Monday, May 4, 2009

Quick Notes for the Day - May 4

Banks Are Lending? - JP Morgan Lending $2 Billion a DAY - J.P. Morgan Chase CEO Jamie Dimon said on Monday that the bank is lending $2 billion a day. "One of the great misconceptions out there is that banks aren't lending. If you look at bank lending the last couple of quarters, it is up. They are lending. Almost every bank you speak to will tell you the same thing, that any one who comes in and is a qualified buyer, we lend to," Dimon said on a conference call hosted by CLSA analyst Mike Mayo. "We are still doing $2 billion a day," Dimon said.

Pending Home Sales Up - The housing market improved in March according to the National Association of Realtors. The pending home sales index rose 3.2% compared with February and was up 1.1% compared with a year earlier. The pending home sales index is based on sales contracts signed on existing homes. "This increase could be the leading edge of first-time buyers responding to very favorable affordability conditions and an $8,000 tax credit," said Lawrence Yun, chief economist for the real estate group. Sales typically close within six weeks of a signing. At that point, they are included in the existing-home sales report.

Construction Spending Moves Higher - Construction spending rose 0.3% in March primarily on the back of nonresidential buildings and public works, the Commerce Department reported. Economists had been expecting a 1.5% decline. Spending in January and February was revised higher which could possibly lead to an upward revision to gross domestic product (when it is recalculated later this month for the first quarter). Earlier reports had investments in non-residential structures falling at a record 44% annual pace in the first quarter. In March, spending on residential projects fell 4.2%. Spending on nonresidential construction projects rose 2.7% in March, while spending on public projects rose 1.1%.

Fed Buys Another $8.5 Billion in Treasurys - The Federal Reserve Bank of New York bought $8.5 billion in Treasurys on Monday, its biggest purchase to date under its program aimed at improving conditions in private credit markets and spurring lending. The debt bought included notes maturing between 2016 and 2019. Dealers submitted about $29 billion in debt to be purchased. The Fed will continue its buybacks with another operation on Wednesday, heading towards purchasing $300 billion in Treasury securities over the next six months. Ten-year note yields pared an earlier increase but remained higher by 1 basis point to 3.17%. Yields were higher before the buyback as a report on pending home sales buoyed hopes that the housing downturn may be ending, supporting stocks to the detriment of bonds.

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