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Sunday, June 14, 2009

Weekly Good News Wrap - June 8-14

  • The G-8 Cites Recovery Signs

    Posted: Sat, 13 Jun 2009 18:12:00 +0000

    The G-8 is composed of the U.S., Japan, Germany, France, U.K., Canada, Italy and Russia. Representatives met over the weekend in Lecce, Italy to begin crafting an agenda for when a broader set of leaders meet on July 8-10.

    The group acknowledged that they are now considering how to back out the swift rescue actions taken last year because the world economies are beginning to show signs of recovery.

    "We discussed the need to prepare appropriate strategies for unwinding the extraordinary policy measures taken to respond to the crisis once the recovery is assured," the leaders asserted in a collaborative statement. "There are signs of stabilization."

    "Early signs of improvement are encouraging, but the global economy is still operating well below potential and we still face acute challenges." said U.S. Treasury Secretary Timothy Geithner.

    "There is a distinct shift in tone from the G-8" during this meeting, said Eswar Prasad, of the Brookings Institute.

    "There are increased signs of stabilization in our economies," the G-8 re-emphasized. The group renewed their commitments to take "all necessary steps to put the global economy on a strong, stable and sustainable growth path."
  • Blackrock's Fink: "We are in the midst of a recovery..."

    Posted: Fri, 12 Jun 2009 16:13:00 +0000

    BlackRock's (BLK) CEO Laurence Fink says the US economy is in the midst of recovery. His firm put their money where their mouth is and gobbled up Barclays Global Investors for $13.5 billion on Friday according to a Bloomberg report.

    "We’re at a point where there’s much greater stability," Fink said. "People are now starting to ask, 'Maybe I can earn more than zero?' We’re starting to see clients starting to move out, in terms of investing in credit, and we’ve seen a re- stabilization in equities."

    Throughout the week additional reports showed a resurgence in hiring practices at major corporations while the government reported that initial claims for unemployment continue to fall.

    On Friday the Michigan consumer confidence index registered it's highest level in 9 months and the Nikkei 225 stock barometer finally smashed through the 10,000 mark -- a level not seen since early October of 2008.

    "Armageddon is behind us," Fink said.

    Perhaps the last 8 months of dire commentary on the US economy has been overblown?
  • Initial Claims Down, Retail Up, Foreclosures Fall

    Posted: Thu, 11 Jun 2009 15:29:00 +0000

    This week produced another "good news Thursday."

    Initial claims continued their downward spiral. As hiring picks up, new claims for unemployment dropped to their lowest levels since the January 24th weekly report.

    Consumers were flashing the buy-sign again in May. The Commerce Department said that sales at U.S. retailers rose 0.5% last month. According to Rasmussen Reports, consumer confidence is now up ten points from the beginning of the year. Investor confidence is up seventeen points from the first reading of the year.

    The May foreclosure figures were also released on Thursday and the number of filings in the U.S. dropped 6%. That had a majority of economists stroking their chins in disbelief. Some areas of the country actually reported double digit drops April to May. Foreclosure filings in Illinois dropped nearly 20%. Foreclosure filings in Illinois also dropped nearly 20%. There were even year over year drops. Foreclosures in Rhode Island for the month dropped 26.9% compared with May 2008. And in Massachusetts foreclosures were down 45.7% from the same period last year.

    Look for continued improvement in employment, retail, mortgage activity and housing sales as thisnew growth cycle gets underway.
  • Hiring Picks Up in May

    Posted: Wed, 10 Jun 2009 19:45:00 +0000

    After the flurry of better than expected employment numbers in recent weeks, several new private surveys show hiring increasing in restaurants, mortgage services and health centers. As we've noted previously some of these sectors showed their ability to offer recession proof jobs in recent months. But asrecovery begins, these sectors are now becoming the first to add jobs to their payrolls.

    One survey from the Society for Human Resource Management shows that about 25% of manufacturing companies and 4 out of 10 service firms now have initiatives in place to add employees in June. Compared to their past surveys, those are the best results in six months.

    Last week the Conference Board said that online job ads rose by 250,000 in May. That was the largest jump on internet job boards since October 2006. And As expected as GDP growth resumes, job demand actually increased in May.
  • Jumbo Mortgage Activity Increasing

    Posted: Tue, 09 Jun 2009 19:33:00 +0000

    As this recovery begins, all eyes will be on the housing markets as a gauge for just how strong this return to growth will be.

    Of particular note is the jumbo mortgage market which is now springing back to life.

    A jumbo mortgage is a home loan with a lending amount above the industry-standard definition of conventional conforming loan limits. With some exceptions, this means an amount above $417,000. A loan in excess of $650,000 is typically referred to as a super jumbo mortgage.

    Banks have now resumed underwriting wealthy clients in both of these categories. In fact jumbo activity seems to be brewing even with a limited secondary market for these large payback notes.

    For instance, Bank of New York Mellon’s wealth management division reports a resurgence in its high-end lending activity. "We’ve seen significant growth," says Erin Gorman, their national director of sales. Through the end of May 2009, BNY Mellon's jumbo lending activities are up 32% by dollar volume compared to that same period in 2008. In the first quarter of 2009, BNY's average loan balance bounced by 23% compared to the first quarter of 2008.

    Another example is found over at Coldwell Banker Residential Brokerage. In the Boston market alone 36 properties of $1 million and up went under contract in March. That figure nearly tripled in May, jumping to 105 mega residential deals.

    Mellon's Gorman currently is observing that her competitors are indeed returning to the jumbo market as theeconomy recovers. She notes that during the recession, "we earned a reputation as the go-to player in jumbo mortgages. And that puts us in a strong position as other lenders gingerly move back onto the field."

    BNY Mellon (BK) is one of the 10 large banks announcing that they will begin repayment of their TARP bailout monies to the US Treasury.
  • More Large Banks Pay Back Taxpayers

    Posted: Tue, 09 Jun 2009 13:02:00 +0000

    The Government is to announce Tuesday that as many as 10 additional large banks are planning to pay back the monies borrowed under the Troubled Asset Relief Program (TARP).

    These large banks (which are now significantly healthier than this time last year) will repay another $50B in loans. That's in addition to some smaller banks that have already paid the US taxpayers back and on top of those healthy regional banks who said "No Thanks!" to TARP in the first place.

    Of the over 9000 banks chartered in the US, only one has failed in June.
  • Nikkei Hits 8 Month High - Approaches 10,000

    Posted: Mon, 08 Jun 2009 05:36:00 +0000

    Japan's Nikkei stock index registered its highest mark in eight months on Monday. Investors were betting on the U.S. economy after Friday's report that far fewer U.S. corporate jobs were lost in May than most economists had forecast.

    The Nikkei is now approaching the important 10,000 mark, a milestone watched closely by many traders.

    "Money is flowing into assets such as commodities and stocks as risk tolerance has steadily improved on the back of hopes for a recovery." said Takahiko Murai, general manager of equities at Nozomi Securities.

    After gaining more than 2.5% last week, the index has now recovered almost 40% from it's low in March.

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