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Fed posts

Is Wall Street influencing Obama's regulations?

In a word: yes.

Despite all the talk about regulating these speculative investment vehicles, "Obama's financial overhaul plan included no big surprises or threats to the lucrative, secretive industry," writes The Wall Street Journal.

The name of the game is lobbying, which is easily funded by the $1.3 trillion dollar industry. Even after numerous Ponzi schemes and frauds have recently been exposed, the U.S. government has failed at regulating hedge funds, the most speculative area in finance, in part due to the industry's lobbying efforts.

Continue reading Is Wall Street influencing Obama's regulations?

The week in preview: A few chances for pre-holiday fireworks

Things will be pretty quiet again on the earnings front during this holiday-shortened week, so not much chance of fireworks there.

The one report analysts surveyed by Thomson Reuters seem to have the highest hopes for is that from Apollo Group Inc. (NASDAQ: APOL), as people look to education to better position themselves to survive the economic slump. For its fiscal third quarter, during which a new co-CEO was named, the Phoenix, Ariz.-based educational services provider is expected to report a profit of $1.12 per share, which is 24.1% higher than a year ago. Revenue is expected to be 24.3% higher to $1.0 billion. The full-year forecast is currently for $3.97 per share (+28.5%) on sales of $3.9 billion (+24.4%). Earnings have topped expectations in the past four quarters, by as much as 13 cents per share. The long-term EPS growth forecast is 15.9%, which is double the industry average, and the forward PE ratio estimate is 15.0. The First Call consensus recommendation remains to buy APOL; InvestorPlace calls it a stock you can trust. At $68.50, shares are down 10.6% since the beginning of the year, but they peeked above the 100-day moving average at the end of this week for the first time since March.

Continue reading The week in preview: A few chances for pre-holiday fireworks

New financial regulation empowers the Fed

What are the new changes in financial regulation? First and foremost, President Obama wants to expand the powers of the Federal Reserve to assume primary responsibility for averting an new financial crisis.

Secondly, he wants to create a "council of financial regulators" who would improve coordination among agencies. The council would discuss systemic risks, but the Fed could at alone without its approval.

The administration has decided not to consolidate regulatory agencies due to the political fallout involved.

Continue reading New financial regulation empowers the Fed

Comfort Zone Investing: Mission impossible?

Your mission, should you decide to accept it, Mr. Phelps, is to boost the economy and increase employment but not allow inflation to run rampant. As usual, the secretary will disavow any knowledge of your actions should you fail. This message will self-destruct in five seconds. Good luck, Mr. Phelps. Or should that be Mr. Bernanke?

That, in a nut shell, is the fine line the Fed must walk. It has to get the economy going and more people back to work, mostly by pumping money into the economy. But it can't put too much money into the system or inflation will run rampant. Right now, the presses are running 24/7, and the money is flying out the Treasury's and Fed's windows, seemingly to almost anyone walking underneath them. The stimulus package is in full swing. But what signs are there that it's working?

Continue reading Comfort Zone Investing: Mission impossible?

$9 Trillion Fed blackhole draws cries for GAO audit

You had to see this coming. The U.S. Federal Reserve is now being subjected to cries for transparency that it has said are necessary for the financial institutions it regulates. The campaign is being spearheaded by Florida Democratic Congressman Alan Grayson. Believe it or not, no one currently audits the Federal Reserve's accounts. And some skeptics have come to think that the Federal Reserve's fiscal house is not in order and that the Fed has actually not been able to balance its books and account for all the assets it has purchased. Zero Hedge claims the Fed cannot account for nearly $9 trillion in off-balance sheet transactions.

Continue reading $9 Trillion Fed blackhole draws cries for GAO audit

The week in preview: Eye on apparel and tech earnings

Last week we got a good look at how the apparel retailers have been doing when JCPenney Inc. (NYSE: JCP), Kohl's Corp. (NYSE: KSS), Nordstrom Inc. (NYSE: JWN), and Urban Outfitters Inc. (NASDAQ: URBN) all reported better-than-expected earnings for the most recent quarter. On the other hand, Abercrombie & Fitch Co. (NYSE: ANF), Eddie Bauer Holdings Inc. (NASDAQ: EBHI), Liz Claiborne Inc. (NYSE: LIZ), and Macy's Inc. (NYSE: M) reported quarterly losses, reflecting the ongoing reluctance of consumers to spend.

Continue reading The week in preview: Eye on apparel and tech earnings

Doomsday Scenario: Lame Treasury auctions, travel numbers shot down

Another day, more wonderful news. If the rally last week left you feeling peppy, alas, global debt markets didn't share your enthusiasm -- witness the extremely tepid reception a new round of U.S. and U.K. debt offerings got from buyers today. Air travel numbers were horrific, indicating, by some opinions, a dire summer for the perennially strapped industry.

Continue reading Doomsday Scenario: Lame Treasury auctions, travel numbers shot down

Inaction and a financial crisis don't mix

Investor Jim Rogers, noted for his expertise in commodities, is someone Wall Street professionals, business executives, and economists alike pay close attention to, as he's frequently been ahead-of-the-curve regarding market and investment trends.

Still, that's not to say that Rogers sometimes can't overdo it a bit and/or does not get it wrong.

A recent chat Rogers had with Bloomberg News is an example of the latter, as the talk yielded more rhetoric, half-truths, and flat out absurd statements and not a whole not of illumination.

Continue reading Inaction and a financial crisis don't mix

The week in preview: Interest rates, manufacturing, earnings gainers

On Tuesday, the Federal Reserve's FOMC holds two-day meeting on interest rates and will announce its decision on Wednesday. The Fed's Ben Bernanke will still be out and about this week, discussing the failure of Lehman Brothers later today, and ending up the week speaking at the Independent Community Bankers of America National Convention and Techworld.

Manufacturing will be in focus this week, starting with industrial production numbers for February and the Empire State Manufacturing Survey Diffusion Index for March scheduled to be released Monday morning. Tuesday morning will bring us the Producer Price Index for February, and Thursday morning comes the Philadelphia Fed Outlook Survey -- Diffusion Index Manufacturing for March.

Continue reading The week in preview: Interest rates, manufacturing, earnings gainers

Nationalization on demand

This post was written by Minyanville contributor Minyan Peter.

I have been asked whether there was anything in Chairman Bernanke's speech yesterday that changed my outlook on the prospects of nationalization for some of our largest financial institutions. In a word "no".

From my perspective, all Chairman Bernanke did was to confirm Monday's Joint Statement from the bank which offered that what the Government was hoping to implement were "temporary capital buffers" "to provide a cushion against larger than expected future losses, should they occur due to a more severe economic environment, and to support lending to creditworthy borrowers." And that the Government's security of choice would be "mandatory convertible preferred shares."

Continue reading Nationalization on demand

The week in preview: A glimmer at the end of the tunnel?

Among all the negative economic data that came out last week was a positive surprise: retail sales were higher in January. A fluke or a glimmer at the end of the tunnel? That may depend on whether we see any positive surprises arising from items on this week's economic calendar:

Continue reading The week in preview: A glimmer at the end of the tunnel?

U.S. adds up to $2 trillion in debt... and the dollar rallies

On a day when the United States committed up to $2 trillion more in government financing and programs to unlock credit markets -- probably the federal government's largest, one-day implied commitment in history -- the dollar rose against the euro and British pound.

The dollar strengthened 1.2 cents to $1.3821 and a gargantuan 4 cents to $1.4488 versus the British pound. The dollar also rose about one-half cent to $1.1584 versus the Swiss franc.

Now, in theory, increasing dollar commitments by the U.S. government means more dollars in circulation, which means every dollar is worth less -- a sequence that should cause the dollar to fall against the world's other major currencies. Not Tuesday, and really, when you review it, not since the financial crisis took hold in October 2008, so says economist David H. Wang. And the reason is basic: the dollar's status as a reserve currency, and as a safe haven.

Continue reading U.S. adds up to $2 trillion in debt... and the dollar rallies

The FOMC decision: Fed remains lender of last and only resort!

The Federal Open Market Committee issued its statement in which it indicated that it will keep short-term benchmark rates low for the foreseeable future. This was not really new and was expected. However, the bigger question was the Fed's stance on quantitative easing, the unconventional methods to keep credit flowing in the economy.

The Fed clearly indicated that it will continue to provide credit directly to those in need using the newly developed special programs, such as the Term Asset-Backed Securities Loan Facility, as the primary vehicles. It is focusing on the most effective means to keep credit flowing.

Continue reading The FOMC decision: Fed remains lender of last and only resort!

Fed can't cut rates but there are three things it can do

The Federal Reserve has cut its Fed Funds rate from 5.25% to 0.25%. Too bad it didn't get the economy moving, but that doesn't mean it is out of options.

Unfortunately, the three options it's considering don't solve the basic problem because they all seek to get people to borrow more money when too much borrowing is what got us into trouble in the first place. That's happening because Ben Bernanke seems to know only one thing -- he does not want to do the same thing that the Fed did under Herbert Hoover during the Great Depression.

So what are the three things it can do?

Continue reading Fed can't cut rates but there are three things it can do

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Last updated: July 11, 2009: 01:46 PM

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