Thursday, March 25, 2010

Quick Notes for the Day - March 25

Jobless Claims Fall - The Labor Department reported that the number of initial jobless claims fell 14,000 to a seasonally adjusted 442,000. The four-week average fell by 11,000 to 453,750. About 5.7 million people were receiving extended federal benefits which was down 345,000 from the prior week.

Bernanke says economy still needs Fed's help - Reuters - "A modest U.S. economic recovery still warrants the Federal Reserve's ultra-low interest rate policy, but the central bank stands ready to remove stimulus once the expansion looks solid, Chairman Ben Bernanke said on Thursday."

Mortgage Rates Move Higher, But Still Below 5% - According to Freddie Mac, the 30 year fixed-rate mortgage averaged 4.99% versus 4.96% last week and 4.85% last year. The 15 year fixed-rate mortgage averaged 4.34% versus 4.33% last week and 4.58% last year.

Natural Gas Futures Fall on Data - The Energy Information Administration (EIA) reported that natural gas supplies rose by 11 million cubic feet over the past week. Natural gas was down about 2.9% on the report.

Health Care Package - Senate Republicans found two issues with the reconciliation bill sent to the Senate, so no matter what happens, there will be another health care vote in the House.

  • Healthcare changes headed back to House - Reuters - "A package of final changes to a landmark healthcare reform law must be approved again by the House of Representatives after the Senate parliamentarian eliminated two minor provisions on Thursday."
  • Senate fix for health-care law delayed - MarketWatch - "The massive health-care overhaul engineered by large Democratic majorities in Congress still has a few snags to overcome. In a small victory, outnumbered Republicans in the Senate managed to force small changes in a sidecar bill designed to fix parts of the historical law signed by President Obama this week. As a result, the sidecar bill has to go back to the House for one final vote."
Why to Take Cornell’s MBAs Over Kentucky’s NBAs - By Scott Soshnick - Bloomberg - "After all, tonight’s game in Syracuse, New York, which is only 57 miles from the Cornell campus, could be billed as MBAs versus NBAs. Cornell has a roster that might be working for Lloyd Blankfein (Goldman Sachs) one day. Much of Kentucky’s roster, meantime, is more likely to be employed by David Stern (NBA)."

Monday, March 22, 2010

Quick Notes for the Day - March 22

Dollar Rises, Euro, Gold, Commodities Fall - The dollar moved higher against the Euro on concerns about Greece's debt and rising interest rates around the world. The thought is that the rising interest rates (like in India) would slow growth, thus the commodities pulled back. Oil dropped to below $80 (an important level) before rising slightly back above $80. Meanwhile, gold dropped below $1,100 an ounce for the first time in three weeks.

Overall, the dollar rose to a 10-month high versus the euro on Monday on signs of a deepening divide within Europe over aid to Greece. The euro fell to $1.3480. The dollar index which measures the dollar against a trade-weighted basket of six major currencies rose to 80.849.

Health Care Reform Passes the House - The obvious "big" story is the passage of the health care reform bill last night in the House. The bill now goes to the Senate in a "reconciliation" move that should speed it through, but Senate Republicans are saying that it might not be that easy. Either way, it looks like it will be the focus of the media for the next week or so. Please see the stories and editorials below.

The House passed the overhaul — now what? - MSNBC - "Relieved Democrats may still be celebrating the passage of landmark health care overhaul legislation, but Republicans in the Senate still have an opportunity to try to derail the bill.

And if history is any guide, they are likely to force the House to vote on health care again before Easter. 'Anybody that thinks that this is only going to be a one-time deal today in the House, I think, is grossly mistaken,' said Republican Sen. Orrin Hatch on CNN's "State of the Union.""

Healthcare Overhaul Faces New Challenges - Reuters - "Republicans vowed to fight back on Monday after Congress passed President Barack Obama's landmark healthcare overhaul while states promised new legal challenges and health industry stocks rose."

Health Care Reform, at Last - The New York Times - "The process was wrenching, and tainted to the 11th hour by narrow political obstructionism, but the year-long struggle over health care reform came to an end on Sunday night with a triumph for countless Americans who have been victimized or neglected by their dysfunctional health care system. Barack Obama put his presidency on the line for an accomplishment of historic proportions."

Show Time for Health Care - By Ross Douthat - The New York Times - "As a conservative, I suspect they’re wrong. But now that the bill has passed, as a citizen of the United States, I dearly hope they’re right. Indeed, I hope that 20 years from now, in an America that’s healthier, richer and more solvent than today, a liberal can brandish this column and say “I told you so.” Because the alternative would mean that we’re all about to be very sorry, and for a very long time to come."

Tuesday, March 16, 2010

Quick Notes for the Day - March 16

Fed Seen Renewing Low Rates, Extended Period Vow - Reuters - "The Federal Reserve is expected to hold interest rates near zero on Tuesday and renew its pledge to keep rates very low for a long time, but it could note a brightening economic picture and hint at being closer to dropping the vow."

Housing Starts Drop 5.9% Due to Snow - The Commerce Department reported that snow storms helped caused housing starts to drop 5.9% to a seasonally adjusted annual rate of 575,000 in February. New construction was down in the Northeast and South, but up in the Midwest and West. Starts of single-family homes fell 0.6% to a 499,000 pace, while starts of large condos and apartment building plunged 43%. In the past year, starts of single-family homes are up 39%, while starts of multifamily units are down 41%. Building permits - which aren't as affected by weather as starts are - dropped 1.6% to 612,000 in February. Permits for single-family homes fell 0.2% to a 503,000 rate.

EU Paves Way to Aid Greece, Sows Doubts Over Euro Management - Bloomberg - "Europe’s blueprint for a financial lifeline to Greece amounts to an unprecedented bet by finance ministers that they can avert a euro crisis by sidestepping the no-bailout rules intended to sustain the 11-year-old currency."

Friday, March 12, 2010

Quick Notes for the Day - March 12

February Retail Sales Rise 0.3% - The Commerce Department estimated that retail sales rose 0.3% in February even with major snow storms during the month. Retail sales have now been higher in four of the past five months, and they are 3.9% higher versus 2009. Excluding autos and trucks (which fell 2.0%), retail sales increased 0.8% which was much higher than economists predicted.

Consumer Sentiment Falls in March - The Reuters/University of Michigan index of consumer sentiment fell to 72.5 in early March versus 73.6 in February. The major issue on the minds of consumers continued to be the labor market that has continued to show signs of improvement.

Obama to Tap Yellen for Fed Vice Chair: Source - Reuters - "President Barack Obama plans to nominate San Francisco Federal Reserve Bank President Janet Yellen, a respected policy dove, to be vice chairman of the central bank, a source familiar with the process said on Thursday."

Tuesday, March 9, 2010

Quick Notes for the Day - March 9

Dollar Stronger with Foreign Debt Issues Uncertain - The U.S. dollar gained versus the euro and British pound on Tuesday finding support amid ongoing worries about debt problems in the euro zone after Fitch Ratings warned that Portugal remained vulnerable to a downgrade.

The euro was at $1.3581 versus $1.3636 on Monday. The dollar index rose to 80.629 versus 80.440 on Monday. The British pound fell 0.4% to $1.4994.

A New Cisco Router - While not normally big news, Cisco Systems unveiled a new router today that says that it will handle 12 times the internet traffic as the nearest competitive product. Currently, AT&T is already testing the router, and it is said to be the next move in bringing better video to the internet. In fact, Cisco stated that the new router could deliver every movie ever made in just four minutes.

Federal Reserve President Charles Evans Speaks on the Recovery and Rates - Reuters - "'Labor market issues ... lead me to think this accommodation will likely be appropriate for some time,' Chicago Federal Reserve Bank President Charles Evans said in remarks to the National Association for Business Economics."

White House's Romer: Too Soon for Spending Clamp-Down - Reuters - "Christina Romer, who heads the Council of Economic Advisers, said cutting back now 'would inevitably nip the nascent economic recovery in the bud -- just as fiscal and monetary contraction in 1936 and 1937 led to a second severe recession before the recovery from the Great Depression was complete.'"

Thursday, March 4, 2010

Quick Notes for the Day - March 4

Factory Orders Rise - The Commerce Department stated that the orders for factory goods rose 1.7% in January versus a 1.5% gain in December. Orders for durable goods increased 2.6%, revised down from the 3% reported last week. Orders for nondurable goods increased 0.9%, led by petroleum and food.

Productivity for 2009 Revised Higher - The Labor Department reported fourth quarter productivity increased at a 6.9% annual rate from 6.2% previously. For the third quarter, productivity was increased to 7.8% annual rate from 7.2%. For all of 2009, productivity increased 3.8% which is the most in seven years. Unit labor costs fell a revised 5.9% in the fourth quarter and a revised 7.6% in the third quarter. For all of 2009, unit labor costs fell 1.7% which is the most since the records were first kept in 1948.

TARP Makes $1.5 Billion on Bank of America - The Treasury Department estimated that it will make a net profit of $1.54 billion from its sale of warrants to purchase common stock of Bank of America. Treasury said it sold 150.3 million Bank of America warrants at $8.35 per warrant and sold another 121.8 million Bank of America warrants at $2.55 per warrant. Treasury received the warrants from Bank of America in return for taxpayer assistance under the TARP.

Jobless Claims Fall - The Labor Department reported that the applications for initial unemployment benefits declined by 29,000 to a seasonally adjusted 469,000. The four week average of initial claims fell by 3,500 to 470,750. The number of people receiving regular state jobless benefits declined by 134,000 to a seasonally adjusted 4.5 million. The total number of people receiving benefits of any kind rose by 145,000 to 11.5 million, not seasonally adjusted.

Monday, March 1, 2010

Quick Notes for the Day - March 1

Consumer Spending Rises in January - The Commerce Department stated that real consumer spending increased a seasonally adjusted 0.3% in January. The data indicates that this is the highest level since May 2008. After taking into account inflation, real spending on goods increased 0.8%. The personal savings rate fell to 3.3% of disposable income (more spending than income) versus 4.2% in December. This is the lowest level of savings since October 2008.

ISM Falls in February, But Still Expanding - The Institute of Supply Management (ISM) reported that the ISM index fell to 56.5% in February versus 58.4% in January. A number over 50 indicates more firms said business was improving than said it was worsening. The new orders index dropped to 59.5% from 65.9%, the production index fell to 58.4% from 66.2%, while the employment index rose to 56.1% from 53.3%.

Kohn to Step Down as No. 2 at The Fed - MarketWatch - "Vice Chairman Donald Kohn, one of the Federal Reserve's top policymakers over the past decades, will retire in June after 40 years of work in the Federal Reserve system, the Fed said Monday."

Buffett: Health Care "Tapeworm" Drags on Economy - Reuters - "Warren Buffett said "out of control" health care costs are a "tapeworm" limiting growth in an economy recovering only fitfully from the financial crisis."