|
| Weekly Wrap Up |
Markets started the shortened trading week down and drops continued into Tuesday as jitters about earnings persisted. Stocks have experienced a good run for four weeks now, so a pullback was expected by some investors. Speculation of a possible bankruptcy for General Motors (GM: Charts, News, Offers) weighed on the Dow Jones Industrial Average on Tuesday. If General Motors is unable to obtain approval from the government for its reorganization plan, bankruptcy may be the only option for the company. Wednesday stocks were only moderately higher with the announcement that Alcoa's (AA: Charts, News, Offers) first-quarter revenue fell to $4.1 billion from $7.375 billion a year ago. The markets posted huge gains on Thursday thanks to Wells Fargo (WFC: Charts, News, Offers).The San Francisco bank in a statement before the opening bell said that it expects to post a profit of $3 billion or 55 cents a share for Q1 on the back of strong results from its Wachovia acquisition last fall and the surge in mortgage refinancing. These results were much stronger that what the street was expecting and that led to a 3.1% rally in the DJIA and surge for other bank stocks such as Bank of America (BAC: Charts, News, Offers). Traders seem to believe that the worst is over for the banks and indeed the financials have been a key driver behind the recent 5 week run of the Dow which has added a staggering 22% over that period. Overall, the sentiment on Wall Street seems to have turned to cautiously very optimistic however it remains to be seen whether that bullishness is justified. Bond prices fell on Thursday raising the yield on the benchmark 10 year note to 2.92% and the dollar was trading higher versus both the euro and the yen. Markets were closed on Friday in observance of Good Friday. More Market News
|
|
| Economic News |
Bubbles have been frequent in economic history, and they occur in the laboratories of experimental economics under conditions which -- when first studied in the 1980s -- were considered so transparent that bubbles would not be observed. We economists were wrong: Even when traders in an asset market know the value of the asset, bubbles form dependably. Bubbles can arise when some agents buy not on fundamental value, but on price trend or momentum. If momentum traders have more liquidity, they can sustain a bubble longer. But what sparks bubbles? Why does one large asset bubble -- like our dot-com bubble -- do no damage to the financial system while another one leads to its collapse? Key characteristics of housing markets -- momentum trading, liquidity, price-tier movements, and high-margin purchases -- combine to provide a fairly complete, simple description of the housing bubble collapse, and how it engulfed the financial system and then the wider economy. (Source: Wall Street Journal) Full Story
|
The economy's steep plunge appears to be ending, a top presidential adviser said Thursday, but he refused to predict how high the unemployment rate will rise before a sustainable recovery begins. Lawrence Summers, director of President Barack Obama's National Economic Council, said there have been some encouraging signs the dive in economic activity that began late last year was drawing to a close. "There has been a substantial anecdotal flow over the last six to eight weeks of things that felt a little bit better," Summers told the Economic Club of Washington. "The sense of a ball falling off a table, which is what the economy has felt like since the middle of last fall... we can be reasonably confident that that is going to end within the next few months and we will no longer have that sense of a free-fall." (Source: MSNBC) Full Story
|
Last week, the Financial Accounting Standards Board (FASB), which determines how we measure value in the material world, made a major rule change. Prodded by that noted statesman and keen economic thinker Rep. Barney Frank of Massachusetts, the board changed the so-called mark-to-market rule in a way that will dramatically improve the look of bank balance sheets. Mark-to-market is a simple concept: You value the assets on your books at their current market value. The new rule, however, would allow banks far more leeway in this regard. They could opine that some of their assets are really worth more than the market says they are. They could thereby increase their reserves, which in turn would allow them to lend more to businesses and consumers, at least theoretically. (Source: Philadelphia Inquirer) Full Story
|
| Business News |
Barclays Plc (BCS: Charts, News, Offers)has agreed to sell its iShares asset management business to private equity firm CVC Capital Partners for 3 billion pounds ($4.4 billion), but kept the right to hunt for a better deal for two months. The deal, which will be 70 percent financed by Barclays, will land a windfall of up to 4.7 million pounds for Barclays President Bob Diamond, and millions for other staff. The British bank said on Thursday it expects to achieve a net gain on the deal of 1.5 billion pounds, which will add about 54 basis points to its equity tier 1 capital ratio, lifting it to 7.2 percent. (Source: Reuters) Full Story
|
If you were listening carefully to Warren Buffett on CNBC one month ago today, you heard him say, "This is a great time to be in banking." It may not have made sense to you then, but it should today. Wells Fargo (WFC: Charts, News, Offers)shares soared 31.7 percent today (Thursday) after the bank announced before the opening bell that it expects to report a record $3 billion in earnings for its first quarter. (Source: CNBC) Full Story
|
Pulte Homes Inc. (PHM: Charts, News, Offers) agreed to acquire Centex Corp. (CTX: Charts, News, Offers) Wednesday in a stock-for-stock deal valued at $1.3 billion that will create the nation’s largest homebuilding company. The transaction, which also includes $1.8 billion of debt, will give the combined business a strong liquidity position with more than $3.4 billion in cash as of March 31. The pairing of Pulte and Centex comes at a time when homebuilders are still struggling to find their footing as credit remains tight and buyers continue to be leery of big-ticket purchases. The industry in turn has attempted to stem the bleeding by drastically scaling back new construction and throwing more incentives at potential buyers in order to unload existing inventory. (Source: MSNBC) Full Story
|
|
| Technology Focus |
IBM Corp. (IBM: Charts, News, Offers)withdrew its offer to buy Sun Microsystems Inc. (JAVA: Charts, News, Offers)for about $7 billion this weekend, clouding the prospects for a deal that would shake up the computing industry, The Associated Press has learned. Talks were in their final stages in recent days, but IBM took its offer off the table after Sun terminated IBM's status as its exclusive negotiating partner, according to two people familiar with the situation. They spoke on condition of anonymity because they were not authorized to disclose the negotiations. One of these people said the two sides were still talking Sunday. It was unclear whether talks were continuing, or if Sun was trying to find an alternative suitor to IBM. (Source: MSNBC) Full Story
|
Cyberspies have penetrated the U.S. electrical grid and left behind software programs that could be used to disrupt the system, according to current and former national-security officials. The spies came from China, Russia and other countries, these officials said, and were believed to be on a mission to navigate the U.S. electrical system and its controls. The intruders haven't sought to damage the power grid or other key infrastructure, but officials warned they could try during a crisis or war. "The Chinese have attempted to map our infrastructure, such as the electrical grid," said a senior intelligence official. "So have the Russians." The espionage appeared pervasive across the U.S. and doesn't target a particular company or region, said a former Department of Homeland Security official. (Source: Wall Street Journal) Full Story
|
In a development that can't be too surprising but may revamp the Internet landscape, Yahoo (YHOO: Charts, News, Offers) Chief Executive Carol Bartz and Microsoft (MSFT: Charts, News, Offers) CEO Steve Ballmer have started talking about forging Internet search and advertising deals. First reported by Kara Swisher in a post on the AllThingsD blog Boomtown on the morning of Apr. 10, the talks are at an early stage. They include "many scenarios, such as one in which the companies swap online advertising assets and deliver services to each other," Swisher wrote. (Source: BusinessWeek) Full Story
|
| Your Money |
Are you lost in a sea of conflicting, hard-to-interpret data? You can gauge the effect on your day-to-day life and your future finances by tracking these indicators. The numbers are dizzying and mostly depressing. Every day the information floodgates open, releasing waves of economic numbers and stats we're told affect everything from the price of a loaf of bread to the number of for-sale signs in our neighborhoods. The steady stream of information, experts say, is missing one key component: "Consumers aren't being told which economic indicators they need to pay the most attention to, and why," says Alan Schlottmann, the executive director of the Theodore Roosevelt Institute, a research and consulting think tank, and a professor of economics at the University of Nevada, Las Vegas. (Source: MSN Money) Full Story
|
|
|
|
|
