“NEW YORK (Reuters) – Applications for home mortgages rebounded last week after three straight weeks of declines as interest rates tumbled, data from an industry group showed on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage applicationactivity, which includes both refinancing and home purchase demand, jumped 14.8 percent in the week ended March 1. The index hit its highest level since mid-January….”
Comments »“(Reuters) – Nasdaq OMX Group Inc said it will form a marketplace for trading in shares in unlisted companies in a joint venture with SharesPost Inc, whose private trading platform has run into regulatory trouble.
The stock exchange operator will own a majority of the venture, Nasdaq Private Market. Specific terms were not disclosed.
The new market, to be based in San Francisco, will launch later this year, pending regulatory approvals, and will be led by SharesPost founder Greg Brogger.
SharesPost’s online trading platform, which matched buyers and sellers of unlisted shares, was charged by the Securities and Exchange Commission last March for failing to register as a broker-dealer before offering securities…”
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“Euro-area exports fell in the fourth quarter for the first time in more than three years and investment declined as the sovereign debt crisis pushed the region deeper into a recession.
Shipments from the euro area dropped 0.9 percent in the last three months of 2012, helping to drive gross domestic product down 0.6 percent, the European Union’s statistics office in Luxembourg said today. Exports last declined in the second quarter of 2009. Imports also fell 0.9 percent in the fourth quarter.
“Real economic activity is yet to show major improvement in many countries and it looks highly likely that growth will remain a major struggle for the euro zone for some time to come,”Howard Archer, chief European economist at IHS Global Insight in London, wrote in a note today.
The 17-nation currency bloc’s economy recorded a third straight decline in the fourth quarter, a trend that will continue in the first three months of 2013, according to a Bloomberg News survey of economists. The European Commission sees the economy shrinking 0.3 percent this year.
The European Central Bank will maintain its benchmark interest rate at 0.75 percent tomorrow with the euro area mired in a recession and political instability in Italy after an inconclusive election, according to a separate Bloomberg survey. The ECB will also update its economic forecasts.
“German Chancellor Angela Merkel is turning east as she pushes plans for a more competitive Europe, seeking to bring on board the leaders of Poland and other eastern countries as allies elsewhere prove hard to find.
Merkel and French President Francois Hollande, the key players in the euro-area debt crisis, travel to Warsaw today for talks on closer European Union integration with Polish Prime Minister Donald Tusk and his peers from the Czech Republic, Slovakia and Hungary. The six leaders are due to hold a joint news conference at about 4 p.m. Warsaw time.
As southern Europeans vilify Merkel for her austerity-led solution to the debt crisis, the head of Europe’s biggest economy is looking for support to the countries of the east she knows from childhood growing up in communist EastGermany. It’s the first time that French and German leaders are jointly attending the four-country forum.
“Germany’s allies in the sovereign-debt crisis are not too numerous,” Kai-Olaf Lang, an analyst at the Berlin-based German Institute for International and Security Affairs, said by telephone. In contrast, Central Europe is “mainly like-minded in economic and financial matters” with the German government.
Forging eastern alliances might help Merkel outmaneuver the U.K. as it seeks to shield the City of London and allow her to sidestep efforts to block closer integration in Europe, including her latest push on competitiveness.
“The pound fell for the first time in three days against the dollar as Bank of England policy makers begin a two-day meeting to decide whether to add more stimulus to the economy to spur growth.
The U.K. currency weakened against all except one of its 16 major counterparts as 11 of the 39 economists surveyed by Bloomberg predict the central bank will increase its asset- purchase target to at least 400 billion pounds ($603 billion) from the current 375 billion pounds. Sterling strengthened yesterday as a report showed U.K. services expanded in February. U.K. government bonds were little changed.
“The risk, if there is a surprise at all, is that there will be more asset purchases and that will weigh on sterling,” said Raghav Subbarao, a foreign-exchange strategist at Barclays Plc inLondon. “Our base case is that there won’t be any change in policy tomorrow.”
The pound dropped 0.2 percent to $1.5097 at 12:17 p.m. London time after falling to $1.4986 on March 1, the weakest level since July 2010. The U.K. currency declined 0.1 percent to 86.38 pence per euro.
Sterling has slumped 5.5 percent this year, the second worst performer after the yen among the 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar gained 2.6 percent and the euro rose 1.2 percent….”
Comments »“Bondholders are replacing the International Monetary Fund in bailing out some of eastern Europe’s most indebted nations.
Hungary, Romania, Serbia and Ukraine, taking advantage of record low borrowing costs, sold $7.25 billion of notes last month, snubbing fiscal requirements from the Washington-based IMF for loans. At yields as high as 7.60 percent, the securities lured investors seeking better returns than the average 4.70 percent for emerging-market dollar bonds.
The sales are helping the former communist nations raise financing without accepting the budget discipline demanded by IMF loans. From Bucharest to Belgrade, the debt is luring demand as zero percent interest rates and increased monetary easing in developed nations push investors to search for higher yields in riskier securities.
“We see a few countries with worsening economic policies and the market is not punishing them,” Viktor Szabo, who helps manage $11.8 billion at Aberdeen Asset Management in London, said by e-mail Feb. 15. “In the current abundant liquidity environment, the anchor role of the IMF and other international financial institutions is less important as investors are desperately looking for yields.”
Hungary’s dollar bonds have returned 20 percent in the past year, almost twice the 11 percent average for emerging-market debt in JPMorgan Chase & Co.’s EMBI Global Diversified Index. The rally cut Hungarian yields by 196 basis points, or 1.96 percentage point, to 5.36 percent, while the EMBI average dropped 70 basis points. Ten-year U.S. Treasury yields fell to 1.90 percent from 1.94 percent while the S&P 500 Index rose 13 percent in the past 12 months.
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| Market Consensus before announcement ADP private payroll employment posted a 192,000 gain for January private payrolls versus its revised total for December of 185,000. The BLS figure for January was a 166,000 increase. |
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“Brent crude was little changed near its highest in four days as a North Sea pipeline system remained shut. Venezuela, OPEC’s fourth-biggest producer, announced the death of President Hugo Chavez.
Futures fluctuated, having climbed by the most in a month yesterday. Venezuelan Vice President Nicolas Maduro said on state television that Chavez died at 4:25 p.m. at a military hospital in Caracas. The Brent pipeline system has been shut since an oil leak was discovered March 2 on the Cormorant Alpha platform. U.S. crude stockpiles rose 5.6 million barrels last week, data from the American Petroleum Institute showed.
“There’s still positive sentiment, risk appetite is still high,” said Filip Petersson, a commodities strategist at Stockholm-based bank SEB AB, who estimates that a fair value for Brent would be $105 a barrel. “There’s plenty of crude out there at the moment.”
Brent for April settlement was at $111.40 a barrel, down 22 cents, on the London-based ICE Futures Europe exchange at 12:20 p.m. in London after advancing as high as $112.23. The volume of all futures traded was 68 percent above the 100-day average. Prices gained $1.52, or 1.4 percent, to $111.61 yesterday, the highest level since Feb. 27 and biggest increase since Feb. 8. The European benchmark grade’s premium to WTI futures was little changed at $20.63.
WTI for April delivery was at $90.64 a barrel, down 18 cents, in electronic trading on the New York Mercantile Exchange. The volume of all futures traded was 38 percent below the 100-day average.
“South Korea joined Russia and Kazakhstan in boosting gold holdings, even as the metal had its worst start to a year since 1991 and billionaire investor George Soros cut his stake in the biggest bullion exchange-traded fund.
The Bank of Korea added 20 metric tons in February, raising its gold reserves by 24 percent to 104.4 tons, it said in a statement today. Holdings rose about $1.03 billion by value to $4.79 billion at the end of last month, equivalent to 1.5 percent of total foreign exchange holdings, according to the statement. Prices advanced.
Russia and Kazakhstan expanded bullion reserves for a fourth straight month in January and the World Gold Council expects central banks to remain strong buyers this year after increasing purchases in 2012 by the most in almost five decades. Banks from Goldman Sachs Group Inc. to Credit Suisse Group AG predict the metal’s 12-year bull market may be unwinding after five straight monthly losses.
“They are buying gold for a long-term commodity that they can put into their portfolios,” said David Lennox, a resource analyst at Fat Prophets in Sydney. “The timing of their entry into the market can sometimes be quite contrary to what’s happening price-wise.”
Gold for immediate delivery has fallen 5.9 percent this year, making it the worst-performing precious metal. It touched $1,555.55 on Feb. 21, lowest level since July, and traded 0.1 percent higher at $1,577.32 at 4:55 p.m. in Seoul.
“Freeport-McMoran Copper & Gold Inc. (FCX), the world’s second largest copper miner, may double sales of copper concentrate to China in the next three years as mined production expands, according to Javier Targhetta, the company’s senior vice president of marketing and sales.
Sales to China may be 800,000 to 1 million metric tons by 2016, up from more than 500,000 tons this year, Targhetta said in an interview in Madrid yesterday. The company’s concentrate sales to the biggest metals buyer have grown 10 times since 2005, he said. Copper concentrate is the material from mines that’s processed into cathodes for use in pipes and wiring.
“We hope to significantly increase sales to China in the coming three years,” Targhetta said before Metal Bulletin’s copper conference in Madrid. “We are one of the ones increasing our mined production. Certainly the Chinese market is a good one for us to place part of new concentrate that we will be producing.”
China will boost concentrate imports by 17 percent this year, soaking up some of the expected growth in mine supply, Barclays Plc said Feb. 15. Freeport in January forecast copper sales this year of 4.3 billion pounds (1.95 million tons) from 3.66 billion pounds in 2012. China is moving its import requirements toward copper concentrate from refined metal, Citigroup Inc. said March 4.
“Australia’s economy expanded in 2012 at the fastest pace in five years as resource investment and exports outweighed subdued manufacturing and construction.
Gross domestic product grew 3.6 percent last year, the best performance since a 4.7 percent expansion in 2007, data from the Australian Bureau of Statistics compiled by Bloomberg showed. The economy grew 0.6 percent in the fourth quarter from the previous three months, when it rose a revised 0.7 percent that was higher than initially reported, today’s report showed.
Stocks and the currency rose as stronger exports validatedReserve Bank of Australia Governor Glenn Stevens’s decision to leave interest rates unchanged yesterday as the nation extends 21 recession-free years. Policy makers cut rates by 1.75 percentage points in the 14 months through December to rebalance an economy where mining regions in the north and west thrive while builders and manufacturers in the south and east struggle, dragged by the strength of the nation’s currency….”
Comments »“Haruhiko Kuroda will have limited options for aggressive easing if he’s confirmed as central bank governor as more Japanese government bond purchases heighten the risk of a market bubble, a former BOJ policy board member said.
“Kuroda will hit the wall of reality,” Atsushi Mizuno, vice chairman at Credit Suisse AG in Tokyo and a member of the BOJ board from 2004 to 2009, said in an interview today. “Increased bond buying would cause over-dependence on the BOJ and that’s not healthy for the market. I see the risk of a JGB bubble.” …”
Comments »FORTUNE — In the late 1990s, an ad agency creative director I’ll call Joe Smith to protect his privacy bought several hundred shares of Apple (AAPL) at $60 apiece. Last fall, at age 42, he found himself out of work and increasingly dependent on the value of those shares to make ends meet.
Following the lead of a 33-year-old investment advisor named Andy Zaky who had written that Apple was going to $750 by January and to $1,000 within a year, Smith converted most of his Apple common stock — more than he should have — into high-risk Apple call options. When those options expired in the third week of January with Apple trading below $500, they were worth exactly zero. Smith had lost roughly $400,000 and all his Apple shares.
A lot of people lost a lot of money when Apple went into the extended downward slide that just entered its sixth month. And there were plenty of other experts saying all along that the stock was undervalued and ready to bounce. But Smith’s story — and the story of hundreds of other investors who were following Andy Zaky’s so-called Apple model portfolio last fall — hold a special poignancy for me. Not only did these people get some spectacularly bad advice, but they got it from someone whom I helped make famous.
I’d been writing about Zaky since the fall of 2008. I’d covered his earnings predictions, his buy and sell calls, his critiques of competing fund managers. I’d eaten dinner with him, toured him around my Brooklyn neighborhood, introduced him to my wife.
So I feel a personal and professional obligation to find out what went wrong.
“The U.S. Food and Drug Administration (FDA) last night rejected an application from Johnson & Johnson (NYSE: JNJ) and Germany’s Bayer A.G. to extend the use of the two companies’ blood thinning drug Xarelto for reducing risk of heart attacks and strokes in patients with chest pain or previous cardiac illness. The drug was approved in 2011 for use to prevent clotting during some joint replacement surgeries, and its use has been expanded to treat irregular heartbeats and other types of blood clots….”
Comments »Home prices rose 9.7% in January, compared with the same month a year ago. That was the largest monthly increase since April 2006, according to research firm CoreLogic (NYSE: CLGX). The firm had previously forecast a rise of 7.9%. The data includes sales of distressed properties.
Month-over-month, January prices rose 0.7%, including distressed home sales. Excluding distressed sales, January prices rose 1.8% compared with December, and the year-over-year price also rose by 9%.
CoreLogic expects February housing prices to rise 9.7% year-over-year and to drop by 0.3% month-over-month as the seasonal slowdown in home sales heads into its fifth month. Excluding distressed sales, the year-over-year increase for February is forecast at 11.3% and the month-over-month estimate improves to a rise of 1.8%.
The company’s chief economist noted….”
Comments »Recent gains have left the Dow less than 40 points away from its all-time closing high if 14,164.53, and only about 70 points below its record intraday high of 14,198.10. Both were set in October 2007.
The S&P 500 is also within 2.6% of its record closing high of 1,565.15, also reached in October 2007.
U.S. stock futures were narrowly firmer ahead of the open.
Stocks have had a strong start to 2013. Even with a largely uneventful, February, all three indexes are still up between 7% and 8% so far this year.
Investors will also be looking for any signs of progress in talks to end the budget impasse in Washington, known as sequester. The Obama administration has started making $85 billion of cuts and some federal workers have started getting furlough notices.
U.S. stocks shrugged off the budget fight to end higher Monday….”
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Ben Bernanke
FORTUNE — Call it Bernanke’s folly. Or quagmire. Or both.
A new study, which was published on Monday by the National Bureau of Economic Research, suggests that the Federal Reserve’s policy of using ultra-low interest rates in order to encourage lending, might be doing the opposite.
This is, of course, not what Federal Reserve chairman Ben Bernanke has maintained. Ever since the financial crisis, and even a little before it, Bernanke has pushed the Fed to do whatever it can — quantitative easing, Operation Twist, making promises — to keep rates low. Bernanke has said that low interest rates would make it cheaper for people and companies to borrow, and so they will….”
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