Trading Now

Trading Now

Thursday, July 23, 2009


*residential mortgage loans and commercial real estate will bring us to the brink again, it's just a matter of time.
Banks continue to struggle with troubled loans
Results from Wells Fargo, U.S. Bancorp, KeyCorp and SunTrust Banks show that while they are performing well in some areas, they are still struggling with increases in troubled loans to businesses and consumers. All four banks reported steep increases in loan losses. The reports indicate the financial industry is not done working through issues related to the financial crisis. The Wall Street Journal (23 Jul.)

*it's the JOBS stupid
Bernanke: End of recession won't decrease unemployment
Joblessness will continue to rise for a while, even after the U.S. recession ends sometime this year, Federal Reserve Chairman Ben Bernanke testified before Congress. "We do expect to see positive job creation near the end of this year, early next year, but it's going to take a while, given the pace of growth, for the unemployment rate to come back down to levels that we would be more comfortable with," he said. Bernanke seemed to be confirming what many economists feared, a "jobless recovery." The Washington Post (23 Jul.)

*so who will be next and when will the PBGC be bankrupt?
U.S. assumes pension liabilities of auto-parts maker Delphi
The Pension Benefit Guaranty Corp. will take over pension plans of Delphi, an auto-parts company once owned by General Motors, the U.S. government said, reversing an earlier demand that assets of Delphi and GM be used to pay pension obligations. The federal pension guarantor might have changed its position because the tough stance was hindering the Obama administration's efforts to quickly restructure the auto industry, analysts said. The New York Times (22 Jul.)

*you think you didn't understand CDS before? Read this, you really won't understand.
Credit default swaps complicate debt restructurings
Many debt restructurings that attempt to use bond-exchange offers are being complicated by issues related to credit default swaps. "Every time an exchange offer fails or there is a low participation rate, it is because of the CDS," said one Citigroup financier. Bankers are being forced to structure such exchange offerings while making sure CDS investors are satisfied. Financial Times (tiered subscription model) (23 Jul.)

*hummmm...starting to smell like american banks.
Loan growth threatens Chinese banks' risk-management systems
Loan growth among China's banks reached a record high in the first six months of 2009, a development that is expected to test the lenders' risk-management systems. Also, the quality of loans likely will be inferior to those written more than a year ago, Standard & Poor's analysts said. If the economic slowdown worsens in China, asset quality could decline further. (23 Jul.)

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