Financial News and Notes 9/18/11 – 9/24/11

Economy

-Greece’s government held an emergency meeting after Euro-zone nations stated that they had not done enough to curb their budget and if Greece did not do more it could interrupt the flow of aid into the debt laden nation.  9/19
-Early forecasts for the holiday shopping season show sales growing but at lower levels then seen in 2010. 9/19
-The IMF lowered its 2012 global growth forecast to 4% and stated that the U.S. and Europe are in dangerous territory and face a decade of meager growth unless they revamp their economic policies.  9/21
-A recent survey of economist on housing forecasts that the housing recovery will remain very weak over the next several years with home prices expected to drop 2.5% for 2011 and rise just 1.1% annually through 2015. 9/21
-The housing market got some welcome good news as previously owned home sales rose 7.7% in July, however a major driver were foreclosures and short sales.  9/22
-After a two day meeting the Fed announced it is launching a new stimulus program by buying $400 billion of long term Treasurys to reduce long term interest rates and selling short term Treasurys.  The Fed will also by using proceeds from maturing mortgage backed securities and reinvest them in new mortgage backed securities.  The program dubbed “operation twist” is designed to spur the economy through increased spending and investment and aid the sluggish housing industry.  The steps were taken as they announced they saw “significant downside risks to the economic outlook.”  9/22
-New data released flashed additional warnings that the global economy might be headed back to a recession.  Both China and Europe showed declining manufacturing activity.  9/23
-The average 30 year fixed rate mortgage fell below 4% to 3.91%, which potentially could spur a wave of refinancings.  9/24

Corporate

-Tyco international is splitting into three separate companies further dividing the conglomerate.  9/21
-Oracle’s fiscal first quarter earnings rose 36% on sales from its software business.
-A civil suit was filed against several poker players and executives at Full Tilt poker an online poker site that claims the executives ran a ponzi scheme defrauding players of $444 million.  9/21
-Australian beer maker Foster’s is being taken over by SABMiller for $10 billion.  9/22
-Moody’s dropped the debt rating of major U.S. financial services firms bank of America, Wells Fargo, and Citigroup
-Banks in Europe could face up to $411 billion in losses as a result of the Euro-zone sovereign debt crisis according to the IMF.  9/22
-United Technologies is buying Goodrich, a aircraft components producer, for $16.4 billion.  It is the largest acquisition ever for Untied Technologies.  9/22
-HP has let go Leo Apotheker as CEO after only 11 months on the job and has replaced him with Meg Whitman the former CEO of eBay, and a current board member at HP, after investors have questioned the direction of the technology giant.  9/23 

Regulatory

-Obama proposed a deficit reduction plan that aims to cut $3.6 trillion over a decade, of which about half would come from tax increases.  9/19
-The SEC subpoenaed hedge funds and other financial firms over potential insider trading revolving around the U.S. credit downgrade.  9/21 

Market

-Many market strategist are cutting their yearend targets for the S&P 500, however the average is still 1,309.  The value reflects a 7.6% rise from Friday’s close.  At the start of the year the average estimate was 1,365. 9/19
-S&P dropped Italy’s credit rating based on the countries poor economic growth and unsettled government alliance.  9/21
-Long term treasury yields dropped as a result of the Fed announcement as the 10 year Treasury yield fell to a record of 1.87%.  Stock markets thought the move have little effect on economic weakness and also were troubled by the Fed’s sour forecast and sent stocks lower.  The Dow fell 2.5% and S&P 500 dropped 2.9%.  9/22
-Global markets took a heavy blow as recession fears began to mount and as it appeared increasingly likely that Greece will default on its debt.  The Dow fell 3.5%, the S&P 500 dropped 3.2%, the Nikkei fell 2.1% and Europe saw stocks plummet 4.9%.  Gold fell 3.7% to $1,739 as well.  Investors flooded safe havens of the dollar and U.S. Treasuries.  The Dollar index rose to its highest point since early February and 10 year Treasury’s yield dropped 15 basis points down to 1.717%.  9/23
-World markets had an awful week.  The Dow was down 6.4% for the week one of the worst in its history and the worst since October of 2008.  Gold also was not immune to the market weakness with the metal falling 5.9% on Friday and down 10% for the week to $1,637.5 an ounce as investors looked to sell the commodity to cover losses elsewhere.  Silver fell as well dropping 17% for its worst one day drop since 1980. 9/24

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