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Tuesday, October 20, 2009


Asian stocks rise in wake of strong Dow on Monday
Stocks saw gains in Asia on Tuesday after a strong performance by U.S. markets on Monday. Australia's S&P/ASX 200 Index rose 1.1%, Japan's Nikkei 225 Index increased 1%, Korea's Kospi Composite Index improved 0.6%, Hong Kong's Hang Seng Index gained 0.8% and the Shanghai Composite Index was up 1.5%. But Indonesia's benchmark index declined 0.4%. The Wall Street Journal (20 Oct.)

* a day late and a dollar too short but hey, who's counting?
White House looks to aid small businesses, home buyers
The Obama administration is seeking to aid two sectors of the economy that have suffered terribly in the recession -- small businesses and home buyers. The Treasury Department on Monday announced a program to help state and local housing finance agencies, some of which are deeply in the red, to provide inexpensive mortgages to borrowers who have not had access to such credit in the past. The administration also said it will ask Congress this week to beef up the amounts allowed in loans from the Small Business Administration. And the Treasury is looking for a way to help small businesses with bailout funds. The Washington Post (20 Oct.)

*Fitch is counting for one.
Fitch says mortgage-modification programs disappoint
Research from Fitch Ratings shows that the number of modified mortgages has increased, but more than half fall behind on payments within months of being modified. Other borrowers who are in a trial modification period have been slow to complete required documentation or make payments to have their loans permanently modified. Fitch estimates that up to 75% of modified mortgages are in default again within a year. "Ultimate modification performance or sustainability will still primarily hinge on whether the borrower wishes to keep the property, as well as having sufficient cash flow to make the modified payments," said Diane Pendley of Fitch. Financial Times (tiered subscription model) (20 Oct.)

*someone said to me yesterday that there was plenty of cash sitting on the sidelines. I said no sorry, thats not correct. Just one look at places like Dubai will tell you that no one is sitting on cash. Rather, they have lost their underwear just like the rest of us. And lo and behold, I'm a genius!
Investment firms' defaults will test Islamic finance industry
The market for Islamic bonds, or sukuk, has been one of the fastest growing sectors in the global financial industry. Issuance in the market jumped from essentially zero to about $100 billion in less than 10 years. Two prominent investment firms in the Middle East have recently defaulted, however, posing a significant test to the Islamic finance industry in regard to the settlement of sukuk. "It's a real legal battleground," said Mohieddine Kronfol, managing director of Algebra Capital. "It will set an important precedent." Financial Times (tiered subscription model) (10/19)

*yeah but retail numbers are up right? Its their expectations of a better xmas that are up. Their jeanie in the bottle hope springs eternal numbers of long ago and oh so far away.....In your dreams baby! Last week Neiman Marcus was sending out $50 coupons to entice shoppers and expect Saks and the like to do the same. I just got an interest increase on another credit card. No xmas presents this year man. Sorry.
Department stores struggle for balance on holiday inventories
U.S. department stores are trying to keep inventories lean this year, but they also don't want to be caught short as the holiday season approaches, analysts say. Last year, retailers wound up with a glut of unsold goods as consumers cut purchases in the recession. Chief financial officers are pressuring buyers to cut down, but some CFOs say that lack of enough to sell could mean a financial disaster during this key season. Reuters (10/20)

*how bout lending me money and then buying back next year.
N.Y. Fed tests tool for withdrawing liquidity
The Federal Reserve Bank of New York is testing the concept of "reverse repos," which could be used to drain liquidity from the banking system. However, officials emphasized that they are simply testing the exit strategy and are not ready to use it. "This work is a matter of prudent advance planning by the Federal Reserve, and no inference should be drawn about the timing of monetary policy tightening," the New York Fed said in a statement. CNBC/Reuters (19 Oct.)

IMF's Lipsky: Don't shut down economic stimulus yet
Any move to begin phasing out economic-stimulus measures now risks sending the global economy into weak growth in 2010, said John Lipsky, the second-ranking official of the International Monetary Fund. "This is no time to take risks with premature withdrawal of the stimulus," he said. CNBC/Reuters (19 Oct.)

*your not really surprised to learn that nothing has changed are you?
CEO perks, benefits went up while banks took bailout money
While some of the nation's biggest financial companies took $350 billion of bailout money from U.S. taxpayers, they increased executives' perks and benefits by an average of 4%, an analysis of corporate financial disclosures showed. GMAC Financial Services' CEO, Alvaro de Molina, got $2.5 million from his company to help out with his personal tax bill. The chief executive of Comerica, Ralph W. Babb Jr., got more than $200,000 for country club expenses. Perks and benefits for CEOs at the 29 biggest financial companies rescued with taxpayer money averaged more than $380,000 in 2008. The Washington Post (20 Oct.)

*didn't Ben just yesterday say that China is leading us out of this mess? YES, he did.
Profit at China's state companies down for first 3 quarters of 2009
Profit at China's state-owned industry from January to September fell 17.6% from the same period in the previous year, the Ministry of Finance says. Profit declined to $137.13 billion, down 2 percentage points compared with the January-to-August period. Gross revenue of these companies also declined 1.7% year-on-year. China Daily (Beijing)/Xinhua (China) (20 Oct.)

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