Tuesday, April 21, 2009

Quick Notes & Articles for the Day - April 21

Secretary Geithner Says He Has The Resources Necessary - Treasury Secretary Geithner on Tuesday said there is $109.6 billion in bank bailout funds remaining of a $700 billion bank bailout package. Speaking before the bailout package's congressional oversight panel, Geithner said he expects over the next year that $25 billion will be re-paid to the Treasury from banks seeking to return capital from the program, which would bring the total amount left to $134.6. Already six smaller banks have returned capital they received from the program and both Goldman Sachs and J.P. Morgan & Chase have said recently that they are seeking to return $10 billion and $25 billion respectively. In a table provided to the panel, Treasury says the $25 billion it expects to be re-paid is a conservative estimate.

Delta - Revenue Looks to Have Bottomed Out - Delta Air Lines CEO Richard Anderson said Tuesday that the deterioration in revenue appears to have bottomed out in the first quarter. "We've seen some signs of stabilization as the revenue environment appears to have bottomed out," Anderson said in a conference call. "But it's still a bit early to call, and we expect to face significant head winds throughout 2009." Anderson said Delta would have broken even in the recent quarter excluding the losses from the company's fuel-hedging contracts. Those contracts, priced above the market now that benchmark oil prices have plunged since July, will be largely completed by the end of the second quarter, the company said.

Bank of Canada Cuts Rates - The Canadian dollar fell on Tuesday after the Bank of Canada lowered its overnight target rate by 25 basis points to 0.25% and said that the Canadian recession will be deeper than anticipated. The rate cut was in line with market expectations. Canada's central bank also said that it considers 0.25% to be "the effective lower bound for that rate."

Fed Buys $7 Billion in Treasurys - The Federal Reserve Bank of New York bought $7 billion in Treasurys on Tuesday, part of a program aimed at improving conditions in private credit markets and spurring lending. The debt bought included notes maturing between 2016 and 2019. Dealers submitted $26.8 billion in debt to be purchased. The Fed will continue its buybacks with another operation on Thursday, heading towards purchasing $300 billion in Treasury securities over the next six months. Ten-year note yields stayed down by 2 basis points to 2.82%.


Why Capital Structure Matters - By Michael Milken - The Wall Street Journal - "Thirty-five years ago business publications were writing that major money-center banks would fail, and quoted investors who said, 'I'll never own a stock again!' Meanwhile, some state and local governments as well as utilities seemed on the brink of collapse. Corporate debt often sold for pennies on the dollar while profitable, growing companies were starved for capital."

More Hatred From Mr. Ahmadinejad - The New York Times - "The fear all along has been that the United Nations conference on racism would be manipulated into yet another forum for demonizing Israel. All too predictably, Iran’s president, Mahmoud Ahmadinejad — who has called the Holocaust a myth and has advocated Israel’s destruction — did just that."

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