Financial News 7/8/12 – 7/14/12

Economy

-China’s trade surplus widened in June due to slowing exports and imports emphasizing the weakening global economy. 7/10

-Job openings increased in May to 3.6 million a rise of 5.8% from April.  7/11

-China is increasing spending in an attempt to improve growth leveraging state owned firms and further entrenching those entities as opposed to turning to a more open- market oriented economy.  7/11

-Brazil reduced interest rates for the eight straight time after their central bank meeting and South Korea had a surprise interest rate cut as well. 7/12

-Minutes from the most recent Fed meeting showed that Fed Governors are seriously considering more stimulus moves.  7/12

-Mortgage rates continue to fall as the average 30 year fixed rate mortgage dropped to 3.56%. 7/13

-China’s GDP fell to 7.6% for the second quarter down 8.1% in the first, it slowest pace of growth since the financial crisis. 7/13

Corporate

-Alcoa kicking off earnings season with a slight loss for the second quarter.  Sales fell by 10% and the firm was hit by falling aluminum prices. 7/10

-Wellpoint, the number two health insurer, will purchase Amerigroup, a Medicaid-focused company for $4.46 billion.  7/10

-Financial broker Peregine Financial filed for chapter 7 bankruptcy.  The trading firm is allegedly missing $215MM in customer money.  CFTC has filed a lawsuit against the firm accusing the firm and its founder of fraud among other violations.  7/11

-The head of Peregine Financial Group admitted to defrauding clients of more than $100 million over 20 years by personally altering bank statements and misleading auditors. 7/14

-The trades of the “London Whale” cost J.P. Morgan $5.8 billion in the second quarter, however the firm still posted a $4.96 billion profit for the second quarter.  7/14

-Wells Fargo showed a 17% rise in second quarter earnings primarily driven by the bank’s mortgage lending. 7/14

Regulatory

-Credit card giants Visa and MasterCard and several other large banks agreed to a $6 billion settlement that they conspired to fix fees merchants were charged for using credit cards.  In addition the Visa and MasterCard agreed to cut the fees they collect for using credit cards for 8 months, which retailers value at $1.2 billion.  The settlement will now also allow retailers to charge more for items consumers purchase with credit cards.  7/14

Market

-After falling on news on a European wide plan to quell the debt crisis, Spanish bond yields are on the rise again.  The 10 year yield has risen to just short of 7.0%.  7/9

-At a euro-zone finance ministers meeting Spain was given an extra year to bring its budget back in line with the groups rules and announced $37 billion of the previously announced bailout of the country’s banks would be available by the end of the month. 7/10

-As part of the $123 Billion bailout of Spanish banks, the banks will be required to cede control to European institutions and losses will be imposed on small local investors. 7/11

-Spain’s Prime minster announced additional austerity cuts that are expected to reduce the country’s budget deficit by $80 billion by 2015. 7/12

-The Treasury auctioned of 10 year notes on Wednesday at a record low yield of 1.459%.  7/12

-Italy’s debt rating was cut to just 2 levels above junk status by Moody’s.  7/13

-With the reduction by the ECB of short term interest rates the Euro has fallen to a 2 year low against the dollar of $1.22.  7/13

-World markets rallied on Friday on better than expected results from J.P. Morgan to help bring the week’s performance to a slight gain after 6 straight daily declines.  The S&P 500 gained 1.6% and the Dow gained 1.6% bringing their weekly gains to 0.16% and 0.04% respectively.  In Europe stocks were up 1.3% for the day and 0.7% for the week.  Oil rose on the positive news up $2.65 to $87.10.  7/14

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