iBankCoin
Home / Finance (page 12)

Finance

Japan’s Central Bank Calls for a New Round of Stimulus Despite Other Calls of Policy Being Sufficient

“A Japanese finance official said the Bank of Japan’s policy tools are sufficient for now as a central bank board member said a new level of action is needed to counter deflation.

“The BOJ, for the time being, should stick to policy measures it has taken so far,” Vice Finance Minister Shunichi Yamaguchi said in an interview yesterday in Tokyo. Board member Takehiro Sato said in a speech today that reaching a 2 percent inflation goal will be difficult without new initiatives.

Prime Minister Shinzo Abe may seek to sweep away policy divisions as the early exit of Governor Masaaki Shirakawaaccelerates the reshaping of the central bank’s leadership. Shirakawa’s announcement yesterday that he’ll step down next month heightened investors’ expectations for aggressive steps to tackle entrenched deflation. The Nikkei 225 Stock Average surged by the most since March 2011 today as the yen slid.

“Abe will only gain momentum and public support as the yen weakens and stocks rise,” said Hiroshi Miyazaki, chief economist at Shinkin Asset Management Co. in Tokyo. “The next big focal point is the BOJ’s April meeting, when it will be important for the bank’s new leadership to show they are able to live up to Abe’s expectations.”

The yen fell to its weakest level in almost three years against the dollar and euro today, while the Nikkei closed at the highest since September 2008. At 5:53 p.m. in Tokyo the yen was at 93.74 per dollar, after earlier touching 94.06, and the Nikkei closed up 3.8 percent.

Yen ‘Correcting’…”

Full article

Comments »

CBO Warns That Spending on S.S. & Healthcare Will Double in 10 Years

“* Spending on Social Security, healthcare due to double in decade

* CBO warns of sharp rise in debt unless Congress acts

* Gradual changes would minimize economic impact

By David Morgan

WASHINGTON, Feb 5 (Reuters) – U.S. spending on Social Security and healthcare will double to $3.2 trillion a year over the next decade, threatening a sharp rise in national debt unless Congress acts to avoid the danger, congressional researchers warned on Tuesday.

A report from the nonpartisan Congressional Budget Office did not put forth a plan to resolve the long-term imbalance between revenues and spending on retirement and healthcare benefits. But it said that action taken now would help minimize the economic impact of whatever course lawmakers can agree on.

“Unless the laws governing these programs are changed – or the increased spending is accompanied by corresponding reductions in other spending, sufficiently higher tax revenues, or a combination of the two – debt will rise sharply relative to (the U.S. economy) after 2023,” the CBO warned.

The report, CBO’s latest on the U.S. budget and economic outlook, comes as President Barack Obama and Congress prepare for a showdown over the federal deficit in coming months.

“Deciding now what policy changes to make to resolve that long-term imbalance would allow for gradual implementation, which would give households, businesses and state and local governments time to plan and adjust their behavior,” CBO said.

The agency estimated last June that Social Security and federal health programs would account for more than one-quarter of U.S. gross domestic product by 2037 unless laws were changed.

Federal spending for Social Security, Medicare and Medicaid stood at $1.6 trillion in 2012, with healthcare spending alone at $885 billion.

CBO predicts that annual outlays for those programs alone will top $3 trillion by 2023, with Obama’s healthcare reform law adding another $134 billion in costs to provide coverage for 26 million people through new state-based healthcare exchanges…..”

Full article

Comments »

The Second Coming of the 1990s Credit Bubble

Watch where you get those yields from!

“Back in 2007, at the peak of the credit and housing bubble, Wall Street knew very well the securitization (and every other) party was ending, which is why the internal names used for most of the Collateralized Debt Obligations – securitized products designed to provide a last dash trace of yield in a market in which all the upside had already been taken out – sold to less sophisticated, primarily European, investors were as follows: “Subprime Meltdown,” “Hitman,” “Nuclear Holocaust,” “Mike Tyson’s Punchout,” and, naturally, “Shitbag.”

Yet even in the last days of the bubble, Wall Street had a certain integrity – it sold securitized products collateralized by houses, which as S&P, and certainly Moody’s, will attest were expected to never drop in price again. But one thing that was hardly ever sold even in the peak days of the 2007 credit bubble were securitizations based on personal-loans, the reason being even back then everyone’s memory was still fresh with the recollection that it was precisely personal-loan securitization that was at the core of the previous, and in some ways worse, credit bubble – that of the late 1990s, which resulted with the bankruptcy of Conseco Finance. Well, in a few short days, those stalwarts of suicidal financial innovation Fortress and AIG, are about to unleash on the market (or at least those who invest other people’s money in the absolutely worst possible trash to preserve their Wall Street careers while chasing a few basis points of yield) the second coming of the very worst of the last two credit bubbles.

WSJ has the details…”

Full article

Comments »

Insiders Pull the Rip Cord Just as DOW Tops 14k

Insiders have been pulling out of stocks just as small investors are getting in.

Selling by corporate executives has surged recently as the Dow Jones Industrial Average hit 14,000 and retail investors flooded into stocks. The amount of insider selling has usually preceded market selloffs.

“In almost perfect coordination with an equity market that was rushing toward new all-time highs, insider sentiment has weakened sharply — falling to its lowest level since late March 2012,” wrote David Coleman of the Vickers Weekly Insider report, one of the longest researchers of executive buying and selling on Wall Street. “Insiders are waving the cautionary flag in an increasingly aggressive manner.”

There have been more than nine insider sales for every one buy over the past week among NYSE stocks, according to Vickers. The last time executives sold their company’s stock this aggressively was in early 2012, just before the S&P 500 went on to correct by 10 percent to its low for the year.

“Insiders know more than the vast majority of market participants,” said Enis Taner, global macro editor for RiskReversal.com. “And they’re usually right over a long period of time.” …”

Full article

Comments »

Australia Keeps Rates Unchanged, Central Bank Signals Room to Ease if Needed

“Australia’s central bank held its benchmark interest rate at the half-century low reached in 2009 and said it has room to cut to a record as a weak labor market contains inflation. Bond yields and the local currency fell.

“The inflation outlook, as assessed at present, would afford scope to ease policy further, should that be necessary to support demand,” Governor Glenn Stevens said in a statement today in Sydney after leaving the overnight cash-rate target at 3 percent. “Looking ahead, with the labor market softening somewhat and unemployment edging higher, conditions are working to contain pressure on labor costs.”

The nation’s currency weakened as Stevens’s statement indicated a willingness to underpin growth and repeated concern about the local dollar’s sustained strength. TheReserve Bank of Australia chief said the economy will likely expand “a little below trend” in the coming year, a lessoptimistic view than the one he released two months ago.

“We expected that recent optimism around the world economy would not be sufficient to change the bank’s clear bias to further cut rates,” said Bill Evans, chief economist at Westpac Banking Corp. (WBC) in Sydney. “There was considerable encouragement in the statement for our near-term view that they will decide to cut rates by 25 basis points at the next meeting.”

Today’s decision to pause was predicted by 24 of 28 economists surveyed by Bloomberg, with the rest forecasting a 0.25 percentage point cut.

Durable Demand….”

Full article

Comments »

Small Business in the U.S. See a Slight Rise in Borrowing Costs

“SAN FRANCISCO (Reuters) – Borrowing by small U.S. businesses rose marginally in December, eking out a tiny gain for the year and suggesting headwinds for economic growth for the first few months of 2013, a report on Monday showed.

The Thomson Reuters/PayNet Small Business Lending Index, which measures the overall volume of financing to small U.S. companies, rose to 112 from an upwardly revised 111.1 in November, PayNetsaid.

Borrowing was up just 1 percent from a year earlier.

PayNet had initially reported the November figure as 108.3.

PayNet founder Bill Phelan, located in Chicago, said the index suggests small businesses “haven’t come out of their shell.” PayNet’s lending index typically correlates to overall economic growth one or two quarters in the future.

“It’s underwhelming,” he said. “The next two to five months are going to be pretty slow.”

Small businesses are often responsible for the bulk of new job creation after recessions. The recent recession ended in 2009, but sluggish growth has meant weak job growth, and unemployment in January rose to 7.9 percent….”

Full article

Comments »

Ground Floor Opportunity -$ZTS

Once in a while i get a strong feeling in my gut that provides me an opportunity to bank coin. Remember, an opportunity is only that and you must keep a constant eye on your investments always re-checking your original assumptions.

Lately, i’ve been thinking about how to make long term money since i would like to focus on other things in my life. Day trading and momentum trades are fun and exciting, but require constant attention….something i may not have as i am planning on starting a new business.

At any rate, i will be honest and tell you that i have not done any homework as of yet; so you must do your own.

But i think there is a huge opportunity with Zoetis. It went public on Friday and caught my attention as there is little competition and a worldwide market to develop.

I have no position yet, but will take a preliminary taste to be an owner and will eventually add over time as i do more homework.

A simple approach to understanding the opportunity here is that his company will benefit from the rise of the middle class and their love for animal companions.

It will benefit from the current course of how we raise livestock.

It will benefit from strategic acquisitions and relationships.

It will benefit from being a long term growth company. Currently revenues are around $4 billion.

Do your homework!

Get started here

 

Comments »

China Reports Record Capital-Financial Account Gap for 2012

China last year had the biggest deficit in its financial and capital account since records began in 1982 as the domestic and global economies slowed, spurring outflows of funds.

The $117.3 billion annual gap was the first since 1998 when investors deserted China during the Asian financial crisis and reversed a $221.1 billion surplus in 2011, data released on the State Administration of Foreign Exchange website showed today. The current-account excess rose to $213.8 billion in 2012 from $201.7 billion the previous year.

The deficit may reflect reduced intervention by the central bank to control the exchange rate of the yuan, which strengthened 1 percent against the dollar in 2012, the least in three years. China’s foreign-exchange reserves, the world’s largest, rose the least since 2003 last year, as the economy expanded at the weakest pace since 1999.

“This shows that China’s balance of payments is returning to a normal state,” said Liu Li-Gang, head of Greater China economics at Australia & New Zealand Banking Group Ltd. in Hong Kong. “At the margin this will slow China’s rapid reserve accumulation and reduce the pressures for the yuan to appreciate further.”

The capital and financial account includes flows of funds for mergers and acquisitions, foreign direct investment, purchases and sales of equities and fixed-income securities and the central bank’s reserve account used to buy and sell foreign currencies.

Balancing Payments…”

Full article

Comments »

The Savings Rate Climbs to Its Highest Levels Since 2009

“One look at the headline December data and one would get the impression that millions of Americans had started dealing meth out of some New Mexico RV, as personal income exploded by the most in 8 years, soaring some 2.6% in December to $13.936 billion. And since the surge in income, which was expected to rise some 0.8%, was hardly matched by a comparable boost to spending which missed expectations of 0.3%, rising just 0.2% – somewhat paradoxical considering the biggest boost to the otherwise negative Q4 GDP print was precisely this: spending and consumption, meant that the personal saving rate (which is merely a function of income less spending) soared to 6.5% or the highest since May 2009 – superficially an indication that consumers are hunkering down in expectation of something very bad.

Breaking Bad jokes aside, just how did the US consumer see their personal income soar as much as it did? …”

Full article

Comments »

US Pension Fund May Sell Oil Holdings Due to Climate Change

“A US pension fund with nearly $2 billion in assets is considering selling its holdings in some of the world’s biggest oil and gas companies because of the threat posed by climate change.

In what investor advocacy groups say would be the first divestment of its kind, the Seattle City Employees’ Retirement System is to discuss on Thursday a request from Mike McGinn, the city’s mayor, to sell out of companies including ExxonMobil and Chevron.

The move is one of the most visible results so far of a campaign spearheaded by Bill McKibben, the US environmental activist, modelled on the 1980s disinvestment movement that pressed South Africa to dismantle its apartheid system of racial segregation.

Mr McKibben, founder of the 350.org climate campaign group, wants universities, governments and churches to divest from what he calls “outlaw companies”, whose coal, gas and oil cannot be safely burnt if the world is to avoid potentially dangerous global warming, according to climate scientists.

“These are no longer normal companies,” he said in an interview. “There is no flaw in their business plans. The flaw is their business plans.”

ExxonMobil said it was trying to reduce its greenhouse gas emissions while providing the world with the energy it needs. “We take the issue of climate change seriously and the risks warrant action,” a spokesman said.

If the Seattle retirement scheme were to divest from such companies completely, it would be the first to take such a step, said Stephanie Pfeifer of the Institutional Investors Group on Climate Change, which represents some of Europe’s largest pension funds and asset managers….”

Full article

Comments »

$STM Said to Be Looking to Raise $500 Million for Restructuring Purposes

STMicroelectronics NV (STM)Intel Corp. (INTC)’s largest competitor in Europe, will spend as much as $500 million to exit its unprofitable wireless-chip venture with Ericsson AB (ERICB), as demand starts to recover in other segments.

The semiconductor manufacturer, based in Geneva, is finalizing plans to pull out of ST-Ericsson by the third quarter. Shutting down the venture is one of the options being considered, Stockholm-based Ericsson has said…”

Full article

Comments »

The Fed Will Maintain $85 Billion Worth of Security Purchases on a Monthly Basis

“The Federal Reserve will keep purchasing securities at the rate of $85 billion a month as the economy paused because of temporary forces including bad weather.

“Growth in economic activity paused in recent months in large part because of weather-related disruptions and other transitory factors,” the Federal Open Market Committee said today at the conclusion of a two-day meeting in Washington. “Household spending and business fixed investment advanced, and the housing sector has shown further improvement.”

Chairman Ben S. Bernanke has unleashed the power of the central bank to buy unlimited amounts of Treasury and mortgage- backed securities in a bid to end a four-year long period of unemployment above 7.5 percent and bolster an economy that shrank 0.1 percent in the fourth quarter.

“Although strains in global financial markets have eased somewhat, the committee continues to see downside risks to the economic outlook,” the FOMC said.

The purchases will remain divided between $40 billion a month of mortgage-backed securities and $45 billion a month ofTreasury securities. The central bank also will continue reinvesting any Treasury securities that mature and will reinvest its portfolio of maturing housing debt into agency mortgage-backed securities.

The Fed repeated that the purchases will continue “if the outlook for the labor market does not improve substantially.”

The Fed also left unchanged its statement that it planned to hold its target interest rate near zero as long as unemployment remains above 6.5 percent and inflation remains below 2.5 percent.

Inflation Outlook…”

Full article

Comments »

Insiders Cash Out of $FIVE on a Secondary Offering

Five Below Inc. (NASDAQ: FIVE) has enjoyed a rather good run since its 2012 initial public offering. The company sells products that cost under $5 and are supposed to be targeted towards children. Now we have a secondary offering from the company, and investors should know that this offering is the insiders cashing out.

 

The secondary offering was raised in size due to demand, up to 11.315 million shares at $35.65 per share. This was projected to be 10.315 million shares to be sold just last week. The underwriters were listed as Goldman Sachs, Barclays Capital, Jefferies & Company, Credit Suisse Securities, Deutsche Bank Securities, UBS Securities and Wells Fargo Securities. Certain selling shareholders have granted the underwriters a 30-day option to purchase an additional 1,697,250 shares of common stock.

Here is all that investors need to know on the surface: All of the shares are being offered by selling shareholders, including certain members of Five Below’s management team and affiliates of certain members of Five Below’s board of directors. Five Below will not receive any proceeds from the sale of shares in this offering.

Read more

Comments »

Student Loan Balances Rise Along With Delinquencies

“A new study on student loans offers more evidence of the financial squeeze facing recent college graduates. But nearly as striking is the company behind the study. TransUnion, one of the nation’s largest consumer credit rating agencies, is among a growing number of organizations in the lending community looking closely at whether the growth in student debt is affecting the overall creditworthiness of a whole generation of borrowers.

“Thisis an emerging area of research,” said TransUnion Vice President of Research and Consulting Ezra Becker in an interview.

While the new study does not draw any conclusions about the borrowers’ creditworthiness, it does paint a grim picture of the college debt situation.

(Read MoreStudent-Loan Delinquencies Now Surpass Credit Cards)

TransUnion says it looked at all 300 million consumers in its database over the past five years, and found that as of last March 37.5 million had at least one student loan. That is up 35 percent from 2007, when 27.8 million consumers had student loans. The average student loan debt per borrower jumped to $23,829 in 2012 from $18,379 in 2007. That is a 30 percent increase. Reported student loan balances jumped 75 percent in the same period—”unprecedented growth,” according to Becker.

The study also found more than half of student loans are in “deferment,” where the borrower can temporarily delay making payments. Payments for certain types of student loans are automatically deferred while the borrower is still in school, but borrowers can also apply for deferment based on financial hardship. The difficulty comes when the deferment period—often three years—is up, and the borrower comes face to face with a dismal job market….”

Full article

Comments »

US Banks Shaken by Biggest Fund Withdrawals Since 9/11

Source

“US Federal Reserve is reporting a major deposit withdrawal from the nation’s bank accounts. The financial system has not seen such a massive fund outflow since 9/11 attacks.

The first week of January 2013 has seen $114 billion withdrawn from 25 of the US’ biggest banks, pushing deposits down to $5.37 trillion, according to the US Fed. Financial analysts suggest it could be down to the Transaction Account Guarantee insurance program coming to an end on December 31 last year and clients moving their money that is no longer insured by the government.

The program was introduced in the wake of the 2008 crisis in order to support the banking system. It provided insurance for around $1.5 trillion in non-interest-bearing accounts with a limit of $250,000. It was aimed at medium and small banks as the creators of the program believed bigger banks would cope with the crisis themselves.

So the current “fast pace” of withdrawal comes as a surprise to financial analysts because the deposits are slipping away from those banks which supposedly were safe. Experts expected savers in small and medium banks would turn to bigger players come December 31.

There are a number of reasons behind this unpredicted fund outflow. Some experts believe it has to do with the beginning of the year when the money is randomly needed here and there. Others have concluded the funds are getting down to business and being invested.

Another set of data from the US Federal Reserve shows some deposits may have moved within the banking system from one type of account to another.”

Comments »

$BRK-A Files to Raise Capital

“Berkshire Hathaway Inc. (NYSE: BRK-A) is about to raise some new debt financing. An SEC filing S-3ASR from Warren Buffett and friends was filed on behalf of the Berkshire Hathaway Finance Corporation unit to be sold as guarantee of Berkshire Hathaway Inc. of debt securities of Berkshire Hathaway Finance Corporation. The formal dollar amount was not shown but that will be out in the coming days. It is not that common for Berkshire Hathaway to be tapping the public bond market, but it is not all that uncommon either.

Berkshire Hathway’s S-3ASR filing said:

We will issue senior debt securities on a senior unsecured basis under an indenture, dated as of February 1, 2010, by and among Berkshire, Berkshire Hathaway Finance Corporation and The Bank of New York Mellon Trust Company, N.A.. BHFC may also issue debt securities under this indenture; however, the debt securities described herein are solely issued by Berkshire Hathaway Inc.

As far as the use of proceeds…..”

Full report

Comments »

Japan Announces $1.2 Trillion Budget, Borrowing Costs at New Highs

“TOKYO (Reuters) – Japan’s government approved on Tuesday a $1.02 trillion draft budget for the next fiscal year that aims to nudge tax revenues above new bond sales for the first time in four years, but still relies on borrowing to cover 46.3 percent of its spending.

The first full-year draft budget compiled under Prime Minister Shinzo Abe, who led his Liberal Democratic Party back to power last month with promises of economic revival, marks symbolic improvement after years of deterioration.

With the 92.6 trillion yen ($1.02 trillion) in spending, the government effectively trimmed the size of its draft budget from the previous year for the first time in seven years, taking into accountgovernment funding for basic pension payouts.

Still, the budget size hovered around record levels, underlining the difficulty which Abe’s government is facing in striking a balance between economic stimulus and fiscal reform.

Taken together with an 10.3 trillion yen extra stimulus plan signed off earlier this month and financed in more than half by new bond sales, it drives borrowing to new highs, pushing Japan’s record high debt further into uncharted territory.

“We managed to make the annual budget slimmer than before,” Finance Minister Taro Aso told reporters.

“Without the extra budget, the economy would fall into a severe situation in April-June,” he added.

In fiscal year 2013/14 starting in April, the government plans to issue new bonds worth 42.8 trillion yen, below this year’s 44.2 trillion yen initial target. But combined with the extra budget borrowing of 5.2 trillion, Abe’s government will borrow 48 trillion yen, though technically the extra budget borrowing will be booked in the 2012/13 accounts.

Tax revenue is targeted to rise 750 billion yen to 43.1 trillion yen, mainly reflecting an expected pick-up in economic growth to 2.5 percent from 1.0 percent forecast for the current year.

FISCAL TARGETS

Within the 92.6 trillion yen general-account budget….”

Full article

Comments »

ECB Rejects a 15 Year Plan to Bailout Anglo Irish Bank

“European Central Bank policy makers rejected an Irish government plan designed to fund the rescue of the former Anglo Irish Bank Corp. for at least 15 years, according to three people with knowledge of the discussions.

Under the proposal, the Irish central bank would have signed a contract guaranteeing to hold for at least a decade and a half a long-term bond issued to replace about 30 billion euros ($40.4 billion) of so-called promissory notes used to rescue the lender in 2010, according to the people, who declined to be identified because the talks are private…”

Full article

Comments »

Ukraine Files For a Third Bailout Loan With the IMF

“Ukraine will press for a third international bailout in four years this week as the former Soviet republic gears up for $10 billion of debt payments and foreign reserves languish near a two-year low.

Under pressure from a shrinking economy and an energy dispute with Russia’s OAO Gazprom (GAZP), the government will seek a $15.4 billion loan when an International Monetary Fund mission arrives today in the capital, Kiev. Its last aid package, which ended Dec. 27, was halted for failure to meet the fund’s terms.

Ukraine is grappling with falling output of steel, its top export earner, a widening current-account gap and reserves that have fallen below three months of imports. While the government can finance itself in global debt markets at present, an IMF accord is required to put the country on a “sustainable path,” according Viktor Szabo, who helps manage $10 billion at Aberdeen Asset Management (ADN) in London.

“They need a deal,” said Szabo, whose fund exited Ukrainian state and corporate debt in November because of the absence of an IMF agreement. “The current-account deficit isn’t sustainable as seen from the pressure on the currency and reserves.”

The hryvnia has fallen 1.7 percent during the last year to to 8.1435 per dollar, prompting the central bank to sell foreign currency. Reserves dropped to $24.5 billion in December from $38.2 billion in August 2011 as the current-account gap widened to a record $14.4 billion in all of 2012, when imports averaged $8.6 billion a month, according to the central bank data.

Debt Repayments…”

Full article

Comments »