Sunday, December 13, 2009

Leftovers from 12/12/2009 Radio Show

Japan Q3 GDP up 1.3% (revised from earlier estimate of 4.8%).
Germany trade surplus up 2.5% as imposts fell 2.4%.
French industrial output fell .8% October; up .5% in Italy from 5.1% in September.

Hong Kong Finance chief publicly worried about risks of asset bubble and continuing capital inflows.

US consumer credit declined for the ninth straight month (12 out of last 13); Oct down 1.7%; Q3 down 3.3%; Q3 revolving credit down 7.4%; Sept revised down to 4.2%; Oct is down 3.6% vs year ago -- prior low record was down 1.9% in 1991.

Wholesale inventory up .3% Oct; Sept revised down to .8% from .6%>; wholesale sales up 1.2% Oct but inventory ratio still fell to 1.16 months from 1.17.

US trade deficit down to $32.9 billion Oct ($35.7 billion Sept); imports and exports were both up; oil imports dropped sharply.

Weekly jobless claims up 17,000 to 474,000; 4 week average down 7750 to 475,500; continuing claims down 303,000 to 5,170,000 (to extended benefits?).

Treasury yield curve (between 2 year and 30 year) 368 basis points -- widest in 17 years.

US retail sales up 1.3% in Nov adjusted -- 1.9% vs year ago; total sales Sept-Nov down 2.1% vs year ago -- bottomed?? --- anecdotal: retailer said 1st two days of Holiday shopping busy but now traffic is like middle of August.  Discover card survey indicated Christmas spending will be down 15%.

ECB urged IMF to pursue global tax on financial transactions to limit economic risk.

US business inventory up .2% Oct (first up since Aug '08) -- ex-auto down .2%; inventory ratio 1.3 months down from 1.31.

UK and France both considering taxing bank bonuses and have floated several % and trigger amounts -- looks like 50% over approximately $40,000.

Bair said FDIC reviews found 83% of failed banks had inadequate board supervision of risk -- in general too many banks have insider dealings with board members.

Pay Czar would limit TARP banks high paid employees (ranking 26th to 100th) to $500,000; 5 AIG executives led by AIG's General Counsel (violation of fiduciary duty?) who arranged private attorney for group as they threatened to leave if pay limited putting pressure back on pay czar in another extortion against the government.

$40 billion 3 year Treasury auction yield 1.223%, bid-to-cover 2.98; foreign interest 60.9%.  Good.
$21 billion 10 year Treasury auction yield 3.448%, bid-to-cover 2.62 (average has been 2.92), foreign interest 34.9%. Woops!
$13 Billion 30 year Treasury auction yield 4.520%, bid-to-cover 2.45, foreign interest 40.3%. Not so good.

Goldman Sachs played the media on bank bonuses by announcing they were limiting bonuses to restricted stock with one of the restrictions being that the stock cannot be sold for 5 years (good) but limited to only their 30 member management committee; what about the traders?

Early in the week Geithner talked about winding TARP down but ended this week extending TARP to Oct 2010 and indicated unspent money may be given to banks to "help" homeowners and small business lending.

Treasury expects to recover all but $42 billion of $370 billion lent under TARP --- has spent $450 billion under TARP ($290 billion to banks) -- estimated $311 billion cost may be only $141 billion.

Bank of America completed its $45 billion TARP payment in an attempt to evade the pay czar.  The question now is do they have enough cash reserves and the government has asked them what business units it plans to sell next year to raise money.

Citi is negotiating a possible TARP payment; started at $45 billion with $20 billion stock offering but the stock holders are upset at the dilution and the government is not in agreement in how much they need to raise -- the amounts to pay and raise by stock offering appear to be decreasing for this truly Zombie bank.

Geithner does not like the concept of a transaction tax to limit economically risky behavior; he thinks it may force companies to leave the US or find a way "around" (evade) tax.  He also does not like a job tax credit believing it will not influence hiring.  As Yves Smith of naked capitalist would say: Quelle Surprise!

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