wave of public anger over bonuses paid to executives of the foundering American International Group, the House voted 328 to 93 on Thursday to get back most of the money by levying a 90 percent tax on it…”

Chris Dodd Added Loopshole Allowing AIG Bonuses at the Request of Obama…

Filed under: Politics, , , , , , , , , , , , , , ,

At Least Obama is Recession Proof: Signed $500K Book Deal 5 Days Before Entering Office

“As he empathized with recession-weary Americans, President Obama arranged in the days just before he took office to secure a $500,000 advance for a children’s book project, a disclosure report shows.

“I don’t recall any sitting president entering into a book deal,” said campaign finance lawyer Jan Baran, former general counsel to the Republican National Committee. “They all have historically done that after they leave office…I recall the only ones who did sign book deals while living there were first ladies, and my recollection is they gave it to charity…”

Filed under: Obama, , , , , , , , , , , , , ,

Fannie to Pay Bonuses of Up To $611K to 4 Execs; Obama Received $105K Contributions

“Fannie Mae plans to pay retention bonuses of as much as $611,000 each to key executives this year as part of a plan to keep hundreds of employees from leaving the government-controlled company.

Rival mortgage finance company Freddie Mac is planning similar awards, but has not yet reported on which executives will benefit…”

Obama Received $105K From Fannie/Freddie…

Filed under: Economics, Politics, , , , , , , , , , , , ,

N.Z. Prime Minister Key Sees Nation Emerging Stronger After Tax Cuts

New Zealand Prime Minister John Key said that the nation’s economy will emerge from this recession much stronger. “I, for one, am confident that New Zealand can come out of this recession stronger than many other countries,” Key said. “These tough times could be a springboard for much better times ahead.”

Since reaching a high of 0.8213 in late Feb. 2008, the New Zealand Dollar has lost as much as 40.4% against its U.S. counterpart. But the Prime Minister has sees this as a positive shift. Indeed, “the exchange rate is acting as a buffer.” That is, “firms in some industries, including for example, sheep meat, venison, and even niche manufacturing, are getting better incomes as a result of the lower currency,” he added.

Australia’s neighbor has been in recession since the first quarter of 2008. It is likely that throughout the entire year, New Zealand’s economy shrank at least 0.3%. In that 12 month period, the unemployment rate rose from 3.4% to 4.6%. Since June the central bank has slashed the overnight cash rate by 525 basis points from 8.25%, the most of any nation throughout that period.

Key has taken steps to ‘think outside-of-the-box.’ His latest piece of legislation aims to give incentives for Australians to vacation in New Zealand. He has increased Tourism New Zealand’s budget by $2.5 million, an increase of more than 25% of its current $9 million budget. “The impact of the global recession is likely to result in New Zealand becoming a more attractive holiday option as Australian consumers tighten their spending,” Key said.

‘Trickle-down economics’ seems to be what Key really wishes to aim for. The Prime Minister plans to cut income taxes on Apr. 1. But such action won’t be adequate. His comprehensive plan also seeks to increase infrastructure investments. In an effort to enhance their transportation efficiency, he plans on increasing the petrol tax by NZ6 cents per liter. Other spending will include school building programs because he is ‘determined to build on these strengths so that when the world starts growing again, New Zealand can be running faster than the countries we compete with,” he said.

– LG

Filed under: Global Economics, World, , , , , , , , , , , , , , , , , ,

Stocks Rally After GE Chief Says They Can Withstand Loan Defaults

US Session Key Developments

  • General Electric Can Withstand Loan Defaults
  • Housing Data Surprises to the Upside
  • Alcoa Slashes Dividend 82% to 3 Cents Per Share

Stocks Rally After GE Chief Says They Can Withstand Loan Defaults

Wall Street celebrated St. Patrick today by finishing the trading session deep in the green after General Electric’s Chief Executive Officer Jeffrey Immelt stated that the company had sufficient reserves to withstand loan defaults. The comments come as a relief after the conglomerate slashed its dividend three weeks ago for the first time since the Great Depression. Surprising Housing and Producer Price data surprised to the upside, leaving traders in an upbeat mood. The prices that manufacturers pay for raw materials rose 0.2% when excluding food and energy with economists expecting the figure to rise by only 0.1%. With these costs now higher, taxable income deteriorates, which in turn allows companies to be more profitable. Sentiment continued its upward trend after housing starts unexpectedly rose 22% in February. As such, KB Home, the fourth-largest U.S. homebuilder advanced 9.3% along with Home Depot, which rose 6.7%. The blue chips could have performed a bit stronger had it not been for an 82% dividend slash from Alcoa, the largest U.S. aluminum maker and a member of the Dow 30, which brought its quarterly cash payout to only 3 cents per share. Nonetheless broader optimism led Financials to perform the strongest. JPMorgan, Wells Fargo, and Citigroup all moved ahead by more than 7.0%.


Dow 30            7395.70         +178.73           +2.48%

The Dow fell in the minutes after opening bell only to rally from thereon. It closed near the day’s high with only one sector finishing the day down, Materials. The sector’s performance is not of particular surprise considering Alcoa’s stock tanked 8.66% after it slashed its dividend by 82% to 3 cents per share.

NASDAQ         1462.11           +58.09              +4.14%
NASDAQ stocks performed the strongest with Information Technology rallying 4.25%. Apple rallied 4.44% after it had let developers preview a beta of the iPhone OS 3.0, which includes cut and paste features and automatic updates.

S&P 500          778.12            +24.23              +3.21%

S&P 500 stocks saw every sector in the index rally by at least 1.74% with Financials surging 6.58%. General Electric was one of the most active stocks, trading 22.74 million shares after its CEO announced that it had adequate capital reserves to withstand loan defaults. The VIX fear gauge couldn’t find enough momentum to fall below the 40 mark; nonetheless it dropped 6.7% to 40.80. Overall, 476 stocks rose with only 24 finishing the day down.

Filed under: Stocks, , , , , , , , , , , , , , , , , , ,

CHINA’S PREMIER WEN JIABAO ‘WORRIED’ ABOUT U.S. INVESTMENTS

CHINA ‘WORRIED’ ABOUT U.S. INVESTMENTS

In November, the Chinese government announced that it would be implementing a stimulus package worth $915 billion. Details of the plan were not so readily available and made it difficult for economists to estimate the impact that it would have on the global economy. Just recently, however, the former head of the nation’s statistic bureau stated that they would be removing export taxes on many industries hurt by the crisis.

Moments ago China’s Premier Wen Jiabao spoke at a news conference and offered greater insight into the government’s thinking. He stated that the communist government has prepared other measures in case of greater problems head. He also said that they had a “full arsenal” to stimulate the economy. Wen may have been taking a shot at the U.S. legislature, saying that China can “at any time…introduce new stimulus.” It has “reserved adequate ammunition” to do so.

In a startling note, he also mentioned that they are concerned over the security of its investments in the U.S. He then urged the U.S. government to “ensure the safety” of its American assets. “We have lent a huge amount of money to the United States” and that “of course we are concerned about the safety of our assets. To be honest, I am a little bit worried.”

On foreign exchange intervention, Wen seemed a bit defensive. He argued that that the Yuan appreciated against a wide-range of currencies, but that the currency’s upward swing has hurt its exports. He also reiterated their stance on diversifying the basket against which the Yuan is pegged to. “No country” can “pressure” them to appreciate or depreciate the currency.

– LG

Filed under: Global Economics, World, , , , , , , , , , , , , , ,

Stocks Have Biggest 3-Day Gain Since Nov. On Bank of America Profit Outlook

US Session Key Developments

  • Bank of America’s Chief Says Company Profitable First Two Months
  • Retail Sales Better Than Expected
  • General Electric Rating Cut to AA+

Stocks Have Biggest 3-Day Gain Since Nov. On Bank of America Profit Outlook

Stocks in the S&P 500 posted the largest 3-day gain since November with a 10.96% surge since Tuesday after Bank Of America Chief Executive Officer Ken Lewis followed the footsteps of his counterparts at Citigroup and JPMorgan. Indeed, Lewis announced that his bank was profitable in the first two months of the year to reporters after a speech given in Boston. The recent trend of CEO profit announcements has allowed Financials in the S&P to rise 33% on the week. General Electric added 13% after losing its AAA credit rating by less than expected. The conglomerate slashed its dividend for the first time since the 1930s two weeks ago in an effort to save the company billions of dollars so that it could prevent its own credit deterioration. Wal-Market advanced 3.1% after government Retail Sales estimated that purchases from such stores had done better than economists had anticipated. The figure for February fell -0.1% while forecasts called for a -0.5% decline.

Dow 30                     7170.06                 +239.66                    +3.46%
Financials pummeled through the remaining short-sellers, surging ahead 13.07%. Even the worst performing sector in the index, Technology, moved up 2.0%. JPMorgan saw 31.73 million shares traded to end the day up $2.80 or 13.73% at $22.30.

NASDAQ                  1426.10                  +54.46                        +3.97%
Technology stocks have become a smaller portion of index after being one of the worst performing sectors in composite. Nonetheless, the industry rallied 2.85% with Apple and Intel jumping about 4.0%.

S&P 500                  750.74                    +29.38                        +4.07%

The S&P 500 had its biggest 3-day again since November, rallying 10.96% since the surge began. Every sector in the index shared the sentiment with Financials rushing ahead 9.94%. Implied volatility on the index dropped 5.57% or 2.43 points to 41.18, leaving the fear gauge under 50 for the fifth straight trading session.

Filed under: Economics, Stocks, , , , , , , , , , , , , ,

Europe Refuses Additional Stimulus Measures

“European ministers said on Monday they had no plans to add to recent fiscal stimulus packages despite calls from the US for radical expansions in government action to boost ailing economies.

Meeting in Brussels, finance ministers from the countries in the eurozone said they wanted first to see the effect of stimulus packages that had been passed. Peer Steinbrück, the German finance minister, said: “We are not debating any additional measures.””

Filed under: Global Economics, World, , , , , , , , , , , , ,