Bloomberg:
- Fannie Mae Was Felled by Flawed Business Model, Regulators Say. Fannie Mae, the government-backed mortgage company under conservatorship, was toppled by conflict between its mission to foster homeownership and profit demand it faced as a publicly traded company, former regulators said. Political support for Fannie Mae and Freddie Mac, the biggest sources of U.S. home-loan funding, helped thwart efforts to reform the two companies before losses forced the government takeover in September 2008, Armando Falcon Jr. and James Lockhart said in remarks prepared for a Financial Crisis Inquiry Commission hearing in Washington today. The public-private structure bred “greed, excessive risk taking and abuse,” said Falcon, who oversaw the lenders from 1999 to 2005 as director of the Office of Federal Housing Enterprise Oversight. “The companies were not unwitting victims of an economic down cycle or flawed products and services. Their failure was deeply rooted in a culture of arrogance,” he said.
- Greek Bonds Climb, Bunds Decline on Bets Greece Gets Bailout. Greek bonds rose, with two-year notes snapping a seven-day decline, on speculation the nation may get a rescue package to assist its struggle to finance the region’s biggest deficit. The securities stayed higher even after Fitch Ratings cut the nation’s credit ranking two levels to BBB-, its lowest investment-grade ranking and less than Standard & Poor’s and Moody’s Investors Service ratings. A support plan for Greece has been agreed upon and the European Union is “ready to activate” it at any moment, French President Nicolas Sarkozy told reporters today in Paris. German bonds dropped. “There’s talk of a possible agreement and this is the main reason Greece is tightening,” said Luca Cazzulani, a fixed- income strategist at UniCredit SpA in Milan. “Whether this will turn out to be something concrete and reliable is something completely different.” The yield premium that investors demand to hold 10-year Greek debt instead of bunds fell 29 basis points to 398 basis points.
- Oil, Gasoline Decline on Signals That Fuel Supplies Will Climb. Crude oil fell and gasoline declined for a fourth day on speculation that U.S. stockpiles of the fuel will surge as refineries bolster processing rates. U.S. plants operated at 84.5 percent of capacity last week, the highest level since October, according to an Energy Department report on April 7. “Prices moved higher on expectations that economic growth will continue and demand is going to increase,” said Chip Hodge, who oversees a $9 billion natural-resource bond portfolio as senior managing director at MFC Global Investment Management in Boston. “Inventory levels are still robust. If demand doesn’t pick up, oil is going to drop.” The U.S. Energy Department reported on April 7 that supplies of crude oil rose 1.98 million barrels to 356.2 million last week, leaving stockpiles 7.1 percent higher than the five- year average for the period. It was the 10th consecutive gain, the longest stretch of weekly increases since late 2004. “There’s no shortage of supply, and demand isn’t that strong,” said Paul M. Mecray III, a managing director at Tower Bridge Advisors, an investment adviser in West Conshohocken, Pennsylvania.
- Deere(DE) Equipment Shortage Prompts Kansas Farmer to Buy Dragotec. Deere’s focus on becoming a build-to-order company has helped bolster prices and profit, even as some dealers say they are losing sales. Deere shrank its inventory 28 percent from a year earlier to $2.75 billion on Jan. 31. Inventory as a percentage of sales in the previous 12 months was the lowest of 15 farm and construction equipment makers including Agco Corp.(AGCO) and Caterpillar Inc.(CAT), according to the most recent filings. “Deere is playing things very close to the chest,” said Larry Southard, co-owner of a dealership with three locations in central Iowa that has sold Deere products for 50 years. “It means I am losing market share. I suspect we can lose at least a half a dozen deals a month.” His dealerships’ sales might be 10 percent to 20 percent higher this year if they had the inventory to meet customer demand and products were shipped more quickly, Southard said.
- Silicon Valley Plots TV Takeover as Web Connections Become Norm. After 15 years of trying, Silicon Valley is getting ready to take over your television. Most TV sets for sale by 2013 will be able to connect to the Internet right out of the box, setting the stage for companies such as Google Inc.(GOOG), Yahoo! Inc.(YHOO) and Intel Corp.(INTC), to make televisions a lot more like computers and smartphones.
- Ford(F) Uses New Profits to Chase GM, Toyota in Emerging Markets. Ford Motor Co., profitable last year for the first time since 2005, is stepping up spending in fast- growing markets in South America and South Africa to help catch up to General Motors Co. and Toyota Motor Corp.
Wall Street Journal:
- Big Banks Mask Risk Levels. Major banks have masked their risk levels in the past five quarters by temporarily lowering their debt just before reporting it to the public, according to data from the Federal Reserve Bank of New York. A group of 18 banks—which includes Goldman Sachs Group Inc.(GS), Morgan Stanley(MS), J.P. Morgan Chase & Co.(JPM), Bank of America Corp.(BAC) and Citigroup Inc.(C)—understated the debt levels used to fund securities trades by lowering them an average of 42% at the end of each of the past five quarterly periods, the data show. The banks, which publicly release debt data each quarter, then boosted the debt levels in the middle of successive quarters. Excessive borrowing by banks was one of the major causes of the financial crisis, leading to catastrophic bank runs in 2008 at firms including Bear Stearns Cos. and Lehman Brothers. Since then, banks have become more sensitive about showing high levels of debt and risk, worried that their stocks and credit ratings could be punished. That practice, while legal, can give investors a skewed impression of the level of risk that financial firms are taking the vast majority of the time.
- Poll: Would a Flat Tax Be Better? Today is national tax freedom day. After today, the rest of your paychecks are pretty much take-home pay as far as the federal government is concerned. But with new surveys showing 47 percent of Americans paying no taxes at all, we want to know if you think a flat tax would be better for the United States.
- Average Investors Are Finally Returning to Stocks - Slowly.
markit:
- Markit Launches Markit iTraxx SovX Asia Pacific Index. Markit, a leading, global financial information services company, today announced plans to launch the Markit iTraxx SovX Asia Pacific index. The index will track investor perceptions of the credit risk of a range of countries in the Asia Pacific region and will start trading in early May 2010. The index, which forms part of the Markit iTraxx SovX family of credit default swap (CDS) indices, will be a useful barometer of the sovereign CDS markets in the Asia Pacific region.
- Detroit Bankruptcy Looms with Deficit of $446 Million in Budget of $1.6 Billion. Detroit has hit the end of the line. It's budget deficit is between $446 million and $466 million (28% to 29%) of $1.6 billion with few ways other than drastic cuts in wages and benefits to address the problem. If unions will not give in (and they won't), Detroit Faces Bankruptcy.
- Energy Department Vows Quick Approval for Loans to Help Automakers Retool. U.S. Energy Secretary Steven Chu vowed Thursday to quickly approve additional loans for automakers, parts suppliers and startups to retool factories to develop and build more fuel efficient vehicles. "We are working as fast as we can," Chu said in a conference call with reporters to tout new job-training grants, adding he hopes to make announcements on loans soon.
- Decrying the Union Pension Bailout Bill. Some members of Congress seem to like putting taxpayers on the hook for practically unlimited liabilities. The latest Congressional Budget Office forecasts 2020 public debt climbing to 90% of GDP under President Obama's 2011 Budget. This is not enough for Senator Robert Casey, a Pennsylvania Democrat and habitual ally of labor, who now wants Americans to bail out union pension plans underfunded by hundreds of billions of dollars. Following on the healthcare model, it's all part of a political calculus in which Washington politicians try to buy votes today for the next election with money that Uncle Sam won't have to spend until afterwards.
- Fannie's Role in Crisis Moves Into Spotlight. A federal commission will examine the role that government-supported mortgage entities played in the financial crisis, with former executives from Fannie Mae(FNM) and key regulators set to testify on Friday.
- The Coming Entitlement Tsunami. Now that we’ve finished creating a new $1 trillion health care entitlement program, Washington has suddenly discovered that we are facing a crisis with—surprise—entitlement programs. No one should be shocked to learn that government spending is out of control. In fact, last year, federal spending topped 24.7 percent of gross domestic product last year, the highest peacetime percentage in U.S. history. That compares to an historical average of roughly 21 percent. Social Security faces unfunded liabilities of more than $15.8 trillion. And while that sounds like a lot of money, it is dwarfed by Medicare’s looming budget shortfall of between $50 and $100 trillion, depending on which accounting measure is used. Because of its funding mechanisms, Medicaid does face the same type of accounting shortfalls, but it will soon add hundreds of billions of dollars to federal, not to mention state, spending. As the full force of entitlement programs kicks in, the federal government will consume more than 40 percent of GDP by the middle of the century. Half of that will be taken up by just those three entitlement programs. From there, it only gets worse.
- Justice John Paul Stevens Retiring.
- Rep. Bart Stupak Won't Seek Reelection. Rep. Bart Stupak (D-Mich.), who played a central role in the health reform fight as the leader of anti-abortion Democrats, announced that he will not run for reelection Friday afternoon, saying he wanted to spend more time with his family. Without Stupak on the ballot, the seat becomes an immediate pickup opportunity for Republicans.
- Labor Plans March on Wall Street. AFL-CIO President Richard L. Trumka says more than 10,000 union supporters will “march on Wall Street” on April 29 in support of a financial-transactions tax and higher taxes on private-equity and hedge funds.
- Review: Federal Program Used to Hide Flights From Public. A federal program designed to protect sensitive business deals and executives' safety is being used by politicians, business executives, university athletic recruiters and others to avoid publicity by hiding their flights on private aircraft from the public, a ProPublica review has found. The aircraft owners don't have to demonstrate any need need to keep flights secret. Planes on the list range from those owned by Fortune 500 companies such as bailout recipient American International Group(AIG), to college athletic programs, such as the University of Alabama, which say they request flight privacy to hide coach searches and recruiting trips. Also granted secrecy were planes registered to federal agencies, churches and newspaper owners. In 2008, after the Big Three auto executives found themselves in the spotlight for flying corporate jets to Washington to plead for aid from Congress, General Motors used the system to block its flights from the public. It declined to say why. Use of the airspace is considered public information because taxpayers fund air-traffic controllers, radars and runways.
Financial Times:
- Foreign Interest Boosts Prime Locations. Wealthy Greeks are snapping up high-end properties in the prime London market as the fiscal crisis in their home country worsens, according to property agents. Greece-based savers moved £8.8bn worth of deposits out of local banks in the first two months of the year – the equivalent of about 4.5 per cent of Greece’s total banking system – amid growing anxiety over the country’s debt crisis. Some of that money is now being channelled into the UK property market.
Les Echos:
- Goldman Sachs(GS) sold securities based on subprime mortgages to Natixis SA in 2007, which led to losses of hundreds of millions of euros for the French bank, a Goldman client. Goldman has denied it bet against clients in the mortgage-derivatives market.
- DRAM Vendors Raise Contract Quotes for 1H April, Says inSpectrum. Despite a mild price drop in the DRAM spot market, major vendors have been able to raise quotes for both DDR2 and DDR3 in the contract market in the first half of April. A mild price hike also occurred in the NAND flash segment, thanks to price revisions by leading players according to inSpectrum. Contract price for 2GB DDR2 and DDR3 module has posted a 6% and 3% sequential growth in the first half of April to US$41.6 and US$45.1, respectively, translating to US$2.48 and US$2.69 per Gb. Most PC vendors, despite higher memory bills-of-materials (BOM) costs, have accepted the price revisions because of short supply of both DDR2 and DDR3, and lean inventory levels, inSpectrum explained.
- 78 SOEs Will Leave Chinese Property Market. Seventy-eight state-owned enterprises have filed plans to exit the property sector, after being ordered to do so by the State-Owned Assets Supervision and Administration Commission. An official from the SASAC says the companies have submitted their plans and they remain resolute on this issue. The SASAC issued the directive on March 18th. It ordered 78 state-owned enterprises whose core business is not property development, to withdraw from the sector within 15 working days. The decision came amid complaints that land acquisitions by SOEs has fueled the rise in urban house prices.
No comments:
Post a Comment