Money Market News

Global Market The U.S. SEC may require Wall Street banks to keep more cash on hand during market stress. The SEC makes a discussion with Wall Street banks to raising capital and reviewing the need to seek loans to support less-liquid positions. The SEC focused on requirements to increase resiliency when banks can't easily secure funding. Any change may crimp profits, so firms have to hold more cash instead of lending money or making investments. The SEC monitors Bear Stearns, Goldman Sachs Group Inc., Lehman Brothers Holdings Inc., Merrill Lynch & Co. and Morgan Stanley to make sure they have enough capital and liquidity. They require firms to have enough funding to meet expected obligations for one year. This assumes securities firms still able to get loans by putting up assets as collateral. The SEC is reevaluating liquidity requirements after a report that recommending more authority for Fed over Wall Street banks. Congress may have to improve SEC oversight by passing legisl...

Global Market ECB are raising the prospect of interest-rate increases to keep inflation in check. Their comments are forcing investors and economists to change forecast after predicted the bank would follow in cutting rates to shore up growth. The ECB are reacting to a surge in oil and food prices. They're concerned that inflation will feed to wage demands and prompt companies to pass on higher costs. This condition helped push the euro to $1.60. The ECB said current policy will help the bank achieve price stability, but still they don’t sure rates are high enough to contain inflation. Growth in Europe's manufacturing and services industries may drop in April. The International Monetary Fund estimates growth in euro region will slow to 1.4 percent from 2.6 percent in 2007. Germany's union negotiated a settlement for 2.1 million staff that it said was worth 8.9 percent. They settled a new contract that raises wages 4.4 percent this year and 3.3 percent in 2009. Stock Market ...

Global Market ECB said the financial-market crisis is not over as banks remain reluctant to lend and indicated to intent on inflation. Lending has declined buffeted by the collapse of the U.S. subprime mortgage market. To facilitate it, ECB has made extra liquidity available to banks for six months. The Bank of England plans to swap government bonds for mortgage securities. But the cost of borrowing euros still climbed to 4.81 percent. Bank of America Corp. net income dropped 77 percent in the first quarter as they set aside $6.01 billion for bad loans. ECB main priority is reducing inflation to below 2 percent. Citigroup Inc. bolstered its capital by selling preferred shares. The bonds pay interest of 8.4 percent for 10 years. After that, the interest rate will convert to a floating rate. Citigroup is building up more loan reserves. The bank still has some financial problems. CIT Group Inc. plans to sell common stock and preferred shares to raise $1 billion. Last week, Citigroup repor...

Global Market Citigroup Inc. posted a $5.11 billion loss, less than analysts' estimates, and cut 9,000 jobs, it sending their shares higher and sparking a rally in U.S. stocks and the dollar. Citigroup reported $16 billion of writedowns and increased loan reserves as customers fell behind on home, car and credit-card payments. Their net loss of $1.02 a share compared with an estimate of $1.66 by analyst. Citigroup climbed $1.08 to $25.11. The Standard & Poor's 500 Index rose 1.8 percent and the dollar gained against the euro. Revenue fell to $13.2 billion, compared with analyst estimate of $11.1 billion. While the writedowns stuck their trading and investment-banking division revenue climbed in both the consumer and wealth-management businesses. The company benefited from a $633 million gain on its stake in Visa Inc., which make an initial stock offering and a $663 million gain on the sale of shares in Redecard SA. Citigroup set about $1.8 billion as reserves for bad consu...

Global Market Merrill Lynch & Co. posted quarterly loss and will cut about 3,000 more jobs after the credit-market crisis forced them to write down debt. The smaller-than-estimated push Merrill shares up 4.7 percent. Analysts predicted $8 billion loss. The first-quarter net loss is $1.96 billion. They are optimistic about the firm's prospects for the year following a more difficult next couple of months. The comments echo remarks by JPMorgan Chase & Co., who said the credit crisis is more than half over. Lehman Brothers, Goldman Sachs Group Inc. and Morgan Stanley have offered similar assessments. Merrill gained $1.82 to $46.71. Merril has sold more than $12 billion of equity to bolster capital and overhauled risk-management since they booked $20 billion of credit-market losses. Merrill's stock has fallen almost 50 percent in last year. Merrill's first-quarter writedowns to account for the plummeting value of mortgage-related bonds including collateralized debt obli...

Global Market JPMorgan Chase & Co. plans to raise $6 billion in its preferred stock offering. It priced to yield 419 basis points more than U.S. Treasuries due in 2018 and pay a 7.9 percent fixed for 10 years. If not called, it will begin to float at 347 basis points more than London interbank offered rate, currently set at 2.73 percent. JPMorgan is raising capital as economy hurt its clients' ability to pay credit cards and consumer loans. JPMorgan has posted about $10 billion of asset writedowns and credit losses. They said it set aside $1.1 billion in first quarter of 2008 for future defaults, after boosting provisions by $395 million. Writedowns have reduced JPMorgan's Tier 1 capital ratio to 8.3 percent. That compares with ratios of 7.5 percent at Wachovia Corp. and 7.1 percent at Citigroup Inc. The minimum rating from regulators is 6 percent. The assets are calculated by weighing its chance of default. JPMorgan said net income dropped to $2.37 billion or 68 cents a sh...

Global Market U.S. producer prices rose twice as forecast and manufacturing in New York states was grew, reducing the odds that the Fed will cut rates more than a quarter point. Food and energy stoked the 1.1 percent gain in wholesale prices. The New York State manufacturing index rose to 0.6 from minus 22.2. It indicates that exports are helping prevent a deeper downturn, while higher producer price makes concern on high inflation. Excluding fuel and food, the producer-price index increased 0.2 percent, producer prices climbed 6.9 percent. The New York report showed an improvement in new orders and shipments. Reports on industrial production in March will be release tomorrow. Prices paid to factories, farmers and other producers were forecast to rise 0.6 percent. The Labor Department may say that the consumer price index rose 0.3 percent. A separate report showed that foreign investment in U.S. securities increased as Treasuries rallied. It increased by $72.5 billion, from $57.1 billi...

Global Market The concern that Group of Seven expressed about swings in exchange rates wasn't enough to change outlook for the U.S. dollar. Analysts maintained the dollar forecasts after the G-7's changed the wording of their statement to reflect the dollar's decline against the euro and the yen. The dollar fell to $1.5818 per euro. The G-7 added the language after the dollar's decline accelerated against the euro and the yen. Bank of America said the dollar may fall beyond $1.60. The Royal Bank of Scotland Plc predicts the dollar will trade at $1.63 at September. Since August, the U.S. Federal Reserve has lowered its rate 3 percentage points to 2.25 percent, to forestall a recession. Meanwhile, European Central Bank has kept its rate at 4 percent amid the fastest inflation in almost 16 years. The Dollar Index has tumbled 6.5 percent amid concern that U.S. economy will move into a recession. Stock Market U.S. stocks fell after Wachovia Corp. reported an unexpected first...

Global Market Confidence among U.S. consumers fell after employers fired workers and gasoline prices surged. The preliminary index of consumer sentiment decreased to 63.2 this month, when the jobless rate approached 11 percent. Meanwhile the cost of imported goods climbed 14.8 percent, led by oil. The reports validate concern that the economy will shrink in the first half of the year, and traders now anticipate Fed will lower its rate by another half point. US are confronting the loss of 232,000 jobs, along with higher costs and overall weakening in the economy. Consumer spending will advance at the weakest rate. Import prices rose 2.8 percent. Expenses excluding fuels jumped 0.9 percent. Import prices were forecast to rise 2 percent. The index of consumer expectations fell to 53.4. Consumer spending will rise at annual pace of 0.5 percent. That would be the smallest gain since purchases fell. The economy will not expand at the first six months of this year. Analyst also projected the ...

Global Market Goldman Sachs Group Inc. is cutting deeper into its ranks, eliminating posts in its mortgage and investment banking units as the credit contraction saps demand. They said that it was eliminating as much as 5 percent of its employees in January to weed out underperformers but they declined to quantify the latest reductions. Wall Street firms may have to eliminate as much as 35 percent of employees as leveraged lending dwindles and the pace of mergers and acquisitions slows. Deutsche Bank AG eliminated 80 jobs at its corporate-finance unit. The job cuts mostly affect analysts and associates from the advisory, commercial real-estate, equity capital markets and leveraged finance groups. The unit has about 4,400 employees. Mergers and acquisitions announced so far this year are worth a total of $776 billion, down last year. Goldman's told shareholders that the M&A business is down quite a lot but they remains optimistic about the business. The credit-market crisis is c...

Global Market UBS AG may have to eliminate as much as 35 percent of employees as leveraged lending dwindles and the pace of mergers and acquisitions slows. Some of the largest financial conglomerates may break up as Wall Street shifts focus to furnishing them with strategic advice. Wall Street banks hit by mortgage losses and writedowns have cut more than 34,000 jobs in the past nine months. UBS is seeking approval for a 15 billion-Swiss franc ($14.8 billion) capital increase. A bet on mortgage securities led to almost $38 billion of writedowns and 25 billion francs of losses. The leveraged credit market may not return to 2007 levels for five or six years. Standard & Poor's estimated that UBS still hold about $213 billion of leveraged loans they can't sell. Goldman Sachs Group Inc. lost money in more trading day compare to Morgan Stanley or Lehman Brothers Holdings Inc. Goldman lost money on 17 days, compared with eight days at Morgan Stanley and seven at Lehman Brothers. G...

Global Market Federal Reserve anticipated that the economy would shrink with some concerned about a prolonged and severe economic downturn. They also found sign that housing markets have reached a bottom. Traders increased bets that the Fed will lower its interest rate half a point in the next meeting. Fed invoked rarely used authority to provide emergency financing in order to limit the impact on the broader economy. The Fed's March actions are definitely a major point of our understanding in the role of the lender-of-last- resort in modern markets. Fed economists told that they had revised down their forecast to show a contraction in this year first half and a slow rise in the second half. In 2009, they projected growth above the economy's long-term potential pace. The Fed took three steps in March to help offset money market constraints. First they announced to expand auctions of funds to commercial banks. Then they give favor to swap $200 billion of Treasuries out in exchan...