Newsletter of Economic and Market Events
Month of December 2010
Dow month: 5.19%, 6 mo: 18.46%, ytd: 11.02%
S&P 500: 1,258
S&P 500 month: 6.58%, 6 mo: 22.10%, ytd: 12.78%
NASDAQ month: 6.20%, 6 mo: 25.79%, ytd: 16.91%
FOMC neutral stance (Dec 14) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%. Federal Reserve (Dec 21) extends through Aug. 1, 2011 of its temporary dollar liquidity swap arrangements with the European Central Bank and the central banks of Japan, Canada, Switzerland and the United Kingdom
U.S. unemployment falls to 9.4%, adding 152,000 jobs.
Dec 17 - Middle Class Tax Relief Act of 2010 ($858 billion bill for 2011-12). Extended Income tax rates ($288 billion): 10%, 15%, 25%, 28%, 33% and 35%. Extended Alternative Minimum Tax ($137 billion): up to $47,450 for individuals and $72,450 for couples (2010), $48,450 and $74,450 (2011) and nonrefundable credits applied to one's tax liability. Social Security tax reduction ($112 billion): a 2% reduction on payroll taxes to 4.2% (2011) on wages up to $106,800. Expanded Child tax credit ($90 billion): retains $1,000 child tax credit. Estate tax ($68 billion): exemption raised to $5 million and tax lowered to 35% while reinstating the "step up in basis" for beneficiaries of those who die in 2010-12. Unemployed ($57 billion): 13-month extension, as high as 99 weeks in states hit hardest by job loss. Extended Capital Gains rates ($53 billion): unchanged for 2011-12. Marriage penalty relief ($27 billion): twice the standard deduction and an expanded 15% tax bracket for couples. Expanded College credit ($18 billion): retains American Opportunity tax credit (a HOPE tax credit). Individual tax break extensions ($8 billion): extends many tax breaks.
Gold trades at a new all-time high of $1,432.50 (Dec 7). Silver trades $30.93 (Dec 30), highest since March 1980). Copper trades an all-time high of $4.372 lb (Dec 30). Official U.S. government Gold price $19.39 (from 1792-1833), $20.67 (1833-1934), $35 (1934-1971, $31.69 low in 1949 and $41.28 high in 1969). In 1968 the U.S. established a two-tiered gold market. On August 15, 1971 the U.S. stopped the direct conversion of U.S. dollars to gold. Gold price set at $38 (1972) and $42.22 (1973) ending the existing Bretton Woods system of international financial exchange. Gold set an all-time high of $850 on January 21, 1980 then fell to $251.70 Aug. 18, 1999. The Washington Agreement (September, 26 1999) limited central banks gold sales following Britain's controversial plan to reduce its gold holdings by 58% to 300 tons from 715 tons, July 1999.
Toronto-Dominion Bank purchases (December 21, 2010) Chrysler Financial for $6.3 billion from Cerberus Capital Management LP. U.S. Treasury Department sold its stake for $1.9 billion on May 17, 2010 settling its $4 billion loan.
Month of November 2010
Dow month: -1.01%, 6 mo: 8.57%, ytd: 5.54%
S&P 500: 1,180
S&P 500 month: -0.25%, 6 mo: 8.36%, ytd: 5.82%
NASDAQ month: -0.36%, 6 mo: 10.68%, ytd: 10.09%
FOMC neutral stance (Nov 3) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%. FOMC will continue to reinvest principal payments from agency debt and agency mortgage-backed securities into longer-term Treasury securities: $250-300 billion plus $600 billion of new purchases of longer-term Treasury securities through the end of the 2nd quarter of 2011 (about $110 billion per month with an average duration of between 5 and 6 years) 1.5-2.5 year Treasuries: 5%, 2.5-4 years: 20%, 4-5.5 years: 20%, 5.5-7 years: 23%, 7-10 years: 23%, 10-17 years: 2%, 17-30 years: 4% and TIPS 1.5-30 years: 3%.
U.S. unemployment rises to 9.8%, adding 93,000 jobs.
2 yr U.S. Treasury rallies to 0.3118% (Nov 4), an all-time low regular sales began in 1975.
GM goes public with an IPO with both overallotments the deal raises a total of $23.1 billion.
Prime Minister Brian Cowen negotiates Ireland's rescue as government budget deficit reaches 32% of gdp, €35 billion for banks and €50 billion the Irish government ($113 billion) - €67.5 billion in loans from the EU, the IMF and U.K., Denmark and Sweden and €17.5 billion from Ireland's own reserves and pensions average interest of 5.8%.
Japanese yen trades 80.22 (11/1) the Bank of Japan intervenes and sells yen and raised their ¥20 to 30 trillion ($360 billion) credit program (Aug 30).
Month of October 2010
Dow month: 3.06%, 6 mo: 1.00%, ytd: 6.62%
S&P 500: 1,183
S&P 500 month: 3.68%, 6 mo: -0.25%, ytd: 6.09%
NASDAQ month: 5.87%, 6 mo: 1.87%, ytd: 10.48%
10 yr U.S. Treasury rallies to 2.3302% (Oct 8) from 4% (April 5, in 6 months).
U.S. unemployment remains to 9.6%, adding 172,000 jobs.
30-year fixed mortgage at historic record low of 4.19%, October 13 (4.61%, 3/2009).
Earnings season for 3Q10 for the S&P 500 index was positive 31%.
Month of September 2010
Dow month: 7.72%, 6 mo: -0.63%, ytd: 3.45%
S&P 500: 1,141
S&P 500 month: 8.77%, 6 mo: -2.40%, ytd: 2.32%
NASDAQ month: 12.02%, 6 mo: -1.21%, ytd: 4.36%
U.S. unemployment remains to 9.6%, -41,000 jobs lost - fourth month of payroll loses.
FOMC neutral stance (Sep 21) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%.
Obama signs Small Business Jobs and Credit Act of 2010 $30 billion federal fund for small bank small businesses loans and $12 billion in business tax breaks.
Basel III, 27 nations agree to raising bank Tier 1 capital ratio to 6% (core to 4.5%, up from 4% and core of 2%) and a capital conservation buffer up to 2.5% - phased in 2013-18.
Month of August 2010
Dow month: -4.31%, 6 mo: -3.00%, ytd: -3.96%
S&P 500: 1,049
S&P 500 month: -4.81%, 6 mo: -4.98%, ytd: -5.93%
NASDAQ month: -6.25%, 6 mo: -5.54%, ytd: -6.84%
Federal Reserve extends GSE Mortgage-Backed Securities and GSE Debt Purchases (8/10/08). System Open Market Account (debt purchases) concentrating new purchases in 2-10 year Treasuries, up to $10-25 billion/ month.
U.S. unemployment rises to 9.6%, -1,000 jobs lost.
FOMC neutral stance (Aug 10) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%.
30 yr U.S. Treasury rallies to 3.4616% (Aug 25) from 4.85% (April 6, in 4+ months).
Obama signs $26.1 billion Education Jobs and Medicaid Assistance Act of 2010 providing $10 billion for state teacher's payrolls and $16.1 for state Medicaid funding.
Iraqi Freedom ends (Aug 31) as U.S. combat operations end and Operation New Dawn begins - 4,419 U.S. troops have died in Iraq.
Month of July 2010
Dow month: 7.09%, 6 mo: 3.96%, ytd: 0.36%
S&P 500: 1,102
S&P 500 month: 6.99%, 6 mo: 2.70%, ytd: -1.17%
NASDAQ month: 6.92%, 6 mo: 5.03%, ytd: -0.62%
July 21 - Dodd-Frank Wall Street Reform and Consumer Protection Act signed: Financial Stability Oversight Council (10 members, Treasury Secretary enforces) monitors and addresses national system-wide risks with the power to seize and break up large, complex financial firms - stricter capital, leverage and new rules (with veto power over proposals by the Consumer Financial Protection Bureau). The liquidation process run by the FDIC while the Treasury would supply funds (to cover the costs) until a "repayment plan" created by assessing fees on financial firms (more than $50 billion in assets) is established.
Consumer Financial Protection Bureau (under the Federal Reserve) with rule-making (examine and enforce regulations) authority for all mortgage-related, credit cards, pay day lenders, check cashers and loan businesses (more than $10 billion in assets) that offer consumer financial products or services. Auto dealers, mobile-home sellers, real estate brokers, accountants and insurers exempt from the Bureau (state and federal regulations). Consumers get an actual credit score along with an annual report. States can impose stricter consumer protection laws on national banks though the banks can appeal (if a state's law "prevents or significantly interferes" with the bank's ability to do business) to federal regulators. State's attorneys-generals have the power to enforce certain rules issued by the Consumer Financial Protection Bureau.
Federal Insurance Office (under the Treasury) monitors the insurance industry's laws and regulations, reports to the Financial Stability Oversight Council and reports to Congress. Fixed-equity annuities escape SEC regulation (currently regulated by state insurance commissioners).
The Fed will supervise large, complex financial companies that threaten the broader economy and retains oversight over community banks while eliminating the Office of Thrift Supervision. The Fed's emergency lending authority would require the Treasury Secretary's approval and prohibits insolvent firm's participation. The Fed will disclose (2-year lag) details of its discount window loans and open-market transactions. Bankers will no longer pick the presidents of the Fed's regional banks. GAO to conduct one-time audit of all of the Fed's emergency lending programs from the financial crisis of 2007-08.
OTC derivatives (standard interest rate, foreign exchange, commodity and CDO) required to be traded on exchanges and routed through clearinghouses. Customized swaps could be traded, but they would have to be reported with new capital, margin, record-keeping and business conduct rules. Spin-off riskiest OTC derivatives trading operations into affiliates - trading in agriculture, uncleared commodities, most metals, CMOs and energy swaps.
Bank Capital standards (size and risk-based) established including a prohibition on large bank holding companies treating trust-preferred securities as Tier 1 capital (though grandfathers securities for banks with less than $15 billion in assets). Larger banks would have 5 years to phase-out their trust-preferred securities as Tier 1 capital. A special assessment would be mandated by the Financial Stability Oversight Council on the premiums big banks pay for FDIC insurance (on commercial deposits) and ends TARP. The Fed can cap Interchange fees on "debit" card swipes which retailers pay to banks making them more reasonable and proportional. Propriety trading limited to 3% (or less, Volcker Rule) of a bank's Tier 1 capital in hedge and private-equity funds. Financial firms and banks would be prohibited from bailing out funds in which they are invested. Home mortgages must adhere to new national minimum underwriting standards while lenders would be required to ensure that borrowers are able to repay home loans by verifying the borrower's income, credit history and job status. Bans payments to brokers for steering borrowers into high-priced loans. Unemployed homeowners (with good credit) would be eligible for low-interest loans ($1 billion from TARP). Banks that securitize mortgage-backed loans must keep 5% of the credit risk on their balance sheets (though a class of low-risk mortgages that meets certain minimum standards would be exempt). Regulators could permit alternative risk-retention arrangements for the commercial mortgage-backed securities market. FDIC insurance coverage permanently increased for banks, thrifts and credit unions to $250,000.
Credit-rating business overseen by a new quasi-government entity designed to address conflicts of interest. Allows investors to sue credit-rating firms for a "knowing or reckless" failure to conduct a reasonable investigation (agencies must disclose their methodologies). SEC (new oversight office) has the ability to fine and/or deregister ratings agencies and must find an independent way to match credit rating agencies with financial firms seeking ratings.
SEC can hold broker dealers who give investment advice to a fiduciary duty similar to registered investment advisers. SEC can grant shareholders proxy access (to nominate directors) and require industry regulators with oversight of pay practices (within the financial industry). Shareholders of publicly-traded companies have a non-binding vote on executive pay and "golden parachutes". Hedge funds and private equity funds required to register with the SEC as investment advisers and to provide information on trades.
243 new rules required writing by 11 different federal agencies - phasing in through 2022.
U.S. unemployment remains 9.5%, though -66,000 jobs lost.
British Petroleum stops leaking Macondo well July 15 (4-5 million barrels). BP sells $7 billion of assets in North America and Egypt to Apache, takes a 2Q10 pretax charge of $32.2 billion and change CEOs. 1991 Iraqi-Kuwaiti war oil spill in Persian Gulf (5-10 million barrels, biggest in history) when retreating Iraqi troops set fire and opened valves on oil rigs and pipelines.
Obama signs $34 billion Unemployment Compensation Extension Act of 2010 extending unemployment benefits.
European Union stress tests on 91 banks, accounting for 65% of the EU's banking industry. 7 banks fail, need to raise more than €3.5 billion ($4.5 billion) of additional capital: Germany's Hypo Real Estate, Greece's ATEBank and five Spanish banks - Unnim, Diada, Espiga, Banca Civica and CajaSur.
Agricultural Bank of China - becomes largest IPO (July 15) at $22.1 billion surpassing the $22 billion raised by Industrial and Commercial Bank of China (ICBC) in 2006. Bank of China (BOC) and China Construction Bank (CCB) make up the big 4.
Goldman Sachs settles $550 million SEC fraud (July 15), largest SEC penalty in Wall Street history. 10 Wall Street firms (April 28 2003, Citigroup's Salomon Smith Barney, Credit Suisse, Morgan Stanley, Goldman Sachs, Lehman Brothers, Bear Stearns, UBS Warburg, J.P. Morgan Chase, US Bancorp's Piper Jaffray, and Merrill Lynch) agreed to a $1.4 billion settlement over conflicts of interest between stock research and investment banking.
AIG settles $725 billion (July 16) "fraud from October 1999 to April 2005 involving anti-competitive market division, accounting violations and stock price manipulation, and brings total expected recovery for AIG shareholders to over $1 billion." In 2006 (Feb 9) AIG settled $1.64 billion for insurance and securities fraud.
Dell settles $100 million SEC (Michael Dell pays $4 million, July 22) fraudulent accounting.
Earnings season for 2Q10 for the S&P 500 index was 38%.
Month of June 2010
Dow month: -3.59%, ytd: -6.28%, 6 mo: -6.28%
S&P 500: 1,030
S&P 500 month: -5.42%, ytd: -7.63%, 6 mo: -7.63%
NASDAQ month: -6.56%, ytd: -7.06%, 6 mo: -7.06%
FOMC neutral stance (June 23) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%.
U.S. unemployment falls to 9.5%, though -175,000 jobs lost.
Euro depreciates to $1.1874 (June 7) falling from $1.5100 (12/1/09, over 21% in 6 months). During the crisis $1.2326 (10/27/08, and $1.2547 2/18/09), previously an all-time high of $1.6038 (7/15/08), an all-time low of $0.8228 (10/26/00) and a launching high of $1.1837 (1/5/99). Europe's lenders deposited a record €369 billion in the ECB's overnight deposit facility on June 9.
ECB (European Central Bank) will lend EU banks €131.9 billion ($161.5 billion) for 3 months (less than estimated). ECB lends €111.2 billion euros ($136.5 billion) for 6 days (to 78 banks) bridging the landmark 12-month loans (1%) the banks need to repay €442 billion.
Exchanges (June 11) begin SEC mandated uniform "circuit breakers" across NYSE, Nasdaq, BATS Global Markets, Direct Edge, International Securities Exchange, Chicago Board Options Exchange, CME Group Inc. and Intercontinental Exchange (following the May 6, 2010) DJIA interday 998.5 point fall. 6-month pilot period, S&P 500 stocks change of 10% in 5 minutes triggers a halt in trading for 5 minutes.
Federal Reserve starts Term Deposit Facility first auction June 14 ($1.15 billion of 14-day term deposits), June 28 ($2.12 billion of 28-day) and July 12 ($2.11 billion of 84-day) paying 0.27%, 0.27%, and 0.31% - tightening credit by draining cash from the banking system.
Bank of Canada (June 1) raises rates to 0.50% from 0.25%, first G7 central bank to raise interest rates since credit crisis began.
Chinese RMB (renminbi) fixed-rate ends on June 21 (band, low 6.78 8/26/08 to high 6.885 12/1/08) and re-floats against the U.S. dollar after nearly 2 years.
China surpasses Japan to become the world's second largest economy. Japan was second since 1968, when it surpassed West Germany.
Fannie Mae and Freddie Mac to delist their common and preferred stock from the NYSE, over $145 billion taxpayer aid to date.
SEC and federal prosecutors indicted Lee Bentley Farkas (found guilty on April 19, 2011) - Taylor, Bean & Whitaker Mortgage Corp. and failure of Colonial BancGroup Inc a $3 billion scheme involving fake mortgage assets that duped financial institutions that started as early as 2002.
Jerome Kerviel, French Societe Generale trader, trial begins charged in €5 billion ($7 billion) loss - bank closed out positions beginning January 21, 2008.
Month of May 2010
Dow month: -7.91%, ytd: -2.79%, 6 mo: -2.00%
S&P 500: 1,089
S&P 500 month: -8.18%, ytd: -2.34%, 6 mo: -0.55%
NASDAQ month: -8.29%, ytd: -0.53%, 6 mo: 5.27%
DJIA falls 998.5 points (May 6, a 1010.14 point swing, markets lose $862 billion in 20 minutes), the 9.2% plunge its biggest since the 1987 crash. The 10 yr U.S. Treasury rallied to 3.26% from 4% (April 5, in 24 trading days). The fall was precipitated by the Greek crisis, then P&G and 3M stocks fell to their NYSE "circuit breakers" (limiting losses) and Waddell & Reed sold 75,000 e-mini S&P 500 index futures contracts. NYSE orders "rolled over" to other "electronic exchanges" and were filled at prices below NYSE "circuit breaker" prices. The "gap" in trading effected other issues, then the NYSE resumed regular trading in issues that had traded limit down - Exchanges subsequently canceled over 20,761 trades in 296 issues (160 ETFs of 1,003 ETFs temporarily lost almost all their value).
Federal Reserve extends U.S. Dollar Liquidity Swaps extended (5/9/10) following the May 6, 2010 DJIA interday 998 pt fall.
10 yr U.S. Treasury rallies to 3.06% (May 25) from 4% (April 5, in 7 weeks). VIX rise to 48.2 (May 21) from below 20 on May 3 (15.23 on April 12, up 216%).
U.S. unemployment falls to 9.7%, 432,000 jobs created - fifth month of payroll gain since October.
Greece receives a €110 billion ($146 billion) rescue package, EU nations (led by Germany and France) €80 billion and the IMF €30 billion. Greece must cut its budget deficit by 11% (of GDP) by 2013, €30 billion cut this year. Greek loan rate around 5% for three years. ECB (European Central Bank) announced it would indefinitely accept Greece's debt as collateral regardless of its credit rating.
EU leaders (16 euro nations) agree to a €750 billion ($940 billion) stabilization facility fund for the Euro. U.S. Federal Reserve reopens foreign bank swaps (through January 2011). The EU Commission will provide €60 billion, the 16-nation eurozone promises €440 billion and the IMF will contribute €250 billion. ECB will buy government and private bonds. Starting May 19 (through March 31, 2011) German regulators temporarily ban naked short-selling on 10 banks and insurers and naked credit-default swaps on euro-area government bonds. ECB expects Europe's banks to writedown €195 billion of bad debt through 2011 (€444 billion already recognized, a total of $770 billion). The 16-country Euro zone had $1.57 trillion of exposure (as of March 31) to Spain ($727 billion), Ireland ($402 billion), Portugal ($244 billion), and Greece ($206).
Month of April 2010
Dow month: 1.40%, ytd: 5.56%, 6 mo: 13.34%
S&P 500: 1,186
S&P 500 month: 1.45%, ytd: 6.36%, 6 mo: 14.48%
NASDAQ month: 2.67%, ytd: 8.46%, 6 mo: 20.34%
FOMC neutral stance (April 28) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%.
U.S. unemployment rises to 9.9%, 313,000 jobs created.
Obama signs $18.2 billion Continuing Extension Act of 2010 extending unemployment benefits.
Greek government receives EU-IMF aid backstop (€30 billion EU and up to €15 billion IMF, total $61 billion) at below-market interest rates. Greece spent €50 billion ($62 billion) on defense (since 2000), €9 billion ($11 billion) on 2004 Olympics while 40% are government employed, full pension as early as 50 yrs old and 30% avoid taxes. The Euro (founded 1999) facing pressures, the 16-nations worked around the Maastricht Treaty barring the bailout of debt-stricken countries.
April 20 - British Petroleum's Deepwater Horizon oil rig explodes, 50 miles southeast of Louisiana in the Gulf of Mexico, 11 crewmen dead.
SEC alleges that Goldman Sachs fraudulently structured and marketed CDOs in April 2007.
Earnings season for 1Q10 for the S&P 500 index was 57%.
Month of March 2010
Dow month: 5.14%, ytd: 4.10%, 6 mo: 11.78%
S&P 500: 1,169
S&P 500 month: 5.89%, ytd: 4.83%, 6 mo: 10.60%
NASDAQ month: 7.10%, ytd: 5.64%, 6 mo: 14.58%
FOMC neutral stance (March 16) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%.
U.S. unemployment 9.7%, 208,000 jobs created.
Obama signs $940 billion (over 10 years) Patient Protection and Affordable Health Care Act and the Health Care and Education Reconciliation Act of 2010 extending health care coverage to 32 million. Subsidized coverage for uninsured Americans and phasing out pre-existing conditions by 2014 - financed by Medicare cuts to hospitals and fees or taxes on insurers, drugmakers, medical-device companies and higher-earning Americans. Student loan reform - ending government subsidies to private lenders. Healthcare.gov
Obama signs $17.6 billion Hiring Incentives to Restore Employment (HIRE) Act.
Month of February 2010
Dow month: 2.56%, ytd: -0.99%, 6 mo: 8.73%
S&P 500: 1,104
S&P 500 month: 2.89%, ytd: -1.00%, 6 mo: 8.24%
NASDAQ month: 4.24%, ytd: -1.37%, 6 mo: 11.40%
Federal Reserve increases the Discount rate 25 bps to 0.75% (February 19) its first increase (since Jun 29, 2006) when the Fed raised from 5.00% to 5.25%. Then the Emergency FOMC inter-meeting cut (August 17, 2007) to 5.75% from 6.25% (at outset of credit crisis) and the Fed Funds rate cut to 4.75% from 5.25% (discount rate to 5.25% from 5.75%, September 18).
U.S. unemployment 9.7%, 39,000 jobs created.
SEC restricts short sales (February 24) once a stock falls 10% from the previous day's closing price - then one can only execute a short sale at a price above the market's best bid (an uptick). The curb stays in place through the following day.
Chilean earthquake 8.8 (Feb. 28) 70 miles north-east of Concepcion and 200 miles south-west of Santiago, 500 people may have died about 1.5 million homes damaged. Chile's 1960 Valdivia earthquake 9.5 (May 22, 1960) is to date the most powerful earthquake ever recorded, killing 1,700-6,000 people.
Vancouver 2010 Olympics - U.S. wins most medals 37 (9 golds) while Canada wins the most golds 14 (26 total), Germany wins 30 medals and Norway 23. Apolo Anton Ohno wins 3 medals (1 Silver and 2 Bronzes) for a total of 8 Olympic medals the most-decorated American male Winter Olympian.
Month of January 2010
Dow month: -3.46%, ytd: -3.46%, 6 mo: 9.77%
S&P 500: 1,073
S&P 500 month: -3.77%, ytd: -3.77%, 6 mo: 8.71%
NASDAQ month: -5.38%, ytd: -5.38%, 6 mo: 8.54%
FOMC neutral stance (January 27) Fed Funds rate 0%-0.25% and the Discount rate of 0.50%.
U.S. unemployment 9.7%, 14,000 jobs created.
General Motors sells Saab to Spyker for $74 million in cash and $326 million in preferred shares.
Haiti Earthquake 7.0 (Jan 14) 16 mi from Port-au-Prince, 200,000 people may have died. U.N. suffers its greatest loss of life (101) in single event - G7 to cancel all Haiti bilateral debt.
Earnings season for 4Q09 for the S&P 500 index was positive 207%, ex-financials positive 16% - ending 9 quarter of negative growth, a record.
Month of December 2009
Dow month: 0.81%, 6 mo: 23.45%, ytd: 18.82%
S&P 500: 1,115
S&P 500 month: 1.83%, 6 mo: 21.33%, ytd: 23.48%
NASDAQ month: 5.83%, 6 mo: 23.65%, ytd: 43.88%
FOMC neutral stance (December 16) Fed Funds rate 0%-0.25% and the Discount rate of 0.50%.
Gold trades at a new all-time high $1226, Dec 2.
LIBOR trades below 0.25%, Dec 21. VIX trades below 20, Dec 22. U.S. Treasury yield curve steepens to record as 2-10-year Treasury spread increases to 288 bps, Dec 22.
U.S. Commodity Futures Trading Commission (CFTC) raises capital standards requiring the inclusion of over-the-counter derivatives positions into their risk-based capital calculations and raises margin requirements from 4% to 8%.
GMAC Financial Services gets $3.8 billion in capital (total amount of government aid $16.3 billion) U.S. government's ownership is 56%.
U.S. Banks and securities firms (Citigroup, B of A, Wells Fargo, etc.) write off losses of $1.1 trillion. Worldwide reported losses over $1.7 trillion of mortgage-related writedowns from asset-backed securities while Banks have raised over $1.5 trillion of new capital.
Month of November 2009
Dow month: 6.51%, 6 mo: 21.69%, ytd: 17.87%
S&P 500: 1,095
S&P 500 month: 5.69%, 6 mo: 19.15%, ytd: 21.26%
NASDAQ month: 4.84%, 6 mo: 20.86%, ytd: 35.95%
FOMC neutral stance (November 4) Fed Funds rate 0%-0.25% and the Discount rate of 0.50%.
U.S. unemployment rate rises to 10.1%, U-6 reaches 17.4%. 8.4 million jobs lost since December 2007.
Obama signs $24 billion Worker, Homeownership, and Business Assistance Act of 2009. Extending unemployment benefits (up to 20 weeks) and extending the $8,000 homebuyer tax credit (signed by April 30 and closed by June 30), the credit will have been used by 1.8 million homebuyers in 2009.
CIT Group files Chapter 11 bankruptcy, $71 billion in assets and $64.9 billion in debt, one of the U.S.'s largest small-business lenders - the fifth-largest bankruptcy in U.S. history.
British government (Nov 3) bails out: RBS £25.5 billion (total £45.5 billion, U.K.'s government stake increases to 84.4% from 70%), the world's most expensive bank bailout. Lloyds Banking Group (acquired HBOS Plc on Jan 16) to receive £5.6 billion pounds (government's rights to buy stock, in addition to earlier £17 billion) and plans to raise £21 billion (£13.5 billion pounds in a rights offering and £7.5 billion in a bond exchange) denying the government majority control which owns 43.5%.
Internet Gambling Enforcement Act in 2006 signed October 13, 2006 compliance is not required until Jun 1, 2010 to comply with the rules intended to limit the use of payment systems for Internet gambling.
Month of October 2009
Dow month: 0.00%, 6 mo: 18.90%, ytd: 10.67%
S&P 500: 1,036
S&P 500 month: -1.99%, 6 mo: 18.81%, ytd: 14.73%
NASDAQ month: -2.25%, 6 mo: 19.10%, ytd: 29.68%
US economy grows by 2.2% in the 3Q09. Following U.S. gdp of 3Q08 -2.7%, 4Q08 -5.4%, 1Q09 -6.4%, 2Q09 -0.7% (first time since the 1930's that the US has suffered 4 consecutive quarters of declining gdp). From 1929-2008, the average annual gdp was 3.4% and from 1997-2008, the average annual gdp was 2.8%.
U.S. unemployment rate rises to 9.8%, though 4,000 jobs created, ending 22 consecutive monthly declines in payrolls.
President Barack Obama wins the 2009 Nobel Prize for Peace.
Reserve Bank of Australia (Oct 6) becomes first major central bank to raise its policy rate 25 bps. to 3.25% rate - following a 49-year low.
China sells an inaugural 6 billion yuan ($878.7 million) of sovereign bonds in Hong Kong (issued Oct. 27) representing 0.013% of $7 trillion of total foreign exchange reserves.
ChiNext opens (Oct 31) China's newest exchange for small cap companies. All 28 ChiNext IPOs worth $10 billion (68.6 billion yuan) double on the first day to $20.5 billion (140 billion yuan).
Capmark Financial Group (formerly commercial lending at GMAC) filed for bankruptcy (Oct 25) debt of $21 billion and consolidated assets of $20.1 billion, a top servicer of U.S. commercial real estate loans and the largest servicer of loans in the rest of the world.
SIPC releases $534.25 million to 1,558 Madoff's vicitms. Exceeding the $520 million (from all 321 prior SIPC liquidations) since the program began in 1970.
Earnings season for 3Q09 for the S&P 500 index was negative -18%, ninth quarter of negative growth is a record.
Month of September 2009
Dow month: 2.27%, 6 mo: 27.66%, ytd: 10.67%
S&P 500: 1,057
S&P 500 month: 3.63%, 6 mo: 32.62%, ytd: 17.05%
NASDAQ month: 4.13%, 6 mo: 36.91%, ytd: 32.66%
FOMC neutral stance (September 23) Fed Funds rate 0%-0.25% and the Discount rate of 0.50%.
U.S. unemployment rate rises to 9.7%.
Group of 20 nations to replace G-8 (G-7 from 1975 until 1997) as primary organization coordinating global economic policy. Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the U.S., the U.K. and the European Union.
IMF offers an additional $33 billion of SDRs (Special Drawing Rights) on September 9.
Month of August 2009
Dow month: 3.54%, 6 mo: 34.47%, ytd: 8.20%
S&P 500: 1,020
S&P 500 month: 3.34%, 6 mo: 38.78%, ytd: 12.96%
NASDAQ month: 1.57%, 6 mo: 45.90%, ytd: 27.39%
FOMC neutral stance (August 12) Fed Funds rate 0%-0.25% and the Discount rate of 0.50%.
IMF offers $250 billion of SDRs (Special Drawing Rights) on Aug. 28 comprised of 4 major freely convertible currencies: US dollars: 44%; Euros: 34%; Yen: 11%; and British pound 11% distributed to member countries in line with their shareholder stakes, secondary market restricted to participating governments or central banks. SDR 21.4 billion to SDR 204.1 billion (about $317 billion).
Swedish Riksbank, August 7, 2009 (world's oldest central bank, 1668) is the first central bank to post a negative interest rates (their repo rate was cut to 0.25% and their deposit rate 50 bps lower at to -0.25%) a penalty on banks that refuse to lend. U.S. Treasury repo rates are generally 5 to 10 bps below the Fed funds rate.
Colonial BancGroup fails with assets of $25 billion, biggest U.S. bank failure in 2009, taken over by BB&T Corp.
UBS AG discloses details on 4,450 accounts to the Internal Revenue Service.
Month of July 2009
Dow month: 8.57%, 6 mo: 14.62%, ytd: 4.50%
S&P 500: 987
S&P 500 month: 7.40%, 6 mo: 19.49%, ytd: 9.30%
NASDAQ month: 7.79%, 6 mo: 34.01%, ytd: 25.43%
U.S. unemployment rate rises to 9.5%.
General Motors exits bankruptcy in 40 days, closing 2,400 dealerships with $30 billion in exit financing from the US government. General Motors Co. is 60.8% owned by U.S. taxpayers, with 11.7% by the Canada and Ontario governments and 17.5% by the United Auto Workers' retiree medical benefits trusts (with 2.5% of preferred stock and $9 billion in notes) and the remaining 10% owned by Motors Liquidation (the old GM) to pay off creditors and unsecured bondholders (with 15% of preferred stock).
'Naked' Short-Selling ends. SEC rules require that brokers must promptly buy or borrow securities to deliver on a short sale.
China's foreign-exchange reserves exceed $2 trillion while China owns $939.9 billion of U.S. Treasuries.
Earnings season for 2Q09 for the S&P 500 index was negative -27.3%, eighth quarter of negative growth is a record.
Month of June 2009
Dow month: -0.62%, 6 mo: -3.75%, ytd: -3.75%
S&P 500: 919
S&P 500 month: 0.00%, 6 mo: 1.77%, ytd: 1.77%
NASDAQ month: 3.44%, 6 mo: 16.36%, ytd: 16.36%
FOMC neutral stance (June 24) Fed Funds rate 0%-0.25% and the Discount rate of 0.50%.
U.S. unemployment rate rises to 9.4%.
GM files Chapter 11 bankruptcy ($91 billion, removed from the DOW index having received $19.4 billion) 4th largest in U.S. history. Pontiac division, first produced in 1926 - closed. Opel and Vauxhall brands, European GM, will be purchased by Magna International (Canadian parts supplier with €1.5bn in credit guarantees from the German government). Sichuan Tengzhong Heavy Industrial Machinery Co. to buy Hummer. Penske Automotive Group to buy Saturn. Koenigsegg to buy Saab.
Chrysler Group exits bankruptcy in 42 days, closing 8 factories and 789 dealerships, with $6.6 billion in exit financing from the US government. Chrysler is owned by a United Auto Workers union trust 55%, Fiat 20% (rising to 35%), U.S. taxpayers 23% (falling to 8%) and 2% the Canada government. Secured bondholders get about $0.29 while the Indiana pension funds get up to $0.72.
BlackRock buys Barclays Global Investors for $13.5 billion and retains a 19.9% stake, the world's largest money manager, with over $2.7 trillion (State Street $1.44 trillion and Fidelity Investments, $1.25 trillion) in assets under management. In 1996 Barclays bought and merged Wells Fargo Nikko Advisers with its BZW Investment Management unit.
Month of May 2009
Dow month: 4.06%, ytd: -3.14%, 6 mo: -3.73%
S&P 500: 919
S&P 500 month: 5.39%, ytd: 1.77%, 6 mo: 2.57%
NASDAQ month: 3.32%, ytd: 12.49%, 6 mo: 15.57%
U.S. unemployment rate rises to 8.9%.
Federal Reserve released that 10 of the 19 major U.S. banks need to raise a total of $74.6 billion in capital - B of A ($33.9 billion), Wells Fargo ($13.7 billion), GMAC ($11.5 billion), Citigroup ($5.5 billion), Regions ($2.5 billion), SunTrust ($2.2 billion), Morgan Stanley ($1.8 billion), KeyCorp ($1.8 billion), FifthThird ($1.1 billion), PNC ($0.6 billion) while AmEx, BB&T, BNYM, CapOne, Goldman Sachs, JPMorgan Chase, MetLife, State Street and USB do not need additional funds.
Credit-Card Act signed into law.
GM receives an additional $4 billion and GMAC an additional $7.5 billion ($19.4 billion and $12.5 billion, respectively) of TARP funds. Treasury offers $22 billion of TARP funds to Insurers: Prudential, Hartford, Allstate, Lincoln National, Principal and Ameriprise.
FASB requires off-balance-sheet loans (qualifying special purpose entities) to be reported, which may result in the nation's 19 largest banks reporting $900 billion in previously unrecognized assets and liabilities requiring an increase of capital reserves.
European Central Bank cut interest rates 25 bps to 1.00%, a record low.
Month of April 2009
Dow month: 7.36%, ytd: -6.93%, 6 mo: -12.41%
S&P 500: 872
S&P 500 month: 9.41%, ytd: -3.43%, 6 mo: -9.92%
NASDAQ month: 12.37%, ytd: 8.88%, 6 mo: -0.17%
FOMC neutral stance (April 29) Fed Funds rate 0%-0.25% and the Discount rate of 0.50%.
U.S. unemployment rate rises to 8.5%.
Chrysler files Chapter 11 bankruptcy, Cerberus Capital Management, Daimler, Fiat SpA, U.S. government, UAW and other creditors will reorganize.
G20 agrees to provide the IMF with $1 trillion of lending power by selling 403 tons of gold.
FASB (Financial Accounting Standards Board) loosens fair value rules from mark-to-market to cash flows and other factors for distressed assets.
European Central Bank cut interest rates 25 bps to 1.25%, a record low.
Earnings season for 1Q09 for the S&P 500 index was negative -35.5%, seventh quarter of negative growth is a record.
Month of March 2009
Dow month: 7.73%, ytd: -13.31%, 6 mo: -29.88%
S&P 500: 797
S&P 500 month: 8.44%, ytd: -11.74%, 6 mo: -31.65%
NASDAQ month: 10.97%, ytd: -3.11%, 6 mo: -26.92%
DJIA trades 6,469.95 (Mar 6) lowest since November 1996 - 54.6% lower than 14,279 (10/11/07)
S&P 500 trades 666.79 (Mar 6) lowest since May 1996 - 57.7% lower than 1,576 (10/11/07)
NASDAQ trades 1,265.52 (Mar 9) lowest since October 1996 - 55.7% lower than 2,861 (10/11/07)
MSCI Europe Index trades 529 (Mar 9) lowest since December 1996 - 61.8% lower than 1,388 (7/13/07)
MSCI Pacific Index trades 70 (Mar 10) lowest since June 2003 - 59.5% lower than 173 (11/1/07)
2008/09 PANIC facts (click)
FOMC neutral stance (March 18) Fed Funds rate 0%-0.25% and the Discount rate of 0.50%.
U.S. unemployment rate rises to 8.1%.
Federal Reserve begins TALF (Term Asset-Backed Securities Loan Facility, up to $1 trillion) lending $84 to $95 for every $100 in ABS posted as collateral - initial interest rates for 3-year loans from 1%-3%.
Treasury Secretary Timothy Geithner announces the Public-Private Investment Program using $75 to $100 billion from TARP: 1) creating the Legacy Loans Program (backed by FDIC, guaranteeing financing for up to 6 times the capital) to purchase and hold loans, 2) the Federal Reserve's TALF will expand to include asset-backed securities, and 3) establish Legacy Securities Program, 5 public-private investment funds, to purchase asset-backed securities, managed privately with up to 100% financial matching with profits or losses shared with the Federal Reserve.
U.S. Treasuries post their biggest 1 day rally (March 18) since 1962. 10yr Treasuries rally from 3.01% to 2.46% following the Fed's announcement to begin purchases of $300 billion of 2-10 year Treasuries (March 25) hoping to reduce consumer borrowing costs.
NCUA (National Credit Union Administration Board) placed U.S. Central Federal Credit Union ($34 billion) and Western Corporate unions ($23 billion) into conservatorship.
EESA/TARP invests second $350 billion in other financial institutions: Citigroup ($25 billion), Bank of America ($20 billion, Federal Reserve will backstop $118 billion of acquired Merrill assets), GM ($15.4 billion), GMAC ($5.0 billion), Chrysler ($4.5 billion), Chrysler Financial ($1.5 billion), American Express ($3.4 billion), CIT ($2.3 billion), Discover Financial Services ($1.2 billion), GM ($1 billion), M&T Bank Corp ($600 million) and New York Private Bank & Trust ($267 million) - 555 institutions now participating.
European Union pledges $100 billion (€75bn) to the IMF and doubles funds for non-Eurozone countries to $68 billion (€50bn).
ICE US Trust LLC, Intercontinental Exchange's entity, started clearing contracts (March 9, 2009) before the CME Group (NYSE Euronext), Eurex AG and LCH.Clearnet Group Limited. $27 trillion (notional value/gross exposure) of credit-default swaps.
European Central Bank cut interest rates 50 bps to 1.5%, a record low. Bank of England (founded in 1694) cut interest rates 100 bps to 0.5%, lowest ever.
AIG receives up to $30 billion of new loans from TARP funds after reporting a $61.7 billion loss in 4Q08 - the largest in corporate history.
Switzerland, Liechtenstein, Andorra and Monaco banking authorities all pledged to comply with OECD (Organization for Economic Cooperation and Development) standards for banking transparency and information exchange. UBS paid (Feb. 18) $780 million to avoid prosecution for helping wealthy Americans evade taxes, disclosing information on more than 250 secret accounts, the U.S. continues to seek the identities of 52,000 American account holders suspected of tax evasion on $20 billion in assets.
Month of February 2009
Dow month: -11.74%, ytd: -19.53%, 6 mo: -38.82%
S&P 500: 735
S&P 500 month: -11.02%, ytd: -18.60%, 6 mo: -42.67%
NASDAQ month: -6.71%, ytd: -12.68%, 6 mo: -41.83%
U.S. unemployment rate rises to 7.6%.
President Obama signs the American Recovery and Reinvestment Act of 2009, a $787.2 billion Stimulus bill. Spending (& Aid), $575.2 billion (incl. $267 billion of Aid): health care ($141.3 billion), infrastructure ($89.7 billion), education ($87.3 billion), energy ($86.2 billion), aid to poor and unemployed ($67 billion), direct cash payments to entitlement recipients ($14.2 billion), state block grants ($8.8 billion), housing ($9.5 billion), science ($5.6 billion), law enforcement ($4 billion) and homeland security ($3.8 billion). Taxes, $212 billion: 2009-10 tax credit ($400 per-worker, $800 per-couple) AMT, college, child, homebuyer ($8,000), low-income earned income tax credits; renewable energy, depreciation and auto sales incentives.
Obama administration announces a housing plan that may help 3-4 million homeowners, the $75 billion plan ($50 billion from TARP and $25 billion from Fannie Mae and Freddie Mac): 1) Loan modifications owned or guaranteed by Fannie Mae and Freddie Mac and 2) A separate modification program through a participating lender. Loans originated before Jan. 1, 2009 are eligible for modification through 2012, mortgages up to $729,750 and rates as low as 2%.
Japan, China, South Korea, Thailand, Indonesia, Malaysia, Singapore, Philippines and 5 Southeast Asian nations agree to form a $120 billion pool of foreign-exchange reserves to defend their currencies.
Treasury Secretary Timothy Geithner announces EESA/TARP 2: 1. Financial Stability Trust (a Comprehensive Stress Test for Major Banks, Increased Balance Sheet Transparency and Disclosure and Capital Assistance Program), 2. Public-Private Investment Fund ($500 Billion - $1 Trillion), 3. Consumer and Business Lending Initiative (Up to $1 trillion), 4. Transparency and Accountability Agenda - Including Dividend Limitation, 5. Affordable Housing Support and Foreclosure Prevention Plan and 6. A Small Business and Community Lending Initiative.
Citigroup converts $25 billion of preferred stock (debt from Treasury's TARP) into common shares, 34% of outstanding shares.
Bank of England cuts interest rates to 1% - lowest ever, founded in 1694.
SEC charges Robert A. Stanford for a fraudulent $7 billion CD / Ponzi scheme.
Month of January 2009
Dow month: -8.83%, ytd: -8.83%, 6 mo: -29.68%
S&P 500: 826
S&P 500 month: -8.53%, ytd: -8.53%, 6 mo: -34.81%
NASDAQ month: -6.40%, ytd: -6.40%, 6 mo: -36.52%
FOMC neutral stance (January 30) Fed Funds rate 0%-0.25% and the Discount rate of 0.50%.
U.S. unemployment rate rises to 7.2%, 2.6 million jobs losts in 2008, most since 1945.
European Central Bank cut interest rates 50 bps to 2%.
Morgan Stanley agrees to buy 51% of Citigroup's Smith Barney for $2.7 billion. Citigroup to split between - Citicorp: retail, corporate, investment and private banking, credit card businesses and Citi Holdings: brokerage, asset management, CitiFinancial and CitiMortgage.
Bank of England cuts interest rates to 1.5%, lowest ever, founded in 1694.
International Derivatives Clearing Group, LLC (IDCG), subsidiary of NASDAQ OMX Group, started clearing over-the-counter interest-rate swap contracts on December 29, 2008. $458 trillion (notional value/gross exposure) of interest rate derivatives.
FDIC sells IndyMac Bank to IMB Management Holdings LP (J.C. Flowers & Co., Paulson & Co., MSD Capital LP and Stone Point Capital) for $13.9 billion - FDIC's bank insurance fund losses are expected to be approximately $9 billion.
Earnings season for 4Q08 for the S&P 500 index was negative -67%, the sixth quarter of negative growth ties the record set 1Q51 to 2Q52.
Month of December 2008
Dow month: -0.60%, 6 mo: -28.94%, ytd: -33.84%
S&P 500: 903
S&P 500 month: 0.78%, 6 mo: -29.45%, ytd: -38.49%
NASDAQ month: 2.74%, 6 mo: -31.20%, ytd: -40.54%
FOMC easing stance - December 16 - Fed Funds rate cut of 0.75%-1% to 0%-0.25% from 1.00% the Discount rate is cut to 0.50% from 1.25%. "The focus of the Committee's policy going forward will be to support the functioning of financial markets and stimulate the economy through open market operations and other measures that sustain the size of the Federal Reserve's balance sheet at a high level. As previously announced, over the next few quarters the Federal Reserve will purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets, and it stands ready to expand its purchases of agency debt and mortgage-backed securities as conditions warrant. The Committee is also evaluating the potential benefits of purchasing longer-term Treasury securities. Early next year, the Federal Reserve will also implement the Term Asset-Backed Securities Loan Facility to facilitate the extension of credit to households and small businesses. The Federal Reserve will continue to consider ways of using its balance sheet to further support credit markets and economic activity."
10yr Treasury trades 2.035% (12/18) rallying from 4.32% (Jun 13) up 52.8% in 6 months - the lowest yield in its 46-year history. 3 month Treasuries traded below 0%, Dec. 9 - first time since the U.S. began selling them in 1929. U.S. Treasuries return 14.7% highest since 1995 (Merrill Lynch & Co.'s U.S. Treasury Master Index) - while the Standard & Poor's 500 Index is poised for its biggest yearly drop since 1931.
U.S. unemployment rate rises to 6.7%.
Oil trades $32.40 (Dec 19) down from an all-time high of $147.27 (Jul 11) - down 77.2% in 4 months.
EESA begins assigning second $350 billion in other financial institutions awaiting Congressional approval: GMAC, American Express, CIT, Discover Financial Services, GM and Chrysler.
President Bush and the Treasury intercede extending $13.4 billion in loans to GM and Chrysler (another $4 billion in February - Ford did not seeking government assistance) - Paulson is the "president's designee". Wages to auto workers must match the compensation of foreign auto company plants in the U.S.. Paulson's Treasury requests the remaining $350 billion TARP funds from Congress. GM and Chrysler also receive $3.3 billion in government loans from Canada and the province of Ontario. Federal Reserve approves GMAC's request to become a bank holding company.
CRB futures trade $327.50 (Dec 5) down from an all-time high of $618 (July 2) - down 47.0% in 4 months.
European Central Bank cut interest rates 75 bps to 2.5%. Bank of England cuts rates 100 bps to 2% - lowest since 1951. The Swedish, Danish and New Zealand central banks also lowered their rates. Bank of Japan lowers interest rate to 0.1%, increases purchases of government debt and announces plans to buy commercial paper for the first time as Japan's recession starves worsens.
Treasury announces the Credit Union Homeowner Affordability Relief Program a $41 billion lending facility where retail credit unions could borrow up to $2 billion at favorable rates - about 8,400 U.S. credit unions with $775 billion in assets.
Federal Reserve increases its balance sheet to $2.2 trillion from $924 billion (9/10) in 2 months. The Federal Reserve, CFTC and SEC announce that a central clearinghouse for the $33 trillion credit-default swap market will be running by December 31.
Japan expands $270 billion package to $385 billion - Y10 trillion of stimulatory spending to save job cuts and Y13 trillion to protect the banking system.
Canadian BCE's $35 billion deal, the largest leveraged buyout in history, led by the Ontario Teachers Pension Plan Board abandoned.
SEC charges Bernard L. Madoff with securities fraud for a $50 billion dollar Ponzi scheme.
Banks and securities firms (Citigroup, UBS, Merrill, etc.) report over $1.012 trillion of mortgage-related writedowns from subprime securities - while raising over $750 billion of new capital.
Month of November 2008
Dow month: -5.32%, 6 mo: -30.14%, ytd: -33.44%
S&P 500: 896
S&P 500 month: -7.44%, 6 mo: -36.00%, ytd: -38.96%
NASDAQ month: -10.76%, 6 mo: -39.14%, ytd: -42.12%
U.S. & International Markets set new lows Global Markets fall from $62.6 trillion [10/31/07] to $27.6 trillion [11/20/08] losing $35 trillion: DJIA falls 48.2% from 14,279 to 7,392.27 [10/11/07 - Nov 21], S&P 500 falls 52.9% from 1,576 to 741.02 [10/11/07 - Nov 21] and NASDAQ falls 54.7% from 2,861 to 1,295.48 [10/31/07 - Nov 21].
MSCI Europe Index falls 54.7% from 1,388 to 628.89 [7/13/07 - Nov 21].
S&P Latin America 40 falls 68.2% from 5,862 to 1,862.84 [5/20/08 - Nov 20].
France's CAC Index falls from 6,168 [6/1/07] to 2,838.50 Nov 21 - a 53.9% fall.
Canada's TSX Index falls from 15,154 [6/6] to 7,647.11 Nov 21 - a 49.5% fall.
2008 Panic facts
World leaders summit (G20) in Washington DC (November 15) "to discuss the financial markets and the global economy" and "agree on a common set of principles" to reform global regulation of the markets: United States (George W. Bush, gdp $45,800), Canada (Stephen Harper, gdp $38,600), Australia (Kevin Rudd, gdp $37,300), United Kingdom (Gordon Brown, gdp $35,000), Germany (Angela Merkel, gdp $34,100), Japan (Tara Aso, gdp $33,500), France (Nicolas Sarkozy, gdp $32,600), Italy (Silvio Berlusconi, gdp $30,900), South Korea (Lee Myung-Bak, gdp $25,000), Saudi Arabia (Abdullah Bin Abdul Aziz, gdp $19,800), Russia (Dmitry Medvedev, gdp $14,800), Argentina (Cristina Fernandez de Kirchner, gdp $13,100), Mexico (Felipe Calderon, gdp $12,400), Turkey (Recep Tayyip Erdogan, gdp $12,000), South Africa (Kgalema Motlanthe, gdp $9,700), Brazil (Luis Inacio Lula, gdp $9,500), China (Hu Jintao, gdp $5,400), Indonesia (Susilo Bambang Yudhoyono, gdp $3,600), India (Manmohan Singh, gdp $2,600) and an European Union representative.
Barack Obama defeats John McCain to become 44th President of the United States.
Federal Reserve announces $200 billion of support for debt backed by consumer and small-business debt (credit-card, auto, student and SBA loans) and the Fed will purchase up to $100 billion of debt from Fannie Mae and the Federal Home Loan Banks and up to $500 billion of mortgage-backed securities backed by Freddie Mac, Fannie and Ginnie Mae - the Treasury will initially provide $20 billion of "credit protection" to these Federal Reserve GSE lending programs from TARP.
FDIC guarantees $1.4 trillion of bank-to-bank lending for more than 3 years as part of the EESA.
Fannie Mae and Freddie Mac (own or back 31 million U.S. mortgages) modify mortgages: resident homeowners 90 days or more late, owe at least 90% of current value, have not filed for bankruptcy - payments would not exceed 38% of their monthly household income through interest rate adjustments and/or longer repayment schedules. Citigroup will modify 500,000 borrower's mortgages.
U.S. unemployment rate rises to 6.5%.
European Central Bank cuts rates to 3.25% from 3.75%, Bank of England cuts to 3% from 4.5% (lowest level since 1955) and the Swiss National Bank cuts to 2% from 2.5%.
Britain announces a £25.6 billion ($38.8 billion) stimulus package spent in 2009-10 - tax cuts and spending increases to avert the U.K.'s first recession since 1991.
China announced a $586 billion (4 trillion yuan) economic stimulus package (almost 20% of China's 2008 gdp) - the plan bolsters low-rent housing, infrastructure in rural areas, roads, railways, airports, subsidies for farmers will be raised and tax deductions for purchases of fixed assets (machinery) to stimulate investment.
Japan promises $100 billion in loans to IMF raising their funding capacity to $250 billion - IMF provide a loan to Pakistan.
American Express (and AmEx Travel Related Services) becomes a bank-holding company.
Citigroup receives $20 billion (in addition to the initial $25 billion) from TARP to protect $306 billion of troubled mortgages and assets - Citigroup assumes losses on the first $29 billion the Treasury will absorb 90% of the remaining losses and $27 billion of preferred with an 8% dividend.
EESA invests $125 billion in smaller regional banks: AIG ($40 billion and $60 billion credit facility, 52.5 billion MBS & CDO purchased), Federal Home Loan Mortgage Corp. ($13.8 billion), PNC ($7.7 billion), U.S. Bancorp ($6.6 billion), Capital One ($3.55 billion), SunTrust ($3.5 billion), Regions Financial ($3.5 billion), Fifth Third Bancorp ($3.4 billion), BB&T Corp. ($3.1 billion), KeyCorp ($2.5 billion), Comerica Inc. ($2.25 billion), Marshall & Ilsley ($1.7 billion), Northern Trust Corp. ($1.5 billion), Huntington Bancshares Inc. ($1.4 billion), Zions Bancorporation ($1.4 billion), Synovus Financial ($973 million), Popular Inc. ($935 million), First Horizon National Corp. ($866 million), ETrade Financial ($800 million), Colonial BancGroup ($550 million), Associated Banc-Corp ($530 million), Webster Financial ($400 million), City National Corp. ($395 million), Fulton Financial ($375 million), TCF Financial ($361 million), South Financial Group ($347 million), Wilmington Trust ($330 million), East West Bancorp ($306 million), Sterling Financia ($303 million), Whitney Holding Corp. ($301 million), Susquehanna Bancshare ($300 million), Valley National Bancorp ($300 million), Citizens Republic Bancorp ($300 million), UCBH Holdings Inc. ($298 million), Cathay General Bancorp ($258 million), Wintrust Financial ($250 million), First Merit Corp. ($248 million), SVB Financial Group ($235 million), Trustmark ($215 million), Umpqua Holdings Corp. ($214 million) and Washington Federal ($200 million) - and 88 banks borrowing less than $200 million.
Month of October 2008
Dow month: -14.06%, 6 mo: -27.26%, ytd: -29.70%
S&P 500: 968
S&P 500 month: -16.98%, 6 mo: 30.11%, ytd: -34.06%
NASDAQ month: -17.74%, 6 mo: -28.69%, ytd: -35.14%
U.S. & International Markets set new lows - DJIA falls 44.8% from 14,279 to 7,882.51 [10/11/07 - Oct 10],
S&P 500 falls 46.7% from 1,576 to 839.80 [10/11/07 - Oct 10] and
NASDAQ falls 47.8% from 2,861 to 1,493.79 [10/31/07 - Oct 24].
MSCI Pacific Index falls 56.8% from 173.1 to 73.11 [11/1/07 - Oct 28] and
Japan's NIKKEI Index falls from 18,297 [6/20/07] to 6,994.90 Oct 28 - a 61.7% fall.
Germany's DAX Index falls from 8,131 [6/20/07] to 4,014.60 Oct 24 - a 50.6% fall.
Britain's FTSE Index falls from 6,754 [7/13/07] to 3,665.20 Oct 27 - a 45.7% fall.
Brazil's BOVESPA Index falls from 73,920 [5/29] to 29,435 Oct 27 - a 60.1% fall.
Russia's RTS Index falls from 2,498 [5/19] to 549.06 Oct 28 - a 78.0% fall.
India's Bombay SENSEX Index falls from 21,113 [1/9] to 7,697.39 Oct 27 - a 63.5% fall.
Shanghai Composite falls 72.8% from 6,124 (Oct 16 '07) to 1,664 (Oct 28) in 1 year - last year the Shanghai Composite was the best performer up 161%.
2008 Panic facts
FOMC easing stance - October 29 - Fed Funds rate cut of 0.50% to 1.00% from 1.50% the Discount rate is cut to 1.25% from 1.75%.
US GDP for 3Q was -0.5% the worst since 3Q01 of -1.4%.
Emergency FOMC inter-meeting (Oct 8) Fed funds cut of 0.50% to 1.50% from 2.00% the Discount rate is cut to 1.75% from 2.25% - ECB (European Central Bank) cuts by 0.5% to 3.75%, Bank of England cuts by 0.5% to 4.5 central banks of Switzerland, Canada, Sweden, China, Hong Kong, Taiwan, South Korea and Australia also cut rates.
Emergency Economic Stabilization Act of 2008 (EESA) a $700 billion rescue of financial institutions by purchasing devalued mortgage-linked assets (Paulson's Treasury Dept. will administer the Troubled Asset Relief Program, or TARP) - protection and tax beaks for taxpayers (equity positions in the financial institutions participating), limits on executive's compensation, independent oversight and transparency, help to prevent home foreclosures (modifying troubled loans), raises FDIC to $250k from $100k and an insurance option into which banks would pay. Federal Reserve receives authority to pay interest on reserves, the SEC receives the power to change mark-to-market accounting rules and the FDIC supports interbank lending.
EESA invests $125 billion in 9 large banks (10/26): $25 billion in each Citigroup, J.P. Morgan, Wells Fargo and Bank of America/Merrill Lynch, $10 billion in each Goldman Sachs and Morgan Stanley, $3 billion in Bank of New York Mellon and $2 billion in State Street. - with preferred stock (5% dividend for the first 5% years and then convert to 9%), warrants (right to buy common stock equal to 15% of the total investment in the firm) and compensation limitations.
Federal Reserve increased currency swaps with foreign central banks to unlimited amounts (up from $620 billion) and increased the Term Auction Facility, the Fed's emergency loan program, to $900 billion - to easy liquidity problems. Federal Reserve begins to purchase U.S. commercial paper from U.S. companies and Money market funds - a $1.8 trillion market (90-day unsecured at 1.88% plus a 1% credit surcharge and 90-day secured asset-backed rate at 3.88%, 10/27).
Federal Housing Finance Agency orders Fannie Mae and Freddie Mac (FHFA is their new regulator) to purchase $40 billion a month of underperforming mortgage bonds - to promote greater stability and liquidity in the U.S. mortgage market.
Bank of America modifies (cuts interest rates and/or principal) 265,000 mortgages and 400,000 of acquired Countrywide's mortgages - the largest predatory lending settlement, $8.6 billion. J.P. Morgan Chase will modify 400,000 borrower's mortgages from their acquisition of Washington Mutual.
G7 (United States, Japan, Germany, France, Italy, the United Kingdom and Canada) agrees to recapitalizing banks with public and private funds, insure depositors and unfreezing credit markets. G20 (G7 plus China, Brazil, Russia, India, Mexico, South Korea, Saudi Arabia, Argentina, Australia, Indonesia, South Africa and Turkey) commits to "using all the economic and financial tools to assure the stability and well functioning of financial markets" - they account for about 90% of global gross domestic product. IMF's 185 member nations endorse a commitment to "use all available tools" to prevent systemic failure. World Bank agrees to help developing countries strengthen their economies, bolster their financial systems and protect the poor against the financial turmoil in international markets.
IMF provides loans to Iceland, Ukraine, and Hungary - Britain was the last European country to receive an IMF loan in 1976.
15 leading European nations commit $2.3 trillion and agree to a 14pt plan to aid troubled banks by adding capital through investment and by guaranteeing inter-bank lending. European governments (Germany, Ireland, Sweden, Austria, Denmark, Iceland and Greece) guarantee all private savings accounts. European Union countries raised minimum guarantees for bank deposits to €50,000 while the ECB raised overnight lending to $250 billion. The United Kingdom (£50 billion and £450 billion in loan guarantees), Spain (€100 billion), Russia ($36 billion), Portugal (€20 billion), Norway ($55.4 billion), Sweden ($205 billion), German (€500 billion), Netherlands (€200 billion), Austria (€85 billion), Switzerland ($60 billion) and France (€360 billion) establish plans to support their domestic banking systems. Japan's package includes government guarantees for loans to businesses is $270 billion.
Gold trades $681 (Oct 27) down from an all-time high of $1033.90 (Mar 17) - down 34.1% in 7 months. U.S. dollar rallies to $1.23 (Oct 23) from $1.60 (Jul 15) - up 22% in 3 months.
SEC extends short selling ban of Financial stocks protecting 950 financial companies - through Oct 8.
VIX (volatility index, fear) new record high of 89.53 spiking 32% from 67.80 (Oct 24) - spiked 22% to 81.17 (Oct 16), spiked 19% to 76.94 (Oct 10) and spiked 29% to 58.24 (Oct 6). TED spread (3-month Treasuries and 3-month Eurodollars) trades at 4.64% and the Libor-OIS spread (3-month London interbank offered rate and Overnight indexed swap rates) trades at record 3.64% on October 10.
Wachovia will be purchased by Wells Fargo (as Citigroup exits) in an $12.7 billion all-stock offering.
Lehman's bankrupcy sets their credit-default swap liability to counterparties at $0.91375 creating $270 billion in payments. Washington Mutual's credit-default swap liability to counterparties is $0.43.
CERN lauches the GRID to analyze data from the Large Hadron Collider (LHC) a computer network that links more than 100,000 processors at 140 global institutes - in 1990 CERN invented the World Wide Web allowing access to information over the Internet.
Earnings season for 3Q08 - according to a consensus of Wall St. analysts the blended growth rate for the S&P 500 index for 3Q08 was negative -19% for the fifth consecutive quarter.
Month of September 2008
Dow month: -6.00%, 6 mo: -11.52%, ytd: -18.20%
S&P 500: 1,166
S&P 500 month: -9.05%, 6 mo: -11.80%, ytd: -20.57%
NASDAQ month: -11.66%, 6 mo: -8.25%, ytd: -21.15%
FOMC neutral stance - September 16 - Fed Funds rate remains 2.00% and the 'discount rate' remains 2.25%.
FHFA (Federal Housing Finance Agency) places Fannie Mae (with Herb Allison of TIAA-CREF) and Freddie Mac (with David Moffett of U.S. Bancorp) into conservatorship - dividends on both the common and preferred shares will be eliminated. Interest and principal payments will continue to their companies' securitized bonds and subordinated debt. The Treasury will 'backstop' both agencies with up to $100 billion (each) of a special class of stock - the Treasury through senior preferred stock and warrants will own 79.9% of each agency. Their portfolios "shall not exceed $850 billion as of 12/31/09, and shall decline by 10% per year until they reach $250 billion" - Fannie's is $758 billion and Freddie's is $798 billion.
U.S. 10yr Treasuries rally from 4.32% (Jun 13) to 3.25% (Sep 16) - up 24.7% in 9 weeks.
Short selling by Hedge funds of $100 million must now report positions to the SEC. SEC halts short selling of Financial stocks (Sep 19, effective immediately) protecting 799 financial companies - through Oct 2. SEC issues rules for short sales requiring delivery of securities by the settlement date, effective Sep 18. Britain's Financial Services Authority (& other Global exchanges) banned short-selling of financial stocks from Sep 18 - Jan 16, 2009.
Federal Reserve approves Goldman Sachs and Morgan Stanley to become bank holding companies - ending independent investment banks. Paulson's Treasury Dept. protects US money market mutual funds with insurance (using a $50 billion fund, through April 30, 2009) - as some of the $3.6 trillion of funds 'broke the buck'. Federal Reserve broadens eligible collateral - previously, only Treasury securities, Agency securities, and AAA-rated mortgage-backed and asset-backed securities could be pledged.
U.S. unemployment rate rises to 6.1%.
Lehman Brothers, the fourth-largest U.S. investment bank, files for the largest U.S. bankruptcy - listed total debts of $613bn.
Merrill Lynch, the third-largest U.S. investment bank, is purchased by Bank of America for $19.4 billion.
AIG ($1.1 trillion assets and 74 million clients in 130 countries) receives an $85 billion Federal Reserve loan in return for relinquishing 79.9% percent ownership in the company.
Washington Mutual is seized by federal regulators and sold to J.P. Morgan Chase for $1.9 billion - the largest bank failure in U.S. history, $307 billion in assets.
The nationalisation of Bradford and Bingley (joins Northern Rock as U.K.'s 2nd mortgage lender) and rescues for European lenders Fortis (Benelux's banking and insurance group), Hypo Real Estate (Germany's real estate firm), Glitnir (Iceland's third-largest lender) and Dexia (Franco-Belgian's bank, world's biggest lender to European local governments).
Hurricane Gustav (Sep 1) made landfall in Louisiana (near New Orleans) and Hurricane Ike (Sep 13) made landfall on Galveston Island causing 145 deaths and $31.5 billion of damage - the 3rd most destructive U.S. hurricane (behind Katrina 2005 and Andrew 1992).
U.S. home prices fell for the ninth consecutive quarter by 17.4% (compared to 3Q07) - S&P/Case-Shiller falls from a high of 206.52 (7/06) to 161.56.
Largest U.S. securities fraud settlement - Enron shareholders and investors will share $7.2 billion: payments from CIBC ($2.4 b), JPMorgan Chase ($2.2 b), Citigroup ($2 b) and approximately $600 million from Arthur Andersen, Lehman and Bank of America.
Month of August 2008
Dow month: 1.45%, 6 mo: -5.59%, ytd: -12.97%
S&P 500: 1,282
S&P 500 month: 1.18%, 6 mo: -3.61%, ytd: -12.67%
NASDAQ month: 1.81%, 6 mo: 4.23%, ytd: -10.75%
FOMC neutral stance - August 5 - Fed Funds rate remains 2.00% and the 'discount rate' remains 2.25%.
UBS agrees to buy back $18.6 billion in failed auction-rate securities, Merrill Lynch agrees to $12 billion, Wachovia $9 billion, Citigroup $7.3 billion, Morgan Stanley $4.5 billion, Bank of America $4.5 billion, JPMorgan Chase $3 billion and Royal Bank of Canada $850 million - about $330 billion of auction-rate securities are outstanding.
U.S. unemployment rate rises to 5.7%.
Genentech rejects Roche Holding's $43.7 billion offer.
2008 Beijing Summer Olympics begins with 100 heads of state in attendance, 204 nations participate (87 nations win medals) - Michael Phelps wins a record eight Olympic gold medals (totaling 14 career golds), Natalie Coughlin wins 6 medals and Usain Bolt wins three golds. The United States takes a total of 110 medals while China takes the most golds, 51. Great Britain takes 47 medals 19 are gold heading into the 2012 London games.
Month of July 2008
Dow month: -7.87%, 6 mo: -10.06%, ytd: -14.22%
S&P 500: 1,267
S&P 500 month: -1.02%, 6 mo: -8.06%, ytd: -13.69%
NASDAQ month: 1.44%, 6 mo: -2.68%, ytd: -12.33%
Markets set new lows - DJIA falls from 14,279 to 10,731 (Oct 11 - July 15, 23.6%) S&P 500 from 1,576 to 1,200 (Oct 11 - Jul 15, 22.4%). Bombay Sensex falls 41% from 21,206 (Jan. 10) to 12,514 (July 16).
2008 Panic facts
The Fed allows GSEs (government sponsored enterprises) Fannie Mae and Freddie Mac access to their discount window - they guarantee $5.4 of $12 trillion of U.S. mortgages.
SEC issues an emergency rule (July 21 - August 12) to limit naked short selling in 19 major financial firms - the 'tick test rule' was repealed on July 6, 2007.
Housing bill signed into law: creating the FHFA (Federal Housing Finance Agency, GSE's regulator) for Fannie Mae and Freddie Mac (increasing limits to $625,500 from $417,000), modernizes/authorizes the FHA to insure up to $300 billion in refinanced mortgages, creates an affordable housing trust fund and $15 billion of home buyer's tax credits (States can offer an additional $11 billion to refinance subprime loans while increasing down payments to 3.5% from 3%) and grants $3.9 billion to buy and rehabilitate foreclosed homes.
U.S. Dollar trades an all-time low of $1.6038 (July 15) to the Euro - falling from $0.8228 (October 26, 2000) a 95% decline.
Oil trades $147.27 an all-time high - July 11. Reuters-CRB (Commodity Research Bureau) Index of 17 commodities trades at an all-time high $618 - July 2.
ECB raises interest rates to 4.25% - the 9th increase for the Euro since 12/05.
IndyMac Bancorp is seized from imminent failure by the Office of Thrift Supervision (FDIC, second only in size to Continental Illinois, 1984).
Federal Reserve's new regulations for mortgage lenders: banning repayment penalties, prohibiting lenders from issuing loans to borrowers that cannot repay while requiring the verification of their incomes and assets, and requiring escrow accounts for property taxes and homeowner's insurance, as well as: actual appraisal of a home's value and good faith lending practices.
InBev buys Anheuser Busch for $49.9 billion to become the world's biggest brewer.
Earnings season for 2Q08 - according to a consensus of Wall St. analysts the blended growth rate for the S&P 500 index for 2Q08 was negative -22.1% for the fourth consecutive quarter - without financials 4.5%.
Month of June 2008
Dow month: -2.28%, ytd: -6.89%, 6 mo: -6.89%
S&P 500: 1,280
S&P 500 month: -8.57%, ytd: -12.81%, 6 mo: -12.81%
NASDAQ month: -9.12%, ytd: -13.57%, 6 mo: -13.57%
FOMC neutral stance - June 25 - Fed Funds rate remains 2.00% and the 'discount rate' remains 2.25%.
U.S. unemployment rate rises to 5.5%.
U.S. 10 yr. Treasuries fall 31% from 3.29% (Mar 17) to 4.32% (Jun 13) - in 3 months.
Federal Reserve, Regulators and 17 banks agreed to changes in the clearing of credit-default swaps, a $62 trillion market - insuring against the failure of any one bank.
Treasury Secretary Henry Paulson recommends an overhaul of Financial Regulation: designating the Fed as the primary regulator for market stability (including oversight of investment banks), creating one bank regulator by combining the Office of Thrift Supervision to the Office of the Comptroller of the Currency, merging the Securities and Exchange Commission with the Commodity Futures Trading Commission, and creating a national regulator for insurance companies.
U.S. home prices fell for the eighth consecutive quarter by 15.9% (compared to 2Q07) - S&P/Case-Shiller falls from a high of 206.52 (7/06) to 167.69.
Month of May 2008
Dow month: -1.42%, ytd: -4.72%, 6 mo: -5.48%
S&P 500: 1,400
S&P 500 month: 1.08%, ytd: -4.63%, 6 mo: -5.47%
NASDAQ month: 4.56%, ytd: -4.90%, 6 mo: -5.19%
Yahoo rejects Microsoft's offer of $44.6 billion to challenge Google.
Myanmar/Burma Cyclone Nargis on May 2, 2008 is responsible for over 134,000 fatalities.
2008 Sichuan, China earthquake (8.0) on May 12, 2008 is responsible for over 69,000 fatalities.
Month of April 2008
Dow month: 4.55%, ytd: -3.35%, 6 mo: -7.97%
S&P 500: 1,385
S&P 500 month: 4.77%, ytd: -5.65%, 6 mo: -10.59%
NASDAQ month: 5.84%, ytd: -9.05%, 6 mo: -15.63%
FOMC Easing move - April 30 - Fed Funds rate to 2.00% from 2.25% and the 'discount rate' to 2.25% from 2.50%.
Bank of England (BOE) follows Fed's lead with $100 billion swap of mortgage securities for BOE government bonds - the move is to encourage credit markets and bank lending.
U.S. Dollar trades $1.60 to the Euro - falling from $0.82 (Oct '00) a 95% decline in little more than 7 years.
Earnings season for 1Q08 - according to a consensus of Wall St. analysts the blended growth rate for the S&P 500 index for 1Q08 was negative -17.5% for the third consecutive quarter - without financials 7.2%.
Month of March 2008
Dow month: 0.29%, ytd: -7.55, 6 mo: -11.75%%
S&P 500: 1,322
S&P 500 month: -0.60%, ytd: -9.95%, 6 mo: -13.37%
NASDAQ month: 0.35%, ytd: -14.06%, 6 mo: -15.62%
Markets set new lows - S&P 500 from 1,576 to 1,256 (Oct 11
- Mar 17, 20.3%), NASDAQ from 2,861 to 2,155 (Oct 31 - Mar 17, 24.7%), and MSCI
Pacific Index from Oct 31 to Mar 17 (23.0%).
2008 Panic facts
Emergency FOMC inter-meeting (Mar 16) Discount rate cut of 0.25% to 3.25% from 3.50% - 25 basis points above the Fed funds rate of 3.00%. The Fed allows the 20 primary dealers of U.S. Treasury securities (non-commercial / investment banks) access to their discount window.
FOMC Easing move - March 18 - Fed Funds rate to 2.25% from 3.00% and the 'discount rate' to 2.50% from 3.25%.
U.S. 10 yr. Treasuries rally 38% from 5.32% (Jun 13) to 3.29% (Mar 17) - in 9 months.
Gold trades $1033.90 an all-time high - Mar 17. Platinum trades at all-time high of $2308.80 - Mar 4. Silver trades $21.44 (Mar 17) matching its highest level, December 1980. Reuters-CRB (Commodity Research Bureau) Index of 17 commodities trades at an all-time high $579.95 - Mar 5.
Bear Stearns is purchased by JP Morgan Chase for $10 (down from $172, 2007) - the Fed intervenes (non-recourse loan of $29 billion) in the protection of investment banking for the first time since the 1930s.
U.S. home prices fell for the seventh consecutive quarter by 14.4% (compared to 1Q07) - S&P/Case-Shiller falls from a high of 206.52 (7/06) to 172.16.
VISA becomes the largest U.S. IPO ever at $17.86 billion - surpassing the $10.62 billion record held by AT&T in 2000.
Month of February 2008
Dow month: -3.35%, ytd: -7.83%, 6 mo: -8.47%
S&P 500: 1,330
S&P 500 month: -3.48%, ytd: -9.40%, 6 mo: -9.71%
NASDAQ month: -4.94%, ytd: -14.37%, 6 mo: -12.52%
$168 billion Stimulus plan signed into law - Tax rebates (to over 130 million Americans), Business tax breaks and Housing provisions (Fannie Mae and Freddie Mac may temporarily purchase mortgages up to $793,000 up from $417,000 while the FHA can insure loans for up to $729,000).
U.S. Dollar trades $1.52 to the Euro - falling from $0.82 (Oct '00) a 85% decline in little more than 7 years.
NASDAQ OMX Group becomes the world's largest exchange - operations of over 60 exchanges in 50 countries.
Month of January 2008
Markets fall most since 9/11 - DJIA falls from 14,279 to 11,508 (Oct 11 - Jan 22, 19.4%), S&P 500 from 1,576 to 1,270 (Oct 11 - Jan 23, 16.3%), NASDAQ from 2,861 to 2,202 (Oct 31 - Jan 23, 23%), MSCI Europe Index from Oct 31 to Jan 23 (23.3%),
MSCI Pacific Index from Oct 31 to Jan 22 (22.1%) and Latin American from Oct 31 to Jan 22 (26.2%).
Emergency FOMC inter-meeting (Jan 22, first since Sept. 17, 2001) Fed funds rate cut of 0.75% to 3.5% from 4.25% - biggest rate cut by the Fed since October 1984.
FOMC Easing move - January 30 - Fed Funds rate to 3.00% from 3.50% - first time since 1914 that the Fed made 2 rate cuts in 10 days.
U.S. unemployment rate rises to 5%.
Oil trades above $100 for the first time, $100.09 - Jan 3.
Countrywide Financial is purchased by Bank of America for $4.1 billion.
NYSE Euronext agrees to buy the American Stock Exchange.
CME Group (Chicago Mercantile Exchange and Board of Trade, merged July 2007) bid $11 billion for Nymex (NY Mercantile Exchange) the world's largest physical commodity futures exchange, 130 years old and went public in Nov '06.
Earnings season for 4Q07 - according to a consensus of Wall St. analysts the blended growth rate for the S&P 500 index for 4Q07 was negative -25.1% for the second consecutive quarter - without financials 12.1%, the worst quarterly performance since 1991.
Month of December 2007
Dow month: -0.80%, 6 mo: -1.07%, ytd: 6.43%
S&P 500: 1,468
S&P 500 month: -0.88%, 6 mo: -2.33%, ytd: 3.53%
NASDAQ month: -0.30%, 6 mo: 1.88%, ytd: 9.81%
FOMC Easing move - December 11 - Fed Funds rate to 4.25% from 4.50%.
Federal Reserve announces an agreement with the European Central Bank, Bank of England, Bank of Canada and the Swiss National Bank creating a (temporary) auction facility (establishing temporary swap arrangements) providing reserves for up to 6 months - to "help promote the efficient dissemination of liquidity" when other lines of credit are "under stress."
European Central Bank (ECB, Dec 17) injects a record €348.6 billion ($501.5 billion) lending (unlimited) to all banks submiting bids of at least 4.21% for 2-week funds at its weekly refinancing auction.
Wheat trades at all-time high above $10-a-bushel (Dec 17).
U.S. home prices fell for the sixth consecutive quarter 5.8% (NAR, compared to 4Q06) sixth consecutive quarter of price declines in national home prices - S&P/Case-Shiller falls from a high of 206.52 (7/06) to 185.03.
China adds gold (also aluminum and steel) becoming the world's largest producer - 276 metric tons of gold in 2007 overtaking South Africa (largest producer since 1905).
U.S. Mortgage lenders have agreed to freeze the interest rates on adjustable-rate (subprime) mortgages for 5 years for mortgages written between January 2005 and July 2007 - FHASecure also offers relief to borrowers.
Month of November 2007
Dow month: -4.01%, 6 mo: -1.88%, ytd: 7.29%
S&P 500: 1,481
S&P 500 month: -4.39%, 6 mo: -3.20%, ytd: 4.44%
NASDAQ month: -6.96%, 6 mo: 2.15%, ytd: 10.14%
U.S. 10 yr. Treauries rally 27.8% from 5.32% (Jun 13) to 3.84% (Nov 26) - in 23 weeks.
Oil trades at an all-time high of $99.29 - up over 43% in 10 weeks.
Gold trades $848 - highest in 27 years when it traded 2 days above $800 (1/18/80, $835 and 1/21/80, $850). Silver trades $15.90 matching its highest level (December 1980).
Shanghai Composite Index loses 21.9% from its high of 6,124 (Oct 16) to 4,778 (Nov 28) and Hong Kong Hang Seng Index loses 19% from its high of 31,958 (Oct 30) to 25,861 (Nov 22). PetroChina becomes the first $1 trillion company (as it debuted on the Shanghai exchange, 11/5) - Exxon Mobil is valued at $475 billion.
Month of October 2007
Dow month: 0.25%, 6 mo: 6.65%, ytd: 11.77%
S&P 500: 1,549
S&P 500 month: 1.51%, 6 mo: 4.52%, ytd: 9.24%
NASDAQ month: 5.85%, 6 mo: 13.23%, ytd: 18.39%
FOMC Easing move - October 31 - Fed Funds rate to 4.50% from 4.75%.
Uranium falls from an all-time high of $136 to $75 - a 45% drop in 4 months.
Royal Bank of Scotland offers $101 billion for ABN Amro ($3.1 trillion of assets) - in the largest bank takeover ever.
Earnings season for 3Q07 - according to a consensus of Wall St. analysts the blended growth rate for the S&P 500 index for 3Q07 is -4.5%, negative for the first time since Q401-Q102.
Month of September 2007
Dow month: 4.03%, 6 mo: 12.47%, ytd: 11.49%
S&P 500: 1,526
S&P 500 month: 3.60%, 6 mo: 7.46%, ytd: 7.62%
NASDAQ month: 4.04%, 6 mo: 11.57%, ytd: 11.84%
FOMC Easing move - September 18 - Fed Funds rate lowered 50 basis points to 4.75% from 5.25% and the 'discount rate' to 5.25% from 5.75%.
U.S. 10 yr. Treauries rally 18.4% from 5.32% (Jun 13) to 4.30% (Sep 10) - in 12 weeks.
U.S. home prices down -2.0% in 3Q07 (NAR, compared to 3Q06) fifth consecutive quarter of price declines in national home prices - S&P/Case-Shiller falls from a high of 206.52 (7/06) to 195.68.
73,000 UAW workers strike General Motors for 2 days (first nationwide strike since 1970) - GM removes a $51 billion health care obligation to a UAW-run VEBA trust (funded with $35 billion).
Month of August 2007
Dow month: 1.11%, 6 mo: 8.88%, ytd: 7.17%
S&P 500: 1,473
S&P 500 month: 1.24%, 6 mo: 4.77%, ytd: 3.88%
NASDAQ month: 1.96%, 6 mo: 7.45%, ytd: 7.49%
Federal Reserve cut (inter-meeting, 8/17) the 'discount rate' to 5.75% from 6.25% citing tighter credit and shaken financial markets. Central banks in the U.S., Europe and Asia had injected more then $400 billion (Aug 9-16) into the banking system providing liquidity to global credit markets. Libor trades up to 95bp over 3-month Fed funds rate.
Chinese stock market ($4.72 trillion) overtakes the Japanese market ($4.7 trillion) in capitalisation - Shanghai Composite Index rallies from below 1000 (Jun 6 '05) to 5,235 (Aug 31) more than 423%, in little more than 2 years.
Month of July 2007
Dow month: -1.47%, 6 mo: 4.67%, ytd: 6.00%
S&P 500: 1,455
S&P 500 month: -3.19%, 6 mo: 1.18%, ytd: 2.61%
NASDAQ month: -2.19%, 6 mo: 3.37%, ytd: 5.42%
CME (Chicago Mercantile Exchange) purchases the CBOT (Chicago Board of Trade) consolidating futures and options trading in a $11.9 billion merger.
People's Bank of China raised interest rates to 3.33% from 3.06% and the lending rate to 6.84% from 6.57% - in order to cool inflation (5th increase in 15 months). Additionally, the government reduced the tax on interest income (5% from 20%, effective 8/15) and raised bank reserve requirements to 12% from 11.5% to encourage savings and curb possible asset bubbles.
Ontario Teachers' Pension Plan agreed to purchase a 52% interest in Canada's largest phone company, BCE Inc., in the largest buyout ever, $48.5 billion. Also, Canadian's Alcan agrees to Australia's Rio Tinto bid of $38.1 billion.
J.K. Rowling releases her 7th and final Harry Potter book becoming the first billion dollar author.
Earnings season for 2Q - the growth rate for the S&P 500 index was 7.7%.
Month of June 2007
Dow month: -1.60%, 6 mo: 7.58%, ytd: 7.58%
S&P 500: 1,503
S&P 500 month: -1.76%, 6 mo: 5.99%, ytd: 5.99%
NASDAQ month: -0.04%, 6 mo: 7.78%, ytd: 7.78%
ECB raises interest rates to 4% - the 8th increase for the Euro since 12/05. Bank of England to raise rates to 5.75% next month (5th increase since 8/06).
U.S. home prices down -1.5% in 2Q07 (NAR, compared to 2Q06) fourth consecutive quarter of price declines in national home prices - S&P/Case-Shiller falls from a high of 206.52 (7/06) to 199.44.
BRIC emerging markets - Brazil becomes the last member to reach $1 trillion in overall stock market value. Russia surpassed $1 trillion in September of 2006, then China (1/07) and India (5/07).
Blackstone Group becomes the first large U.S. private equity firm to go public - valuing the firm at $33.5 billion.
U.S. inverted yield curve ends Jun 7 '07 it began on Dec 27 '05 (75 weeks) - the last U.S. Bond yield inversion was from Feb 24, '00 - Dec 22, '00, 8th time since 1980. Investors shied away from shorter U.S. Treasury maturities impacting global debt markets (10 yr typically exceeds 2 yr yields by apr. 90 bps). Inversions had averaged 30 weeks (9 to 59 weeks) and -46 bps (-8 to -133 bps). The "carry-trade" (borrowing in low-interest rate countries) fuels M&A activity worldwide.
Month of May 2007
Dow month: 4.33%, ytd: 9.34%, 6 mo: 11.50%
S&P 500: 1,530
S&P 500 month: 3.24%, ytd: 7.90%, 6 mo: 9.29%
NASDAQ month: 3.13%, ytd: 7.83%, 6 mo: 7.12%
S&P 500 closes above its all-time closing high - despite the fact that Technology (60% lower) and Telecom (44%) sectors still remain lower than their March 2000 high.
Daimler sells 80.1% controlling interest in Chrysler to private-equity firm Cerberus Capital Management for $7.4 billion.
Shanghai Composite Index rallies 100% in 113 trading days (200% in the past 12 months) - from below 2,000 (Nov 29) to above 4,000 (May 9) as some of $2 trillion of Chinese savings (earning less than 3%) flood into stocks (more than 100 million brokerage accounts are now open, 25 million opened ytd).
Month of April 2007
Dow month: 5.73%, ytd: 4.81% 6 mo: 8.13%
S&P 500: 1,482
S&P 500 month: 4.37%, ytd: 4.51%, 6 mo: 7.63%
NASDAQ month: 4.30%, ytd: 4.55%, 6 mo: 6.72%
U.S. Dollar trades $1.37 to the Euro - falling from $1.17 (12/05) a 17% depreciation in 17 months. British pound hits a 26-year high trading above $2 to the dollar.
Europe (24 markets, including Russia and eastern Europe) at $15.7 trillion passes US in stock market value ($15.6 trillion) for the first time since WWI.
Toyota overtakes General Motors (2.35m cars and trucks sold to 2.26m units) in the first quarter of 2007 - ending GM's 76 year reign as the world's largest carmaker.
Earnings season for 1Q - the growth rate for the S&P 500 index was 7.9%. The 1Q07 marks the end of 3.5 years of double-digit earnings growth. In U.S. corporate history 14 quarters of consecutive double-digit earnings growth for the S&P 500 index was a record.
Month of March 2007
Dow month: 0.70%, ytd: -0.87% 6 mo: 5.78%
S&P 500: 1,420
S&P 500 month: 1.00%, ytd: 0.14%, 6 mo: 6.37%
NASDAQ month: 0.21%, ytd: 0.25%, 6 mo: 7.22%
U.S. home prices down -1.4% in 1Q07 (NAR, compared to 1Q06) third consecutive quarter of price declines in national home prices - S&P/Case-Shiller falls from a high of 206.52 (7/06) to 201.01.
Federal Reserve (and other Federal agencies) propose new guidlines for subprime mortgage loans (7.5 million and aproximately 5 million Alt-A or nontraditional loans) because of growing delinquencies, foreclosures and bankruptcies.
European Central Bank (ECB) raised interest rates to 3.75% from 3.50% (7th time since 12/05) for 13 European nations.
Month of February 2007
Dow month: -2.80%, ytd: -1.56% 6 mo: 7.79%
S&P 500: 1,406
S&P 500 month: -2.23%, ytd: -0.85%, 6 mo: 7.90%
NASDAQ month: -1.91%, ytd: 0.04%, 6 mo: 10.67%
Reuters-CRB (Commodity Research Bureau) Index of 17 commodities trades at an all-time high above $414. Uranium trades $85/lb, Nickel and Lead trade at new record highs.
Bank of Japan raises interest rate from 0.25% to 0.50%.
TXU, the largest power producer in Texas, goes private in largest leveraged buy-out & private equity deal in U.S. corporate history at $45 billion.
Fortress Investment becomes the first U.S. hedge fund to be listed and traded publicly.
The Blackstone Group buys Equity Office Properties Trust for $39 billion - surpassing the HCA deal for $33 billion (Nov '06).
Month of January 2007
Dow month: 1.27%, ytd: 1.27% 6 mo: 12.84%
S&P 500: 1,438
S&P 500 month: 1.41%, ytd: 1.41%, 6 mo: 12.70%
NASDAQ month: 1.99%, ytd: 1.99%, 6 mo: 17.79%
Oil futures trade below $50 for the first time since May '05.
Earnings season for 4Q - the growth rate for the S&P 500 index was 11.6%. The 4Q06 will mark the 14th consecutive quarter of double-digit earnings growth for the S&P 500 index. In U.S. corporate history 14 quarters (of consecutive double-digit earnings growth) is a record.
Month of December 2006
Dow month: 1.98%, 6 mo: 11.78%, ytd: 16.29%
S&P 500: 1,418
S&P 500 month: 1.29%, 6 mo: 11.65%, ytd: 13.62%
NASDAQ month: -0.66%, 6 mo: 11.19%, ytd: 9.52%
Reuters-CRB (Commodity Research Bureau) Index of 17 commodities trades at an all-time high above $409.
U.S. home prices down -2.7% in 4Q06 (NAR, compared to 4Q05) second consecutive quarter of price declines in national home prices - S&P/Case-Shiller falls from a high of 206.52 (7/06) to 203.33.
Bank of New York (N.Y.'s oldest bank, founded by Alexander Hamilton in 1784) agrees to buy Mellon Financial for $16.5 billion. It will manage $1.1 trillion in assets and safeguard $16.6 trillion - world's largest Asset managers: Barclay's $1.8, State Street $1.7, Fidelity $1.3 and JPMorgan Chase $1.3 trillion; world's largest Custodian banks: BONY $16.6, JPMorgan Chase $14.0, State Street $11.9 and Citigroup $9.6 trillion.
European Central Bank (ECB) raised interest rates to 3.5% from 3.25% (6th time in 12 months) for 12 European nations.
China chooses Westinghouse (Toshiba) for $5.3 billion nuclear reactor contract (26 by 2020) - China is the 3rd largest nuclear power generator in Asia after Japan & South Korea.
AT&T and Bellsouth merger in $86 billion deal.
President Gerald Ford dies at 93 (longest-lived); 38th President of the United States from 1974-77. Ford replaced Richard Nixon as the only non-elected President is U.S. history. Ford oversaw the withdrawal of American forces from Vietnam and the pardoning of Nixon for the Watergate scandal which was credited for Ford's lose to Jimmy Carter in 1976.
Month of November 2006
Dow month: 1.17%, 6 mo: 9.43%, ytd: 14.03%
S&P 500: 1,400
S&P 500 month: 1.67%, 6 mo: 10.24%, ytd: 12.18%
NASDAQ month: 2.75%, 6 mo: 11.62%, ytd: 10.25%
U.S. unemployment rate falls to 4.4%.
Russia ($1 trillion economy) invited to join the World Trade Organisation (WTO) of 149 members - China joined the WTO in 2001.
HCA completes largest leveraged buy-out in U.S. corporate history at $33 billion - surpassing KKR's 1989 purchase of RJR Nabisco Inc. for $31.3 billion.
Freeport-McMoRan agrees to buy Phelps Dodge for $25.9 billion.
Month of October 2006
Dow month: 3.43%, 6 mo: 6.27%, ytd: 12.72%
S&P 500: 1,377
S&P 500 month: 3.15%, 6 mo: 5.11%, ytd: 10.34%
NASDAQ month: 4.78%, 6 mo: 1.89%, ytd: 7.30%
U.S. population exceeds 300 million (China, 1.32B and India, 1.10B) 100 million reached in 1915 and 200 million in 1967.
European Central Bank (ECB) raised interest rates to 3.25% from 3% (5th time in 10 months) for 12 European nations.
Industrial and Commercial Bank of China (ICBC) launches the world's largest IPO ever - surpassing NTT DoCoMo, $18.4 billion in 1998. Oversubscribed by more than 7 times and bringing in $21.9 billion.
U.N. Security Council adopts resolution to impose sanctions on North Korea for a suspected nuclear-bomb test on Oct 9. Countries with nuclear weapons: United States, Britain, Russia, China, France, India, Pakistan & Israel (unacknowledged).
Michael Schumacher retires as the world's first billionaire athlete - Formula One driver. Schumacher, 7-time world champion, 91 race wins & 154 podium finishes - brought wins to Ferrari (2000-04) for the first time since 1979.
Earnings season for 3Q - the growth rate for the S&P 500 index was 18.7%. The 3Q06 will mark the 13th consecutive quarter of double-digit earnings growth for the S&P 500 index. In U.S. corporate history 13 quarters (of consecutive double-digit earnings growth) has only been achieved once before, 4Q92 - 4Q95.
Month of September 2006
Dow month: 2.62%, 6 mo: 5.13%, ytd: 8.98%
S&P 500: 1,335
S&P 500 month: 2.46%, 6 mo: 3.17%, ytd: 6.97%
NASDAQ month: 3.44%, 6 mo: -3.46%, ytd: 2.40%
U.S. 10 yr. Treauries rally 13.5% from 5.24% (Jul 5) to 4.53% (Sep 25) - in less than 12 weeks. European and Asian funds pour into U.S. debt as global investors anticipate further rate increases by the European and Asian central banks.
U.S. home prices down -1.7% in 3Q06 (compared to 3Q05) the first quarter of price declines in national home prices since 1991 (NAR) - S&P/Case-Shiller Home Price Index falls from a high of 206.52 (7/06) to 205.8.
China's foreign currency reserves have surpassed $1 trillion eclipsing Japan's $900 billion - more than 70% were held in U.S. Treasuries which has fallen to less than 35% as China diversifies.
Alcatel SA and Lucent Technologies Inc. merge in $13.4 billion share swap.
Oil trades below $60 down 24% since its July 10th high - as Americans reduce their "miles driven" (year over year) for the first time since 1981. OPEC looks to cut output from 29.5 million bpd by at least 1m barrels a day - first cut since April 2004.
Month of August 2006
Dow month: 1.75%, 6 mo: 3.53%, ytd: 6.20%
S&P 500: 1,303
S&P 500 month: 2.12%, 6 mo: 1.80%, ytd: 4.41%
NASDAQ month: 4.40%, 6 mo: -4.30%, ytd: -1.00%
NASA awards Lockheed Martin a $3.9 billion contract (part of a $122 billion effort through 2018) to build a spacecraft that will return U.S. astronauts to the moon.
Pension Reform bill signed into law.
Anadarko Petroleum Corp. $23.3 billion acquisition of Kerr-McGee Corp. and Western Gas Resources approved.
European Central Bank's governing council increased their target rate to 3% from 2.75%, - Great Britian, Denmark & Australia also raise rates. People's Bank of China raises the one-year lending rate to 6.125%.
Month of July 2006
Dow month: 0.31%, 6 mo: 2.95%, ytd: 4.37%
S&P 500: 1,276
S&P 500 month: 0.47%, 6 mo: -0.31%, ytd: 2.24%
NASDAQ month: -3.73%, 6 mo: -9.28%, ytd: -5.17%
Oil closes $77.03 an all-time high - intraday high of $78.40.
Bank of China freezes North Korean bank accounts assisting the US-led crackdown of North Korea's alleged counterfeiting and money-laundering.
Bank of Japan raises interest rate to 0.25% up from 0.0%. BOJ's 0.0% rate policy has been in force (except 8/00-2/01) since Mar '99 - 14 other central banks also raise rates.
S&P/Case-Shiller Home Price Index (20-city) rises to a high of 206.52 - rising from 100 (Jan 1, 2000).
Earnings season for 2Q - the growth rate for the S&P 500 index was 16.3%. The 2Q06 will mark the 12th consecutive quarter of double-digit earnings growth for the S&P 500 index. There has only been 1 other instances of at least 12 consecutive quarters of double-digit earnings growth, 4Q92 - 4Q95.
Month of June 2006
Dow month: -0.16%, 6 mo: 4.04%, ytd: 4.04%
S&P 500: 1,270
S&P 500 month: 0.00%, 6 mo: 1.76%, ytd: 1.76%
NASDAQ month: -0.28%, 6 mo: -1.50%, ytd: -1.50%
FOMC Tightening Cycle - Jun 29 - Fed Funds rate increases to 5.25% (17th consecutive increase).
U.S. unemployment rate falls to 4.6%.
European Central Bank's governing council increased their target rate to 2.75% from 2.5%, - India, Denmark, South Korean, Thailand, Turkey & South Africa also raise rates.
Warren Buffett gifts 10 million of Berkshire Hathaway (B shares - over $31 billion) to the Gates Foundation - surpassing Bill and Melinda Gates' endowment of $25.9 billion.
Phelps Dodge acquires Inco (which merges with Falconbridge) for $40 billion. Arcelor merges with Mittal Steel for $38.3 billion.
NYSE Group reaches deal to acquire Euronext. NYSE counterbids (Deutsche Borse) $10.2 billion for the pan-European Stock Exchange - Euronext's price rises from €21.70 (Jan 5, 05) to €79.15 (May 9) 364% in 17 months.
Month of May 2006
Dow month: -1.75%, ytd: 4.21% 6 mo: 3.36%
S&P 500: 1,270
S&P 500 month: -3.05%, ytd: 1.76%, 6 mo: 1.68%
NASDAQ month: -6.20%, ytd: -1.22%, 6 mo: -2.42%
FOMC Tightening Cycle - May 10 - Fed Funds rate increases to 5% (16th consecutive increase).
$70 Billion Tax cut (extension) bill signed into law.
Platinum $1335 and Copper $4.03/lbs trade at all-time cash highs. Gold trades $732 - highest since February 1980, when Gold spent 3 weeks above $700. Silver trades $15.21 - highest since February 1983. Reuters-CRB (Commodity Research Bureau) Index of 17 commodities trades at an all-time high above $399.
Wachovia Corp., the 4th largest U.S. bank, pays $25.5 billion for Golden West Financial Corp.
Corporate fraud verdicts returned on Ken Lay, Jeffrey Skilling and Andrew Fastow (Enron). Enron's collapse caused the closing of Arthur Andersen. Five years and the implementation of Sarbanes-Oxley saw John J. Rigas (Adelphia), Sam Waksal (ImClone), Bernie Ebbers (WorldCom), Dennis Kozlowski (Tyco), Martha Stewart, Global Crossing, Qwest, HealthSouth, Rite Aid, Fannie Mae, AIG and others litigated, convicted, fined and/or imprisoned.
Medicare (Part D) Prescription Drug benefit (coverage began Jan 1, 2006). Over 37 million of Medicare's 43 million beneficiaries have enrolled as of May 15 (next open enroll begins Nov 15, 2006). Estimated to cost $724 billion over 10 years, it is the biggest expansion of Medicare since its creation in 1965. The voluntary program is designed to promote competition among private insurers in the marketplace. By entering your individual information at www.medicare.gov your best choices (prescription drug plans) are provided - average monthly premium is about $24 a month.
Month of April 2006
Dow month: 2.32%, ytd: 6.07% 6 mo: 8.88%
S&P 500: 1,310
S&P 500 month: 1.24%, ytd: 4.97%, 6 mo: 8.53%
NASDAQ month: -0.73%, ytd: 5.31%, 6 mo: 9.53%
China increases interest rates in order to cool domestic economy growing at 9-11%. China's Three Gorges dam approaches completion (May 20) - the $25 billion project is the world's largest. Beijing-Lhasa Express begins (July 1) the 710-mile link to the Tibetan capital climbs to over 16,640 feet, oxygen-assisted - $4.2 billion, 5 years.
Boston Scientific acquires Guidant in a $27 billion buyout.
NASDAQ purchases a 25% interest in the London Stock Exchange (1566-1698 in the Royal Exchange, New Jonathon's in 1773 and officially founded on March 3, 1801) - LSE's price rises from 341p (Oct 20, 04) to 1280p (Apr 19) 375% in 18 months.
Earnings season for 1Q - the growth rate for the S&P 500 index was 14.9%. The 1Q06 will mark the 11th consecutive quarter of double-digit earnings growth for the S&P 500 index. There has only been 1 other instances of at least 11 consecutive quarters of double-digit earnings growth, 4Q92 - 4Q95.
Month of March 2006
Dow month: 1.06%, ytd: 3.66% 6 mo: 5.12%
S&P 500: 1,294
S&P 500 month: 1.09%, ytd: 3.69%, 6 mo: 5.37%
NASDAQ month: 2.54%, ytd: 6.08%, 6 mo: 8.74%
FOMC Tightening Cycle - Mar 28 - Fed Funds rate increases to 4.75% (15th consecutive increase).
NYSE, the world's largest stock market, demutualizes and mergers with Archipelago Holdings Inc. (and Pacific Exchange). After 213 years, as member-owned (1,366 members), the NYSE goes public.
Bank of Japan ends over 7 years of deflation fighting, Mar 9 - BOJ's ultra-loose monetary policy (0% since Mar '99) is over; removing excess liquidity and managing interest rates is now the policy.
European Central Bank (ECB 12-nation Euro zone) 18-member governing council increased their target rate to 2.5% from 2.25%.
DP World (United Arab Emirates) will divest itself of 6 U.S. port operations in its acquisition of British owned P&O - facing national securities opposition by Congress.
Month of February 2006
Dow month: 1.19%, ytd: 2.58% 6 mo: 4.89%
S&P 500: 1,280
S&P 500 month: 0.00%, ytd: 2.56%, 6 mo: 6.31%
NASDAQ month: -1.04%, ytd: 3.45%, 6 mo: 7.39%
U.S. unemployment rate falls to 4.7%.
U.S. 30yr Treasury bonds auctioned - Reissued on Feb 9, $14 Billion at 4.53% (lower than the Feb '99 low yield of 5.298%) - last 30yr Treasury issued Aug 2001 (discontinued for 4.5 years).
India, the world's 2nd largest Emerging market economy ($3.6 trillion), SENSEX index closes above 10,082 (Feb 7) - rallying from 6,118 (Apr 18) to 10,422 (Feb 28), over 70% in the past 10 months.
Ben Bernanke (Federal Reserve Governor, Aug '02 - Jun '05 and former Chairman of the White House Council of Economic Advisers) succeeds Alan Greenspan as Chairman of the Federal Reserve. Bernanke delivered his first Federal Reserve semi-annual policy report to Congress, Feb 15 - affirming continuity of policy. Kevin Warsh (Stanford University) a White House economic aide and Randall Kroszner (University of Chicago) a former White House adviser have been appointed to fill two vacancies on the Federal Reserve Board. Donald Kohn (senior Governor of Fed) to be nominated as vice Chairman of the U.S. central bank.
2006 XX Olympic Winter Games Torino, Italy where German, American, Canadian, Austrian, Russian & Norwegian athletes scoop up medals. Joey Cheek (US) after winning 500 meters (silver 1000 meters) speed skating announces donating his $40,000 (all U.S. athletes receive $25k, $15k or $10k from the U.S.O.C.) to "Right to Play" - founded by Norwegian superstar Johann Olav Koss (who won 3 gold medals in the 1994 Olympic Games, Lillehammer) inspiring Cheek. Over $500,000 have been pledged by athletes - U.S. athletes chose Cheek to carry U.S. flag in closing ceremony.
Month of January 2006
Dow month: 1.37%, ytd: 1.37% 6 mo: 2.11%
S&P 500: 1,280
S&P 500 month: 2.56%, ytd: 2.56%, 6 mo: 3.73%
NASDAQ month: 4.54%, ytd: 4.54%, 6 mo: 5.54%
FOMC Tightening Cycle - Jan 31 - Fed Funds rate increases to 4.50% (14th consecutive increase).
Canada, U.S.'s largest trade partner, Stephen Harper (Conservative Party) defeats Paul Martin (Liberal Party) ending a 12-year Liberal rule to become Canada's next prime minister. TSX Composite Index rallies from 10,519 (Nov 10) to close at an all-time high above 11,999 (Jan 31) more than 14% in less than 3 months.
Bill Ford, chairman and great-grandson of the founder of the Ford Motor Co., announces Ford will no longer provide quarterly and annual guidance - the lifeblood of Wall St. investment analysts - Ford's restructuring will focus on a new CEO & building the cars their customers buy. GM faces similar or greater restructuring challlenges including selling GMAC and troubles with Delphi.
Alan Greenspan, Chairman of the Federal Reserve (world's most powerful central banker), retires after 18.5 years. He started his tenure on August 11, 1987 (just weeks before the October 19 crash, 508.32 points) - DJIA fell from 2,746 (Aug 25) to 1,616 (Oct 20) a 41% decline (in 40 trading days). Greenspan oversaw nearly two decades of U.S. prosperity with only 18 months of moderate recessions (less than 8.2%). His Federal Reserve tenure was the second-longest (William McChesney Martin, nearly 20 years) as he steered the U.S. economy through numerous challenges. Greenspan replaced Chairman Paul Volcker, who was appointed in 1979 and is remembered for cutting inflation from 14.8% (CPI, the Misery Index included unemployment at 20.6%) to 2.5% (in 1983). Volcker conquered stagflation by raising interest rates, while encouraging fiscal restraint, trade and productivity gains.
Iran (pop. 68 million, Islamic republic) moves its foreign exchange out of European banks in advance of referral to the U.N. Security Council and possible imposition of economic sanctions over its nuclear program. Iran is OPEC's second largest oil producer (after Saudi Arabia) and holds 10% of the world's proven oil reserves. Iran also has the world's second largest natural gas reserves (after Russia).
Earnings season for 4Q - the growth rate for the S&P 500 index was 14.4%. The 4Q05 will mark the 10th consecutive quarter of double-digit earnings growth for the S&P 500 index. There have been only 2 other instances of at least 10 consecutive quarters of double-digit earnings growth, 2Q72 - 3Q74 and 4Q92 - 4Q95.
Month of December 2005
Dow month: -0.81%%, 6 mo: 4.31%, ytd: -0.61%
S&P 500: 1,248
S&P 500 month: -0.08%, 6 mo: 4.79%, ytd: 3.06%
NASDAQ month: -1.21%, 6 mo: 7.25%, ytd: 1.24%
FOMC Tightening Cycle - Dec 13 - Fed Funds rate increases to 4.25% (13th consecutive increase).
Reuters-CRB Index of 17 commodities trades a (non-adjusted) all-time high above $351 (Nov '80 high, $337.60). Gold futures trade $544 (a 24.5 year high) breaking the March 1981 high of $540 as gold fell from its all-time peak of $850 reached in January 1980.
Bank regulators (Federal Reserve, Comptroller of the Currency, Federal Deposit Insurance Corporation, Office of Thrift Supervision and the National Credit Union Administration) issue new guidelines on mortgage loans ($11 trillion outstanding - stronger risk management by lenders warrant tighter standards on unconventional mortgages. Interest-only & Payment Option ARM's in 2001 made up 4% of loans they have risen to over 40% in 2005.
World Trade Organization (WTO) 149 members (DOHA) approved a ministerial declaration in which the European Union sets an end date (2013) for farm export subsidies - help to the world's poorest developing countries.
Iraqi people vote in first regional parliamentary General elections - Dec 15 - the Council of Representatives, a 275-member body, will shape Iraq's future democratic government.
European Central Bank (President Jean-Claude Trichet and the 12-nation ECB currency policy makers) - Dec 1 - raised rates from 2% to 2.25%. The 2% point gap (2% Euro vs. 4% U.S. Dollar) had been the widest since September 2000. The ECB has managed the Eurozone's (311 Milion Europeans) Monetary policy since the Euro's launch in 1999. Interest rates had been at 2% (since June '03), when the ECB cut rates from 2.5% to 2%. The DJ Euro Stoxx 50 trades at a 3.5 year high.
Month of November 2005
Dow month: 3.50%, 6 mo: 3.23%, ytd: 0.20%
S&P 500: 1,249
S&P 500 month: 3.48%, 6 mo: 4.87%, ytd: 3.14%
NASDAQ month: 5.28%, 6 mo: 7.93%, ytd: 2.48%
Oil trades $55 down from $70.85, a 21% fall since Aug '05.
Dollar trades $1.16, strongest in 2 years - rallying from an all time low of $1.36 (15% appreciation since Jan '05) purchases a Euro.
Bank of America merges with MBNA for $35.8 billion.
Canada, U.S.'s largest trade partner, government of Prime Minister Paul Martin, Liberal Party, fell Nov. 28 when opposition parties united to topple Martin. Canada with 33 million people share a $1/2 Trillion (NAFTA) trade with the U.S. which accounts for a third of Canada's economy (85% of Canadian exports). TSX Composite Index rallies from 5,678 (Oct 10, '02) to 11,118 (Sep 28, '05) over 95% rally in 3 years (283 pts shy of the Sep 5 '00 high of 11,401).
2005 Hurricane season ($47.5 billion in insured losses and over $200 billion in U.S. government outlays) with 27 named storms (14 became hurricanes) exceeds 1933 (22) for the most storms since record keeping began 154 years ago. The Galveston Hurricane of 1900 remains the deadliest U.S. natural disaster - estimated loss of life was between 6,000 to 12,000. Hurricane Katrina in August, Hurricane Andrew (Florida in 1992) and the Okeechobee Hurricane (Florida in 1928) make up the top four most destructive Hurricanes in U.S. history.
Month of October 2005
Dow month: -1.21%, 6 mo: 2.43%, ytd: -3.18%
S&P 500: 1,207
S&P 500 month: -1.71%, 6 mo: 4.41%, ytd: -0.33%
NASDAQ month: -1.44%, 6 mo: 10.36%, ytd: -2.66%
FOMC Tightening Cycle - Nov 1 - Fed Funds rate increases to 4% (12th consecutive increase).
Hurricane Wilma recorded as most intense (lowest barometric pressure, Rita was the 4th & Katrina the 6th recorded in U.S. history) leaving 6 million Floridians without electricity.
China's first televised manned space launch of two astronauts. It is only the third country to launch a human into orbit on its own, after Russia and the United States. The mission lasted five days; the 2003 "secret" flight, which carried one astronaut lasted just 21.5 hours.
Iraqi people vote and adopt first democratic constitution in their country's history.
Kashmir earthquake strikes on October 8 - registering 7.6 it killed between 85,000 - 95,000 and left over 3.5 million Pakistanis homeless for the harsh winter.
Delphi files for bankruptcy, the world's biggest auto-parts supplier, spun off from General Motors in 1999. About half of Delphi's business comes from GM.
Chicago White Sox win their first World Series title since 1917 (when "Shoeless" Joe Jackson and the "Black Sox" threw the 1919 Series against Cincinnati), beating the Los Angeles Angels and then the Houston Astros in 8 straight games.
Earnings season for 3Q - the growth rate for the S&P 500 index was 16.0%. The sectors expecting the weakest growth are materials (-5%) and consumer discretionary (1%). The 3Q05 will mark the 9th consecutive quarter of double-digit earnings growth for the S&P 500 index. There have been only 3 other instances of at least 9 consecutive quarters of double-digit earnings growth: 2Q72 - 3Q74, 2Q87 - 2Q89, and 4Q92 - 4Q95.
Month of September 2005
Dow month: 0.83%, 6 mo: 0.62%, ytd: -1.99%
S&P 500: 1,228
S&P 500 month: 1.99%, 6 mo: 4.07%, ytd: 1.40%
NASDAQ month: 1.27%, 6 mo: 7.60%, ytd: -1.24%
FOMC Tightening Cycle - Sep 20 - Fed Funds rate increases to 3.75% (11th consecutive increase).
Hurricane Rita strikes along the Texas-Louisiana border on Sep 24. Over 2.8 million residents evacuate the 500 mile coastal area (largest U.S. evacuation ever), damages estimated between $10-20 billion.
Chief Justice William Rehnquist dies at 80; 16th in U.S. Supreme Court history 1972-2005. John Roberts is confirmed as 17th Supreme Court Chief Justice. At 50 years old Roberts is the youngest Chief Justice in over 200 years.
United Nations celebrates its 60th Anniversary founded in 1945 by the Allies of World War II: United States, Great Britain, Russia, China & France as a forum for all Nations to engage in peaceful resolutions.
Japan, world's second largest Developed economy, Prime Minister Junichiro Koizumi wins landslide reelection and a popular mandate to push through market reforms. Notably, privatizing Japan Post (Koizumi was Minister of Posts and Telecommunications from 1992-95) into separate businesses for mail delivery, banking services and insurance. Japan Post with 400,000 employees, runs 24,700 post offices and is the nation's largest employer. With $3.3 trillion in assets it is also the world's largest financial institution. Nikkei 225 trades over 13,617, over a 79% rally in 2.5 years. Japan's Nikkei 225 passed 10,000 for the first time on Jan 10, 1984, trading up to within 43 points of 40,000 on Dec 29, 1989 (325% rally, 6 yrs), before falling to 7,603 on April 28, 2003 (80% fall, a 20 yr low). The Bank of Japan has held borrowing costs near 0% since 2001 in an effort to combat over 7 years of deflation.
Germany, world's third largest Developed economy, Christian Conservative Angela Merkel (Iron Frau) defeats 7 year incumbent Social Democrat Chancellor Gerhard Schroeder - Angela Merkel becomes the first female German Chancellor. DAX 30 rallies 21% in past 5 months anticipating change in leadership. The DAX 30 has rallied from 2,188 (8 yr low on March 12, 2003) to over 5,004 (September 7, 2005) 128% rise in 2.5 years. Germany still digesting unemployed from former East Germany (over $1 Trillion spent on German reunification, 15th Anniversary on Oct 3, 2005) has the world's 2nd largest government deficit behind the U.S. and unemployment over 12% (18% in former East Germany).
Month of August 2005
Dow month: -1.49%, 6 mo: -2.65%, ytd: -2.80%
S&P 500: 1,204
S&P 500 month: -2.43%, 6 mo: 0.08%, ytd: -0.58%
NASDAQ month: -2.75%, 6 mo: 3.56%, ytd: -2.48%
FOMC Tightening Cycle - Aug 9 - Fed Funds rate increases to 3.50% (10th consecutive increase). Federal Reserve announces that it will begin reissueing the 30 yr Treasury bond beginning on February 9, 2006 (discontinued on Feb 18, 2002).
Oil trades above $70 to $70.85 for the first time a 600% rally in 6.5 years - up from $10 in Dec '98.
Energy Bill signed into law - pressured by rising consumer gasoline prices.
Transportation Bill ($286 billion) signed into law.
Conoco Phillips buys Burlington Resources for $35.6 billion.
National Home prices stall - pressured by rising mortgage rates and rising home prices.
China takes the first step toward decoupling the Yuan from the Dollar. The Yuan will no longer be pegged directly to the U.S. dollar but to a basket of currencies. China holds the second largest inventory of U.S. Treasuries after Japan. China's $8.8 trillion Emerging economy compares to the U.S.'s $13 trillion economy.
CNOOC (Chinese "government") withdraws bid for UNOCAL after Congress strongly opposes acquisition as a threat to U.S. national security interests (purchase of U.S. energy resources). China ($8.8 trillion) and India ($3.6 trillion) emerging economies have the greatest increases in energy consumption for nearly half of the world's population.
Hurricane Katrina hits the Gulf Coast on Aug 29 (just East of New Orleans) ravaging Louisiana, Mississippi and Alabama. Flooding by levee breaks of over 215,000 properties in New Orleans initiates the largest domestic airlift & dislocation of Americans (2 million, since the Civil War). Damage covers a 90,000 sq. mile area - an area greater than the entire states of New York (47,223), Florida (53,997), Michigan (56,809), or Utah (82,168). The widest natural disaster in U.S. history takes the lives of over 1,800, over 500,000 jobs are lost, it will cost taxpayers $150 billion and the Gulf Coast years to rebuild. 115 Nations & 12 International Organizations pledge assistance to Katrina recovery. Over $1.3 billion of donations flow into non-government recovery organizations, the largest charitable collections ever.
Month of July 2005
Dow month: 3.56%, 6 mo: 1.44%, ytd: -1.33%
S&P 500: 1,234
S&P 500 month: 3.61%, 6 mo: 4.49%, ytd: 1.90%
NASDAQ month: 6.23%, 6 mo: 5.92%, ytd: 0.28%
U.S. unemployment rate dropped to 5.0%, its lowest level since August 2001, before 9/11.
Dollar trades below $1.19 rallying from an all time low of $1.36 (Jan '05) to the Euro.
Lance Armstrong wins Tour de France for 7th consecutive victory (1999-2005); after being diagnosed with cancer in 1996 and given a 50% chance to live. No other cyclist had won more than five: Jacques Anquetil, Eddie Mercks (Belgium), Bernard Hinault, Miguel Indurain (Spain) - Greg Lemond was the first and only other American, he won 3 times.
London terrorist bombings on 7/7 kills 52 on subways and one bus - the deadliest attack in Britain since World War II. Prime Minister Tony Blair introduces new laws in Parliament curbing "hate mongering, inciting terrorism".
Earnings season for 2Q - the growth rate for the S&P 500 index was 11.7%, estimates started at 8.8%. The 2Q05 will mark the 8th consecutive quarter of double-digit earnings growth for the S&P 500 index. There have been only 3 other instances of at least 8 consecutive quarters of double-digit earnings growth.
Month of June 2005
Dow month: -1.84%, 6 mo: -4.72%, ytd: -4.72%
S&P 500: 1,191
S&P 500 month: 0.00%, 6 mo: -1.65%, ytd: -1.65%
NASDAQ month: -0.58%, 6 mo: -5.60%, ytd: -5.60%
FOMC Tightening Cycle - June 30 - Fed Funds rate increases to 3.25% (9th consecutive increase).
Oil trades above $60 for the first time a 500% rally in little over 6 years.
10 yr U.S. Treasury trades trades 3.80% (Jun '05) lowest since Mar '04 (3.65%) and 3.07% on Jun 16 '03 - Federal Reserve began it's current tightening cycle from 1% in June of '04.
London wins the 2012 Olympics which will follow Beijing in 2008.
European Union constitution rejected by France.
Greenspan warns that the long U.S. Treasury bond yield is unusually low "a conundrum". A voracious appetite for our long bonds by Asian ecomomies (they are buying our bonds as we buy their goods and services), Non-U.S. global savings and U.S. real estate speculation (securitization of mortgages).
Month of May 2005
Dow month: 2.70%, ytd: -2.93%, 6 mo: 0.37%
S&P 500: 1,191
S&P 500 month: 3.03%, ytd: -1.65%, 6 mo: 1.53%
NASDAQ month: 7.65%, ytd: -5.05%, 6 mo: -1.34
FOMC Tightening Cycle - May 3 - Fed Funds rate increases to 3% (8th consecutive increase).
GM and Ford - Two of the Big Three U.S. automakers - debt is downgraded to "junk" status by S&P.
Month of April 2005
Dow month: -2.96%, ytd: -5.48%, 6 mo: 1.65%
S&P 500: 1,156
S&P 500 month: -2.03%, ytd: -4.54%, 6 mo: 2.30%
NASDAQ month: -3.90%, ytd: -11.80%, 6 mo: -2.68
Bankruptcy Bill signed into law.
Pope John Paul II (Karol Wojtyla, 1978-05 the first non-Italian in 455 years) had visited 129 countries, delivering more than 2,000 public addresses and influencing the collapse of communism in Eastern Europe - 5 million people visited Rome along with 4 kings, 5 queens, at least 70 presidents and prime ministers and more than 14 leaders of other religions to mourn the pope, who died at 84. Cardinal Joseph Ratzinger (German) oversaw the ceremonies later to become Pope Benedict XVI - the 265th reigning pope.
Earnings season for 1Q - the growth rate for the S&P 500 index was 13.9%. Consumer discretion sector is expected to have the sharpest decline in earnings (-7%).
Month of March 2005
Dow month: -2.44%, ytd: -2.60%, 6 mo: 4.20%
S&P 500: 1,180
S&P 500 month: -1.91%, ytd: -2.56%, 6 mo: 5.92%
NASDAQ month: -2.54%, ytd: -8.22%, 6 mo: 5.43%
FOMC Tightening Cycle - March 22 - Fed Funds rate increases to 2.75% (7th consecutive increase). To remove policy accommodation at a pace that "...is likely to be measured...pressures on inflation have picked up in recent months and pricing power is more evident...with appropriate monetary policy action, the upside and downside risks to the attainment of both sustainable growth and price stability should be kept roughly equal."
P&G buys Gillette for $57.2 billion.
U.S. unemployment rate unexpectedly rose to 5.4% from 5.2%.
U.S. 10 yr Treasury trades 4.69% - the highest yield in 10 months (4.90%). The 10 yr U.S. Treasury had their worst losses, 34%, in over 20 years when yields rose from 3.65% (Mar 17, '04) to 4.90% (May 14, '04) in just 2 months - preceding the Fed's current tightening cycle from 1%.
Month of February 2005
Dow month: 2.64%, ytd: -0.16%, 6 mo: 5.83%
S&P 500: 1,203
S&P 500 month: 1.86%, ytd: -0.66%, 6 mo: 8.97%
NASDAQ month: -0.53%, ytd: -5.83%, 6 mo: 11.59%
FOMC Tightening Cycle - February 2 - Fed Funds rate increases to 2.5% (6th consecutive increase). Fed retained its reference to a "measured" pace of adjusting the funds rate higher.
Oil trades above $50 for the first time a 400% rally in less than 6 years.
Greenspan warns about the unusually flat U.S. bond yield curve calling it "a conundrum". The FOMC was forced in 2003 to drive Fed funds rate down to 42 year lows (1%) to allay the consequences of the "possibility" of deflation.
Q404 GDP was revised higher to a 3.8% rate from the 3.1% earlier reported. In 2004 GDP advanced 4.4%, its best performance since 1999, when GDP rose 4.5%. GDP expanded 3.0% during 2003 and 1.9% in 2002.
Month of January 2005
Dow month: -2.73%, ytd: -2.73%, 6 mo: 3.45%
S&P 500: 1,181
S&P 500 month: -2.48%, ytd: -2.48%, 6 mo: 7.27%
NASDAQ month: -5.33%, ytd: -5.33%, 6 mo: 9.27%
Fed Funds rate at 2.5% after 1 year at 1% (Fed Funds was 6.5% from May 16, '00 - Jan 3, '01).
Gold starts the year at $440 up from $250 in April of 2001.
Oil starts the year at $42. Oil started last year at $27 then traded just below $50 at Halloween. In December 1998 oil was $10.
Dollar begins the year at an all-time low of $1.36 to the Euro. Dollar has fallen from $0.8228 (October 26, 2000) to $1.36 in the past 4 years (a whopping 65% decline) to the Euro. The Euro began trading on Jan 1, 1999 between European banks at $1.17.
According to Thomson Financial Q404 growth rate for the S&P 500 index came in at 20.4%. Last year Q403 earnings growth was 28.3%, which was the highest quarterly growth rate recorded in the last 10 years. With earnings finishing at or above 20%, it will mark only the 8th time this has happened since 1950. The last year the annual growth rate for the index was 20% or greater was 1993 (23.3%).