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Tuesday, January 12, 2010


Asian markets close mixed, with Alcoa dragging down Australia
Share markets across the Asian-Pacific region were mixed Tuesday, with China's Shanghai Composite advancing for a third straight session. Alcoa's earnings disappointed markets, hindering material shares across the region. The Shanghai Composite jumped 1.9%, Japan's Nikkei 225 rose 0.8% and Australia's S&P/ASX 200 gave up 1%. South Korea's Kospi Composite added 0.3%, Taiwan's Taiex shed 0.2%, and Hong Kong's Hang Seng and New Zealand's NZX 50 dropped 0.4%. The Wall Street Journal (12 Jan.)

White House considers fee to recoup losses from TARP
Although most of the major banks that received money through the Troubled Asset Relief Program have repaid the U.S. government, the White House is considering a fee to recoup the cost of the program. While few details about the fee are available, officials said the administration is attempting to structure it so banks cannot pass the cost along to customers. Officials acknowledged that doing so will be difficult. Financial Times (tiered subscription model)

Fed makes record profit, will return $45 billion to Treasury
The Washington Post calculated that the Federal Reserve will return about $45 billion to the U.S. Treasury Department after earning a record profit because of its unconventional initiatives to boost the economy. "This shows that central banking is a great business to be in, especially in a crisis," said Vincent Reinhart, a former official at the Fed and a resident scholar at the American Enterprise Institute. "You buy assets that have a nice yield, and your cost of funds is very low. The difference is profit." The Washington Post (12 Jan.)

More Dubai foreclosures are likely after Barclays wins in court
Banks holding defaulted mortgages on real estate in Dubai, Unite Arab Emirates, might be encouraged to go ahead with foreclosure, now that Barclays has won the first court cases on foreclosure in the city. "Banks will be more aggressive in pursuing legal action if they see the process is efficient," said Antoine Yacoub, a banking analyst at Moody's Investors Service. "... Once they see a precedent has been set, they will be encouraged to push more cases through." Maktoob (11 Jan.)

Analysis: Detroit's race to green tech is apparent at auto show
Models featuring electric batteries and gas-electric hybrid power at the Detroit auto show demonstrate a change in direction for U.S. automakers, according to this New York Times analysis. The shift away from conventional engines will reduce dependence on foreign oil and benefit the environment. Automakers are also focusing on green power because they expect to have to meet emissions and mileage standards in future years. The New York Times (11 Jan.)

Fed argues against disclosing info about loans to banks
Attorneys for the Federal Reserve argued that banks will be less likely to tap the Fed's discount window or use other emergency lending programs if the information will be made public. Accessing the funds carries a negative connotation, said Matthew Collette, a Fed lawyer, even if it is a healthy bank struggling with a short-term liquidity issue. News organizations have sued to gain access to the information. The Wall Street Journal (1/12)

Western Europe's unemployed feel pain of prolonged downturn
Unemployed workers across Western Europe are still waiting for jobs to come back, despite the technical end of recession in several countries. The Organization for Economic Co-operation and Development said unemployment is close to 10% in the region and is likely to keep climbing. Millions of young people will be locked into joblessness for at least another year, economists said. The Washington Post (12 Jan.)

Venezuelan benchmark bond soars 4% as S&P upgrades rating outlook
Bond markets sent Venezuelan government debt surging in the first day of trading after President Hugo Chavez devalued the bolivar. The benchmark 2027 bond jumped about 4%. Standard & Poor's affirmed its BB-minus rating for Venezuelan debt and upgraded its outlook from negative to stable. "We revised the outlook to stable because we believe that the latest government devaluation of the currency, combined with prospects for stable oil revenues, will reduce Venezuela's fiscal pressures," S&P said. Reuters (11 Jan.)

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