Trading Now

Trading Now

Tuesday, July 21, 2009


*this means the Recession is over right?
California breaks $26 billion budget deadlock
California Gov. Arnold Schwarzenegger and state lawmakers said they negotiated a compromise that closes the state's $26 billion budget deficit. The wide-ranging deal includes mandatory three furlough days a month for state workers, taking money from cities and counties, and delaying programs. The Sacramento Bee (Calif.) (free registration) (20 Jul.)

*what happened to all the trillions sitting on the sidelines? Up in smoke!
Credit crisis hinders clout of SWFs as assets plummet
According to Deutsche Bank, sovereign-wealth funds were estimated to have $3,000 billion in assets under management at the end of March, about $600 billion less than at the end of 2007. Bank analysts also reined in growth forecasts for SWFs. "Sovereign-wealth funds have suffered in the financial crisis and its fallout. Their total assets have fallen quite sharply since 2007," said Steffen Kern, an analyst at Deutsche Bank. "This is because of the fall in global equities and other assets such as real estate. The flood of new money into these funds, which we saw in large volumes before the crisis, has abated, too." Financial Times (tiered subscription model) (20 Jul.)

*not if the stock market isn't allowed to retrace March lows you won't. the more governemnt meddling, the worse for the market.
Fed has ability to limit inflation, Bernanke says
In a newspaper opinion piece, Federal Reserve Chairman Ben Bernanke explained that the central bank has been pouring money into the U.S. economy to stimulate growth, but it will be able to increase borrowing costs to curb inflation when necessary. "Accommodative policies will likely be warranted for an extended period," Bernanke wrote. "At some point, however, as economic recovery takes hold, we will need to tighten monetary policy to prevent the emergence of an inflation problem down the road." Reuters (21 Jul.)

*CLO's are a little brother of CDO's and were a disaster for Lehman Brothers, it's just that everybody wants to forget they exist.
Downgrades of CLO debt possible, Moody's says
Despite a rally in collateralized-loan obligations, the sector could face downgrades of its triple-A ratings, Moody's Investors Service warned. Analysts said CLO defaults have yet to peak. "The rate of deterioration in the CLO market has eased and prices are up, but that optimism may be overdone," said Michael Hampden-Turner, a credit strategist at Citigroup in London. "The economic environment for leveraged entities will remain challenging, with default rates forecast to rise throughout 2009. If the current rally in CLOs and leveraged loans continues, it will be increasingly vulnerable to a correction." Financial Times (tiered subscription model) (20 Jul.)

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