Wednesday, May 6, 2009

Quick Notes & Articles for the Day - May 6

With tax season over, Joe has started penning another blog (the first since the middle of tax season) that will appear as a post on Saturday for all those blog followers. Be sure to check it out.

Also, be sure to read the article below about Bank of America. A bit confusing, but in the end, the need for more capital looks to be completely over for them.

Quick Notes

April ADP Employment Falls 491,000 - Private-sector employment in the United States fell by 491,000 jobs in April, according to the ADP employment index released Wednesday. The March number was revised higher to a decline of 708,000 from a decline of 742,000. This was a much better number than estimated.

Fed Buys $6.95 Billion in Treasurys - The Federal Reserve Bank of New York bought $6.948 billion in Treasurys on Wednesday, continuing its program aimed at improving conditions in private credit markets and spurring lending. The debt bought included notes maturing between 2011 and 2012. Ten-year note yields stayed higher by 2 basis points at 3.18%, under pressure from better-than-expected jobs data from ADP.

Goldman Sachs Upgrades US Banking Debt - Goldman Sachs analysts on Wednesday upgraded their debt rating for the U.S. banking sector to attractive from neutral. "Supply of non-guaranteed debt is increasing from many of the stronger banking groups. Though this could also put short-term pressure on secondary spreads, we believe that there is demand for senior paper from investors, which we view as a positive development for the sector on an intermediate-term basis," the analysts said. They raised their ratings for Bank of America debt to outperform from in-line, and boosted their take on Capital One to outperform. They trimmed their view on Morgan Stanley to in-line from outperform, "as it has tightened relative to peers in recent months. We remain comfortable with the company's fundamentals, but think that spreads now offer only fair value compared with peers."

Renault Interested in Saturn - General Motors is holding talks with France's Renault over the possible sale of its Saturn unit, The Wall Street Journal reported in its online edition Wednesday, citing people familiar with the matter. Renault is one of several auto makers interested in Saturn, the newspaper said. GM, which is surviving on billions of federal aid, had said it may close down the division as part of its restructuring effort.


Bank of America Needs $33.9 Billion Cushion, U.S. Says - By Louise Story & Eric Dash - The New York Times - The headline probably grabbed you, but the real story is BofA does not need $33.9 billion MORE - it already has $45 billion from the TARP. "If the bank is unable to raise the capital cushion by selling assets or stock, it would have to rely on the government, which has provided $45 billion in capital through the Troubled Asset Relief Program." For those doing the math, this means they actually have a huge cushion with the TARP factored in of $11.1 billion.

Obama's Global Tax Raid - The Wall Street Journal - "President Obama revealed Monday that he's half a supply-sider. If only someone could explain to him the other half. We have a tax code, the President said, "that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York." That sounds like a great argument for lowering taxes on the guy creating jobs in Buffalo. Alas, that's not what he has in mind."

Specter Survives, at Least for Now - By David Brooks & Gail Collins - The New York Times - From David: "The emotional outpouring isn’t about Specter — Democrats are not that enamored of the guy." From Gail: "Getting all 60 Democrats to vote together will be like herding rabid guinea pigs in a thunderstorm."

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