Latest Market Research And News On Gold Developments
December 22nd, 2009
- The number of homes in foreclosure topped one million for the first quarter ever, as delinquencies rose even among prime borrowers and nearly half of all holders of modified mortgages, whose monthly payments had been lowered, defaulted again. The depressing figures, released on Monday by the Office of Thrift Supervision and the Office of the Comptroller of the Currency, restate the difficulty facing the real-estate market going forward, as continuously high unemployment makes regular mortgage payment difficult for millions of homeowners.
- The Federal Bureau of Investigation is probing a computer-security breach targeting Citigroup Inc. that resulted in a theft of tens of millions of dollars by computer hackers who appear linked to a Russian cyber gang, according to government officials.
- Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 2.2 percent in the third quarter of 2009. GDP was revised down from the advance estimated of 3.5% to the preliminary estimate of 2.8%, and now to 2.2%. You have to wonder how the government could be off by 1.3%. Motor vehicle output added 1.45 percentage points to the third-quarter change in real GDP after adding 0.19 percentage point to the second-quarter change. What this means is that Cash for Clunkers was an even larger factor than previously understood. As it stands, by a basic calculation without motor vehicle output, third quarter GDP would have been only 0.75%.
Tags: Economic News, economic recovery
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December 21st, 2009
- Regulators on Friday shut down two big California banks, as well as banks in Alabama, Florida, Georgia, Michigan and Illinois, bringing to 140 the number of U.S. banks brought down this year by the weak economy and mounting loan defaults. The 140 bank failures are the most in a year since 1992 at the height of the savings-and-loan crisis. They have cost the government-backed deposit insurance fund — which has fallen into the red — more than $30 billion so far this year. The failures compare with 25 last year and three in 2007.
- The gap between yields on Treasuries and so-called TIPS due in 10 years, a measure of the outlook for consumer prices, closed above 2.25 percentage points four days last week, the longest stretch since August 2008. That’s the low end of the range in the five years before Lehman Brothers Holdings Inc. collapsed, and shows traders expect inflation, not deflation in coming months, said Jay Moskowitz, head of TIPS trading at CRT Capital Group LLC in Stamford, Connecticut.
- The economy is still flat at best. The Commerce Department reported seasonally adjusted November retail sales up 1.3% from October. However, if you apply the average seasonal adjustments that were used during the years 2006 and 2007, which account for a normal spike in November sales due to the holiday shopping season, retail sales were actually down 1.3% in November.
- Former Federal Reserve Chairman Alan Greenspan said in prepared testimony the threat to U.S. fiscal stability is larger than ever. Averting a situation where the U.S. struggles to finance unprecedented budget deficits “is more urgent than at any time in our history,” he said in testimony Thursday before the Senate Committee on Homeland Security and Governmental Affairs.
- Zhu Min, Deputy Governor of the Chinese Central Bank, issued comments at an economic forum in Beijing yesterday in which he stated that the U.S. dollar is set up to go lower and that foreign buyers will become a lot more reluctant to buy more U.S. Treasury bonds: “When the U.S. has to fund its deficit through the combination of issuing more Treasuries and printing more dollars, it is inevitable that the dollar will continue to weaken.”
Tags: Economic News, economic recovery, global economic recovery
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December 16th, 2009
- The federal government decided to give up billions of dollars this week when the IRS issued an exception to its tax rules allowing Citigroup (and a handful of other companies partially owned by the federal government) to hold on to billions of dollars in tax breaks that would otherwise lose value when the government sells its shares to private investors. The IRS has changed several rules to reduce tax burdens on financial companies during the economic crisis. Officials said the ruling will benefit taxpayers because the public’s shares in Citigroup will be more valuable and the company will be able to pay the government back on time. “The government is consciously forfeiting future tax revenue. It’s another form of assistance, maybe not as obvious as direct assistance but certainly another form,” an expert on tax accounting said.
- The Arab states of the Gulf region have agreed to launch a single currency modeled on the euro, hoping to blaze a trail towards a pan-Arab monetary union. The move will give the hyper-rich club of oil exporters a petro-currency of their own, greatly increasing their influence in the global exchange and capital markets and potentially displacing the US dollar as the pricing currency for oil contracts.
Tags: Economic News
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November 23rd, 2009
- With the national debt now topping $12 trillion, the White House estimates that the government’s tab for servicing the debt will exceed $700 billion a year in 2019, up from $202 billion this year, even if annual budget deficits shrink drastically. In concrete terms, an additional $500 billion a year in interest expense would total more than the combined federal budgets this year for education, energy, homeland security and the wars in Iraq and Afghanistan.
- St. Louis Fed member Bullard said over the weekend that he favors extending the Fed’s program of purchasing mortgage-backed securities beyond the 1st Q next year. This adds many more months to the low rates for an ‘extended period of time.’ His comments have pummeled the US Greenback, and as the dollar fell, stock futures soared
Tags: dollar demise, dollar fall, Dollar News, hedge against declining dollar, interest expense, mortgage-backed securities, national debt, weak dollar
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November 17th, 2009
- GMAC CEO Alvaro de Molina was asked to resign by the board after only 19 months at the helm. GMAC had been preparing a request for additional bailout funds from the Treasury.
- General Motors posted a $1.5B loss for Q3, but announced it would repay $6.7B of its $50B government bailout, at the rate of $1B per quarter.
- Bernanke signaled yesterday that the ‘extended’ low interest rate period may become longer as jobless rates rises.
Tags: bernanke, General Motors, GMAC
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November 13th, 2009
• The Treasury is confident Congress will raise the U.S. debt limit by year-end, and not allow a showdown similar to one that shuttered parts of the government in 1995. Sources say the White House is looking for a $1-1.5T increase beyond its current $12.1T limit. The request is higher than a proposed increase already passed in the House, but would get the government through the November 2010 midterm congressional elections without needing another increase. Geithner has repeatedly stressed the need to bring deficits down to sustainable levels, but in the short-term he’s more worried about the need to keep up spending until unemployment recedes.
• The FDIC’s board approved Thursday $45B of bank premium prepayments that it needs after its deposit insurance fund slipped into a deficit at the end of Q3. The prepayments – which equate to three years of dues – will satisfy the fund’s “need for liquidity without imposing undue burden on the industry,” FDIC Chairman Sheila Bair said. A surge in failures – 120 so far this year – has pushed the industry-supported fund into a deficit for the first time since 1991.
Tags: Economic News, economic recovery, economy, FDIC
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November 9th, 2009
- United Commercial Bank, a big San Francisco bank with branches in China, was closed by state regulators on Friday and its banking operations were acquired by East West Bancorp Inc, also active in both nations. United Commercial Bank, with assets of $11.2 billion, was the 120th U.S. bank to fail this year. Regulators closed four other banks on Friday, in Georgia, Michigan, Missouri and Minnesota. Failures already were the highest since 1992.
- G-20 leaders said it’s too early to withdraw global stimulus efforts despite signs that a global economic recovery is underway. “Economic and financial conditions have improved following our coordinated response to the crisis,” officials said, following a two-day gathering in St. Andrews. “However, the recovery is uneven and remains dependent on policy support, and high unemployment is a major concern. To restore the global economic and financial system to health, we agree to maintain support for the recovery until it is assured.”
- Market expectations for inflation in the US and UK have reached their highest levels since late last. The developments reflect fears that a prolonged period of low overnight rates will spark higher inflation. Last week, the Federal Reserve, Bank of England and European Central Bank indicated that interest rates would remain very low for months to come and played down the risks of inflation.
Tags: Bank of England, European Central Bank, Federal Reserve, G20, United Commercial Bank
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October 29th, 2009
- In an effort to continue to prop up the housing market, which has not done well at all even with support, the government will likely continue to give first time home buyers an $8,000 credit. While buyers who have lived in their house for five years will also be able to receive a $6,500 credit if they buy a new house. No matter what the undesirable cost to the U.S. taxpayer and financial system are with this program, the government is doing everything possible to make the housing market. Imagine what would happen if they were not involved.
- One by one, countries are taking steps to un-dollarize their economy. The latest is Turkey. Turkey is switching to national currencies in trade with Iran and China, ending dependence on the U.S.
- Thanks to cash for clunkers and a huge increase in government spending GDP for the 3rd quarter was up 3.5%.
Tags: cash for clunkers, housing credit, U.S. dollar, U.S. Dollar News
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October 23rd, 2009
- Pay czar Kenneth Feinberg outlined much-awaited compensation rules for seven TARP recipient firms; top executives at firms such as Citigroup, AIG and Bank of America will have a pay cap of $500K – for many a 90%-plus reduction. Also, rather than cash, the rules require that the majority of salaries be paid in stock held for the long-term.
- While Feinberg was busy administering to TARP recipient firms, the Fed proposed a framework to crack down on pay packages that encourage bankers to take excessive risks by subjecting executives, traders and dealmakers’ compensation to regulatory scrutiny. Instead of pay limits, the Fed’s plan is to monitor pay practices at the nation’s 28 biggest institutions, making sure compensation structures reward executives for long-term performance and discourage excessive risk-taking.
- The Fed will be in no rush to withdraw fiscal stimulus, Chicago Fed president Charles Evans said yesterday, warning the recovery “is going to be very unsatisfactory in 2010.”
- Fears of inflation and large U.S. budget deficits drove the dollar on Wednesday to its weakest level since August 2008 and helped push oil prices to their highest in more than a year. The euro rose above $1.50, while crude oil prices climbed over $81 a barrel in trading on the New York Mercantile Exchange.
Tags: euro, inflation, oil, TARP, U.S. budget deficit
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October 22nd, 2009
- The U.S. could lose its AAA rating if it fails to reduce its deficit over the next 3-4 years, Moody’s says. Steven Hess, Moody’s lead analyst for the U.S., acknowledges reducing the gap won’t be easy: “Raising taxes is never popular and difficult politically, so we have to see if the government can do that or cut expenditures.”
- The number of initial claims in the week ending Oct. 17 rose 11,000 to 531,000. It’s the highest level since the week ended Sept. 26.
- The Obama administration will soon order the nation’s biggest bailed-out companies to drastically cut the pay packages of 175 top executives. Kenneth Feinberg, who was named the White House’s pay czar in June, will demand that each of the seven largest bailout recipients lower the total compensation for their top 25 highest paid employees by 50%, on average. Under the plan, which is expected to be officially released by the Treasury Department next week, annual salaries for executives at those seven firms are expected to fall 90%, on average.
Tags: Economic News, executive pay, Moody, Moody's
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