Trading Now

Trading Now

Tuesday, August 11, 2009


*what will they do when stock markets sinks?
Banks race to hire as stock markets climb
After cutting back during the past two years, Goldman Sachs, JPMorgan Chase and other banks have been cautious about hiring this year. But they are stepping up recruitment as credit spreads narrow and stock markets surge. "Back in March and April, no one really knew if the investment-banking business was going to exist again," said David McCormack, managing director of Sheffield Haworth. "The world has changed dramatically in the last four to five months, and now banks are hiring." Reuters (8/10)

*you could work here instead
N.Y. Fed aggressively hires traders as holdings surge
The Federal Reserve Bank of New York plans to bolster its market-group staff, which was at 240 at the end of 2007, to 400 by the end of this year. The bank's soaring securities holdings prompted the hiring spree as the Fed aims to keep credit flowing through the economy. "Once we started to have to implement programs that were clearly outside the traditional credit-easing tools that the Fed has used before, it became illogical to manage some of the new programs inside the current structure," said Patricia Mosser, a senior adviser. Financial Times (tiered subscription model)

*no shit shylocks
Congressional panel says banks' troubled assets pose threat
If the U.S. economy deteriorates or the Treasury's efforts to revive markets fail, the government might need to expand its programs to rid banks of troubled assets, the Congressional Oversight Panel said. "Treasury must assure robust legacy securities and legacy loan programs or consider a different strategy to do whatever can be done to restart the market for those assets," the committee said. Reuters (11 Aug.)

*in case you were wondering what the government was doing to bailout homeowners
Ginnie Mae's exposure to subprime mortgages soars
The Government National Mortgage Association, known as Ginnie Mae, will soon join Fannie Mae and Freddie Mac as a trillion-dollar guarantor of subprime mortgages. Like its cousin companies, Ginnie Mae is owned by U.S. taxpayers and appears to be heading toward trouble with its mortgage exposure. The inspector general of the Department of Housing and Urban Development issued scathing reviews of the Federal Housing Administration's practices. Ginnie Mae bundles and then sells FHA-insured mortgages. The Wall Street Journal (11 Aug.)

*the crisis came about due to lax lending standards. You can't drive up prices to high heaven unless you have an exhorbitant pool of mortgagors and you can't have that unless you have oodles of cash to throw around and exotic mortgage set-ups like ARM's or Pick a Payment. Poof! 30% of U.S. mortgages could be underwater in 12 months
As unemployment and foreclosures increase into next year, as much as 30% of U.S. homeowners could owe more than their houses are worth by mid-2010, data service said. Already, nearly a quarter of homes are underwater. "The negative equity rate will rise and spin off more foreclosures," said Stan Humphries, chief economist of Bloomberg (11 Aug.)

*if the bank lobbying that has taken place since the crisis began to thwart any new regulation or transparency is any indication
Analysis: Crisis brings 3 lessons that remain unlearned
It is clear that economic forecasters were wrong to dismiss the importance of the August 2007 collapse of the U.S. subprime-mortgage market. The crisis that followed offers three lessons that policymakers seemingly have not learned. The economic downturn has taught that imbalances in global trade and finance have real consequences, debt brings with it risk, and globalization does not manage itself but needs to be guided. Telegraph (London)/ (10 Aug.)

*and Germany said they are on the road to recovery...right
Banking insider says Germany remains at risk of credit crunch
Andreas Schmitz, head of the Federal Association of German Banks, cautioned that a credit crunch continues to threaten the country as banks are forced to cope with corporate downgrades. "Will there be a credit crunch? Clearly it is a concern, and there is a real danger of this. I do not think it is entirely unrealistic to think there will be one," Schmitz said. "I think we have reached the low point of the financial crisis. But it is obvious that every bank will have more to deal with in the next 18 months, in terms of defaults by clients and nonperforming loans, than they have had up to now." Financial Times (tiered subscription model) (11 Aug.)

*will Canada be forced into a more sever recession?
Obama dismisses "Buy American" complaints at trade talks
President Barack Obama described problems created for Canada by the U.S. stimulus' "Buy American" restriction as isolated. "This in no way has endangered the billions of dollars of trade taking place between our two countries," he said. Canadian Prime Minister Stephen Harper lobbied Obama for an exemption that would help Canadian exporters but returned home after trade talks in Guadalajara, Mexico, largely empty-handed. Canadian businesses have complained that they are forced to compete with U.S. firms inside Canada but are increasingly blocked from competing for business within the U.S. The Globe and Mail (Toronto) (11 Aug.)

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