Newsletter of Economic and Market Events
Month of December 2016
Dow month: 3.34%, 6 mo: 10.22%, ytd: 13.42%
S&P 500: 2,239
S&P 500 month: 1.81%, 6 mo: 6.66%, ytd: 9.54%
NASDAQ month: 1.11%, 6 mo: 11.15%, ytd: 7.50%
FOMC raises rates 25bps (Dec 14) Fed Funds rate 0.50%-0.75% and the Discount rate of 1.25%.
ECB extends QE (12/8) to €2.3T past March 2017 to 12/31/17, starting in April '17 monthly purchases reduced to €60B from €80B; deposit rate unchanged -0.4%, refinancing rate unchanged 0% and overnight marginal lending rate unchanged 0.25%; ECB to purchase bonds with durations of 1-30yrs and can buy debt with a yield below the ECB deposit rate of -0.4%.
Chinese yuan trades CN¥6.9649 (12/16, lowest since 5/23/08) depreciating 14% from CN¥6.0393 on 1/14/2014.
- Euro depreciates to 1.0398 (12/15) down 25% from €1.399 (5/6/15) against the dollar, lowest since 12/27/02.
JPMorgan Chase (€337.2M), Credit Agricole (€114.7M) and HSBC (€33.6M) fined (12/7) by EU antitrust regulators for market manipulation of Euribor, from 9/05-5/08.
BBVA to pay (12/21) $27M for exceeding limits on BSI's securities underwriting and dealing activities.
Steven Cohen's SAC Capital to pay $135M to Elan Corp. investors related to $1.8B insider-trading settlement (2014), civil and criminal penalties.
Goldman Sachs to pay (12/21) $120M for rigging ISDAfix (an interest rate benchmark) used to price swaps transactions, commercial real estate mortgages and structured debt securities 2009 to 2012. Goldman Sachs to pay (12/16) $56.5 million to resolve a investors lawsuits for rigging ISDAfix.
Barclays sued by U.S. Justice Department for falure to settle outstanding litigation in selling U.S. mortgage-backed securities from 2005-07, Barclays has currently set aside $3 billion.
Credit Suisse to pay (12/22) $5.28B (2.48B in civil penalty and $2.8B in relief for homeowners and communities) for sales of mortgage-backed securities from 2005-07. Credit Suisse fined by FINRA (12/5) $16.5M for ineffective anti-money laundering programs.
Deutsche Bank to pay (12/22) $7.2B ($3.1B US Justice Dept. and $4.1B civil penalties and consumer relief) for sales of mortgage-backed securities from 2005-07.
- Deutsche Bank settled (in April) to pay $60M to traders and investors for U.S. antitrust violations in conspiring to manipulate gold prices from 2004-13 - Barclays, Bank of Nova Scotia, HSBC, and Societe Generale litigation outstanding.
- Deutsche Bank to pay (12/16) $37M for misleading traders about how it distributed trades across its dark pools, from 1/2012-2/2014.
Ikea settles (12/21) with 3 American families to pay $50M for deaths of young children killed after Ikea's furniture fell on them.
Princess Cruise Lines to plead guilty (12/1) to 7 felony charges and pay $40M for polluting oceans with waste and then covering it up.
Pfizer (and Flynn Pharma) fined (12/7) $107M by UK's CMA (Competition and Markets Authority) for unfair prices for Epilepsy drug phenytoin sodium.
DeVry University to pay (12/15) $100M for FTC violations of misleading potential students with ads promoting job and salary success for graduates.
VW to pay (12/20) $1B (including $225M for EPA environmental remediation and $25M additional funds for zero-emissions vehicles in California) and buyback 20,000 polluting 3.0L diesel older VW and Audi 3.0L TDIs and a software fix for 63,000 newer polluting 3.0L diesel VW Touareg, Audi (A6, A7, A8, A8L, Q5) and Porsche Cayenne vehicles.
Platinum Partners hedge fund (founder Mark Nordlicht and 6 employees) charged (12/19) with defrauding (Ponzi scheme) more than 600 investors of more than $1.3B.
Month of November 2016
Dow month: 5.41%, 6 mo: 7.52%, ytd: 9.75%
S&P 500: 2,199
S&P 500 month: 3.43%, 6 mo: 4.86%, ytd: 7.59%
NASDAQ month: 2.60%, 6 mo: 7.60%, ytd: 6.32%
U.S. unemployment falls to 4.6%, adding 178,000 jobs.
FOMC neutral stance (Nov 2) Fed Funds rate 0.25%-0.50% and the Discount rate of 1%.
Donald Trump elected 45th President of U.S. - 306 electoral votes to Hilary Clinton's 232. Trump University agrees (11/18) to settle lawsuit for $25 million with the NY AG's office. Donald J. Trump Foundation's admitted (11/22) to violating "self-dealing" rules on IRS filings, by transferring income or assets to a "disqualified person".
Toyota to pay (11/9) $3.4B for 1.5 million 2005-10 trucks and SUVs lacking proper rust protection causing premature corrosion of vehicle frames.
HSBC $35M and Citibank $23M to pay (11/14) investors for manipulating Libor.
JPMorgan Chase to pay (11/17) $264M ($130M to SEC, $72M Justice Dept. and $61.9M Federal Reserve Board of Governors) for violations of the Foreign Corrupt Practices Act (FCPA) in hiring children of Chinese decision makers to win more than $100M in revenues.
Chicago Cubs win 112th World Series after 108 yrs (1908) rallying from 1-3, to a game 7 10th inning victory.
Month of October 2016
Dow month: -0.91%, 6 mo: 1.74%, ytd: 4.11%
S&P 500: 2,126
S&P 500 month: -1.94%, 6 mo: 2.95%, ytd: 4.01%
NASDAQ month: -2.32%, 6 mo: 9.45%, ytd: 3.63%
U.S. unemployment falls to 4.9%, adding 142,000 jobs.
British pound trades (10/7) £1.1841 down 6.14% against USD a "mini flash crash" during early Asian market hours, then trades £1.225 in European trading hours, and trades £1.2034 in U.S. futures trading.
Global debt exceeds $152T, 2.25x the global GDP - 2/3 of the debt is private sector and 1/3 sovereign debt.
Credit Suisse to pay (10/6) $90M for misclassify client's assets in its wealth management business in 2012.
Mylan to pay (10/7) $465M for overcharging Medicaid for EpiPens.
Agricultural Bank of China to pay (NYDFS 11/4, assets of $9.5B at NY branch) $215M for anti-money laundering violations - between Chinese and Russian companies and from Yemen to companies in China.
Earnings season for 3Q16 YOY growth for the S&P 500 index was 4%.
Month of September 2016
Dow month: -0.51%, 6 mo: 3.52%, ytd: 5.07%
S&P 500: 2,168
S&P 500 month: -0.14%, 6 mo: 5.24%, ytd: 6.07%
NASDAQ month: 1.90%, 6 mo: 9.08%, ytd: 6.08%
U.S. unemployment rises to 5.0%, adding 208,000 jobs.
FOMC neutral stance (Sept 21) Fed Funds rate 0.25%-0.50% and the Discount rate of 1%.
"Bahamas Leaks" (9/21) 1.3M files on more than 175,000 Bahamian offshore accounts, 539 registered agents (including "Panama Papers" Mossack Fonseca's 15,915 entities) registered between 1990-2016.
Volkswagen to pay (9/30) $1.21B to 652 U.S. VW dealers for diesel emissions injuries (an average of $1.85M per dealer) and $600M with state attorneys generals.
Wells Fargo to pay (9/8) $185M (plus $5M in customer remediation) for widespread illegal sales practices openning 1.5 million accounts and 565,000 credit card applications without customers' consent.
- Clawbacks (9/27): WF CEO John Stumpf forfeits $41+M and former retail banking WF VP Carrie Tolstedt to forfeit $19+M. William McGuire (United Health, 12/6/07) forfeited $600M for illegal stock option backdating gains from 2003-06 and Dennis Kozlowski (Tyco, 8/10/12 - sentenced 9/19/05) forfeited $505.8M for fraud of fiduciary duties.
Bank of America to pay (9/26) $12.5M for its Merrill Lynch brokerage which caused erroneous trading orders ("mini-flash crashes"), the largest violation of the market access rule, on at least 15 occasions from late 2012 to mid-2014.
BB&T to pay (9/29) $83M for violating the False Claims Act by originating and underwriting mortgage loans insured by HUD and FHA.
NCUA (National Credit Union Administration) settles with Royal Bank of Scotland to pay (9/27) $1.1B for selling RMBS to U.S. credit unions - NCUA's recoveries exceed $4.3B: Barclays paid $325M (10/19/15), Morgan Stanley $225M (12/10/15), Bank of America $165M (4/2/13), Deutsche Bank $145M (11/14/11), UBS $69.8M (4/15/16), Wells Fargo $53M (10/19/15), Credit Suisse $50.3M (4/12/16), Citigroup $20.5M (11/14/11) and HSBC $5.25M (3/12/12).
Sam Wyly to pay (9/30) $198.1M to SEC for offshore accounts concealing trading profits from 1992-2005 - additional pending "global settlement" of more than $1B to Justice Dept, IRS and bankruptcy creditors.
Month of August 2016
Dow month: -0.17%, 6 mo: 11.41%, ytd: 5.60%
S&P 500: 2,171
S&P 500 month: -0.14%, 6 mo: 12.37%, ytd: 6.22%
NASDAQ month: 0.99%, 6 mo: 14.37%, ytd: 4.11%
U.S. unemployment unchanged at 4.9%, adding 176,000 jobs.
BOE reduces (8/4) benchmark interest rate to 0.25% from 0.50%, Term Funding Scheme to lend banks up to £100B at advantageous terms for businesses and consumers, UK's MPC plans to buy £60B of government bonds over 6mos and up to £10B of corporate bonds over 18mos, asset purchases to rise to £435B (up from £375B) and expand the central bank's balance sheet another £170B ($223B).
- UK 10yr bond trades 0.501% (8/15) yield falling from 3.092% (1/2/14).
Brazil's Senate impeaches (8/31) President Dilma Rousseff for breaking budgetary laws - elected on 10/31/10 Brazil's Ibovespa index fell from 73,000 11/4/10 to 37,046 1/26/16 down 49% and the Brazilian Real depreciates 171% to USD from 1.5375 7/26/11 to 4.1638 9/24/15.
Goldman Sachs to pay (8/3) $36.3M and ban for Joseph Jiampietro's leaking confidential information from the Federal Reserve.
Apollo Global Management to pay (8/23) $52.7M for misleading fund investors about fees and a loan agreement.
Barclays settles (8/8) $100M with 44 states for manipulating Libor and Euribor interest rate benchmarks from 8/2005-5/2008.
Mega Financial (Taiwanese bank) to pay (8/19) $180M for money laundering connected to Mossack Fonseca, the "Panama Papers" law firm.
PricewaterhouseCooper settles (8/26, $5.5B sought) for failure to discover mortgage fraud at Taylor, Bean & Whitaker Mortgage Corp (Chairman Lee Farkas, bankruptcy 8/24/09, 3rd largest direct FHA lender) and Colonial BancGroup (6th largest bank bankruptcy 8/26/09, $25B in assets, FDIC cost $3.8B).
Apple, EU Commission determines (8/30) that Ireland mis-allocated profits within Apple Sales International and Apple Operations Europe from 1991-2014, tax aid worth up to €13B - tax rate of 1% in 2003 (first year covered, under statue of limitations) down to 0.005% in 2014. Ireland or other countries (including the US) must now recover the tax to remove the EU distortion of competition. October 21, 2015, Luxembourg and the Netherlands found to have advantaged Fiat Chrysler and Starbucks, €20-30M each respectively. January 11, 2016, Belgium found to have advantaged at least 35 multinationals, €700M in total. The EU Commission has 2 ongoing investigations in Luxembourg, as regards Amazon and McDonald's. Google is under investigation in France and other European countries.
Rio 2016 Olympics - U.S. wins 46 Golds (121 total), Great Britan wins 27 Golds. Michael Phelps becomes most decorated Olympian with 28 (23 Golds, 3 Silvers and 2 Bronzes) winning 5 Golds and 1 Silver in Rio. Usain Bolt wins 9 Golds, 3 Golds in Rio. Katie Ledecky wins 5 Golds. Simone Biles wins 4 Golds and 1 Bronze.
Month of July 2016
Dow month: 2.80%, 6 mo: 11.94%, ytd: 5.78%
S&P 500: 2,174
S&P 500 month: 3.57%, 6 mo: 12.06%, ytd: 6.36%
NASDAQ month: 6.59%, 6 mo: 11.88%, ytd: 3.09%
U.S. unemployment unchanged at 4.9%, adding 252,000 jobs.
FOMC neutral stance (Jul 27) Fed Funds rate 0.25%-0.50% and the Discount rate of 1%.
U.S. 10yr Treasuries trade 1.318% (7/6, from 3.0516% 1/2/14) and U.S. 30yr Treasuries trade 2.0882% (7/6, from 3.9744% (1/2/14).
- German 10yr bond trades negative -0.205% (7/6) yield falling from 2.087% (9/11/13).
- Japan's 10yr bond trades at a negative rate (7/27) -0.295%.
- Swiss's 10yr bond trades at a negative rate (7/11) -0.64%.
British pound trades £1.2798 (7/6, lowest since 6/20/85) depreciating 38.4% from £2.1104 on 11/8/2007.
- British PM Theresa May assumes office July 13, 2016.
- ECB on track to purchase €5-8B/month of €600B of EU corporate bonds.
- Global government bond's average yield at new record low below 0.65% and sovereign debt ($44T outstanding) with negative yields rising to $13T (including Japan's JGB $7.9T).
- Chinese yuan trades CN¥6.7047 (7/18, lowest since 9/23/10) depreciating 11% from CN¥6.0393 on 1/14/2014.
Japan's BOJ increased (7/29) ETF purchases to ¥6T/yr ($58B, from ¥3.3T) maintained its purchasing of ¥80T/yr JGBs and left financial institutions interest rate on excess reserves at -0.1%.
- Japanese PM Shinzo Abe announces (7/27) ¥28T ($265 billion) of economic stimulus including ¥13.5T of fiscal spending (¥7.5T of new spending this year and ¥6T of low-cost loans). 3rd largest of 26 Japanese total stimulus packages back to 8/92 (nearly every year) the largest 4/09 and 12/08.
EU's largest 51 banks stress tests (7/30): lowest Italy's Monte dei Paschi, UK's RBS, and Ireland's AIB - European banks have raised €180B since the end of 2013.
MF Global's John Corzine (COO Bradley Abelow, CFO Henri Steenkamp and others) settle (7/21) for $132M for role in the brokerage firm's 10/31/11 collapse.
Herbalife to pay (7/15) $200M with FTC, forcing changes to avoid being classified as a pyramid scheme.
U.S. Justice Dept. sues Malaysian Fund 1MDB for $1B for corruption and money laundering related to fraudulent misappropriated funds tied to Malaysian PM Najib Razak.
Medicare Fraud Strike Force arrests Philip Esformes (7/22) for more than $1B of fraudulent Medicare and Medicaid billing - corrupt doctors, hospitals and health care providers in South Florida.
NATO approves (7/8) deployment of 4 battalions (including a brigade Spearhead Force of 5,000 troops, able to move within days) to Poland and the Baltic countries neighboring Russia, in response to Russian aggression. U.S. also approves (7/8) deployment of THAAD missile defense system to South Korea, in response to North Korean aggression.
Earnings season for 2Q16 YOY growth for the S&P 500 index was negative -2%.
Month of June 2016
Dow month: 0.80%, ytd: 2.90%, 6 mo: 2.90%
S&P 500: 2,099
S&P 500 month: 0.10%, ytd: 2.69%, 6 mo: 2.69%
NASDAQ month: -2.12%, ytd: -3.28%, 6 mo: -3.28%
U.S. unemployment rises to 4.9%, adding 271,000 jobs.
FOMC neutral stance (Jun 15) Fed Funds rate 0.25%-0.50% and the Discount rate of 1% - St. Louis Fed president James Bullard departs from majority in Fed's projected "dot plot" of future interest rate's curve citing deflationary data dependency.
Britain votes (6/23) to leave the EU, British pound trades £1.3246 (6/24) one-day depreciation of 11.75% from £1.5009, PM David Cameron (since 5/11/10) to step down, Britain's sovereign and EU's credit rating downgraded by ratings agencies, BOE loosens UK bank capital controls.
- Japanese yen trades ¥98.72 (6/24) appreciating 21.6% from ¥125.86 (6/5/15).
Obama signs PROMESA (6/30, Puerto Rico Oversight, Management and Economic Stability Act) creates an oversight board to manage the territory's fiscal affairs, enforce balanced budgets through asset sales and employee layoffs, and works with investors on restructuring Puerto Rico's $70B debt. Puerto Rico defaults (7/1) on $911M (including $780M G.O.) of $2B of principal and interest due - $13B of General Obligation bonds outstanding.
HSBC to pay (6/16) $1.58B in shareholder securities (subprime lending) fraud for holders of Household International stock between 3/23/01-11/11/02.
Merrill Lynch to pay (6/23) $415M and admit wrongdoing for misusing customer's cash to generate profits and failing to safeguard customer securities from ML's creditors, from 2009-12.
Volkswagen settles (6/28) $15.3B: $10.033B with Justice Dept, State of California, U.S. EPA and FTC and will buyback 475k registered (of U.S. 499k sold) diesel 2.0 liter vehicles, fix them, or cancel outstanding leases, $2.7B EPA trust fund for environmental remediation, $2B for American clean energy technology, $603M to 44 U.S. states, D.C., Puerto Rico (including $86M to California) - 85% of 2.0 liter diesels must be retired (within 3yrs) or additional penalties apply, settlement does not include civil penalties under the U.S. Clean Air Act, or address about 85,000 3.0 liter Audi, Porsche and VW vehicles.
Medicare Fraud Strike Force announced (6/22) charges against 301 (61 doctors, nurses and other licensed medical professionals) for schemes involving approximately $900M in false billings - since January 2009, more than $29.9B recovered through False Claims Act (more than $18.3B involved fraud against Federal health care programs).
Month of May 2016
Dow month: -0.25%, ytd: 2.08%, 6 mo: 0.38%
S&P 500: 2,097
S&P 500 month: 1.55%, ytd: 2.60%, 6 mo: 0.82%
NASDAQ month: 4.37%, ytd: -1.19%, 6 mo: -3.15%
U.S. unemployment fell to 4.7%, adding 24,000 jobs, weakest since 2010 - participation rate falls to 62.6% and record 94,708,000 Americans were neither employed nor made an effort to find employment.
Greece's parliament approves (5/22) new taxes and austerity measures to secure EU disbursement - all 19 Eurozone countries and IMF approve (5/25) €10.3B in loans from EU rescue funds.
Citibank to pay (5/25) $425M - $250M to CFTC for manipulating ICE Swap rate and $175M for rigging the Yen Libor and Euroyen Tibor.
Month of April 2016
Dow month: 0.83%, ytd: 2.33%, 6 mo: 0.95%
S&P 500: 2,065
S&P 500 month: 0.24%, ytd: 1.03%, 6 mo: -0.67%
NASDAQ month: -2.65%, ytd: -5.32%, 6 mo: -6.19%
U.S. unemployment unchanged at 5%, adding 144,000 jobs.
FOMC neutral stance (Apr 27) Fed Funds rate 0.25%-0.50% and the Discount rate of 1%.
"Panama Papers" (4/3, hacked law firm Mossack Fonesca) expose over 140 politicians (more than 50 countries, including 72 current or former heads of state) financial activities (corruption and tax avoidance) who hold accounts offshore (lists 15,600+ paper companies), 11.5 million documents leaked - covering 1977 to December 2015. Iceland's PM Gunnlaugsson resigns (4/5). Ten banks requesting the most offshore accounts for their clients: Experta Corporate & Trust, Banque J. Safra Sarasin Luxembourg, Credit Suisse Channel Islands, HSBC Private Bank Monaco, HSBC Private Bank Suisse, UBS, Coutts & Co. Trustees Jersey, Societe Generale Bank & Trust Luxembourg, Landsbanki Luxembourg and Rothschild Trust Guernsey. Cayman Islands tax leak (2/2013) and Swiss HSBC leak (2/2015) exposed secret bank accounts maintained for criminals, traffickers, tax dodgers, politicians and celebrities. Panama has more than 350,000 secretive International Business Companies (IBCs) registered, largest number after Hong Kong and the British Virgin Islands.
Wells Fargo settles (4/8) $1.2B for falsely certifing home loans for FHA insurance from 2001-08.
Goldman Sachs to pay (4/11) $5.06B for misleading residential mortgage-backed securities investors from 2005-07.
Earnings season for 1Q16 YOY growth for the S&P 500 index was negative -5%.
Month of March 2016
Dow month: 7.07%, ytd: 1.49%, 6 mo: 8.60%
S&P 500: 2,060
S&P 500 month: 6.63%, ytd: 0.79%, 6 mo: 7.29%
NASDAQ month: 6.85%, ytd: -2.74%, 6 mo: 5.41%
U.S. unemployment rose to 5%, adding 186,000 jobs.
FOMC neutral stance (Mar 16) Fed Funds rate 0.25%-0.50% and the Discount rate of 1%.
ECB expands QE (3/10) cutting deposit rate cut to -0.4% (-10bps), refinancing rate to 0% (-5bps), overnight marginal lending rate to 0.25% (-5bps) and increasing monthly asset buys to €80B from €60B, including Investment grade euro-denominated bonds issued by non-bank corporations established in the euro area are now eligible for purchases - $786.8B assets purchased since October 2014.
China's PBOC cuts (3/2) Reserve requirement ratio (RRR, for commercial banks) by 50bps to 17%.
Moody's to pay (3/9) $130M to the California Public Employees' Retirement System for inflating ratings of residential mortgages - S&P settled for $125M on 2/2/2015.
Month of February 2016
Dow month: 0.31%, ytd: -5.21%, 6 mo: -0.48%
S&P 500: 1,932
S&P 500 month: -0.41%, ytd: -5.48%, 6 mo: -2.52%
NASDAQ month: -1.21%, ytd: -8.97%, 6 mo: -4.58%
U.S. unemployment unchanged at 4.9%, adding 233,000 jobs.
WTI oil trades $26.05 (2/11) WTI down 71% from $113.97 on 4/28/11.
Argentina settles (2/29) with Elliott Management over defaulted debt for $4.65B from 2001 (about $0.75). Montreux Partners and Dart Management settled (2/5) with Argentina for about $2B (of $6.5B package) and on (2/9) Argentina agreed to pay $1.35B to a group of Italian investors.
Vimpelcom (Russian wireless carrier and subsidiary Unitel) to pay (2/18) $795M for bribes and corruption in Uzbekistan from 2006-12 - Siemens paid $800M for violatung U.S. Foreign Corrupt Practices Act and U.S. anti-corruption laws 12/15/2008.
HSBC to pay (2/5) $470M for abusive mortgage servicing, foreclosures, and loan origination practices between 2008-12.
Morgan Stanley to pay (2/11) $3.2B for misleading investors in securitizing residential mortgage-backed securities between 2006-07.
Month of January 2016
Dow month: -5.50%, ytd: -5.50%, 6 mo: -6.92%
S&P 500: 1,940
S&P 500 month: -5.09%, ytd: -5.09%, 6 mo: -7.79%
NASDAQ month: -7.86%, ytd: -7.86%, 6 mo: -10.02%
U.S. unemployment fell to 4.9%, adding 168,000 jobs.
FOMC neutral stance (Jan 27) Fed Funds rate 0.25%-0.50% and the Discount rate of 1%.
WTI/Brent oil trades $26.19/27.10 (1/20) WTI down 71% from $113.97 on 4/28/11; Brent down 72% from $127.02 on 4/11/11.
- U.S. Dollar (26 Broad Currencies) Trade Weighted Index trades 125.8727 (1/21) appreciating 28% from 93.86 (5/2/11, low 89.03 5/8/95) highest since 5/2003 (high 130.20 1/28/02).
- U.S. Dollar (7 Major Currencies, Euro, Canada, Japan, United Kingdom, Switzerland, Australia, and Sweden) Trade Weighted Index trades 95.8011 (1/20) appreciating 37% from 67.9944 low (5/2/11) highest since 4/2003 (113.0988 1/28/02, high 148.1244 2/25/85).
- Copper trades $1.9355 (1/19) down 57% from an all-time high of $4.6495/lb on 2/15/11.
- Platinum trades $811.40 (1/21) down 64% from an all-time high of $2308.80 on 3/4/08.
- CRB index trades 154.846 (1/20) down 56% from 370.72 on 5/2/11.
- Chinese yuan trades 元6.596 (1/8) depreciates 9% from a high 元6.0393 on 1/14/2014.
- Russian ruble trades ₽85.957 (1/21) depreciates 46% from ₽48.14 on 5/18/15.
BOJ initiates (1/28) -0.1% negative rate on new reserves deposited (Policy-Rate Balance) - following the ECB -0.3%, Switzerland -0.75%, Sweden -0.5% and Denmark -0.65%.
Italian banks €350B "bad bank" (1/27, about 17% of total loans) with EU scheme allow a government guarantee to be attached to bundles of non-performing loans based on the price of credit default swaps.
Credit Suisse ($84.3M) and Barclays ($70M) to pay (1/31) for misrepresentation of information in their trading dark pools.
J.P. Morgan to pay (1/25) $1.42B to settle for illegally siphoning billions of dollars from Lehman before its collapse - emerged from chapter 11 protection in March 2012. JPMorgan to pay (1/26) $995M to Ambac insurer for misrepresented loans underlying mortgage bonds sold by Bear Stearns in 2008. JPMorgan to pay (1/5) $48M for failing to meet the terms of a settlement to resolve mortgage servicing violations in U.S. robo-signing settlement.
Earnings season for 4Q15 YOY growth for the S&P 500 index was negative -3%.
Month of December 2015
Dow month: -1.66%, 6 mo: -1.11%, ytd: -2.23%
S&P 500: 2,044
S&P 500 month: -1.73%, 6 mo: -0.92%, ytd: -0.73%
NASDAQ month: -1.99%, 6 mo: 0.79%, ytd: 5.73%
U.S. unemployment remains 5.0%, adding 262,000 jobs.
FOMC raises (Dec 16) Fed Funds rate 25bps to 0.25%-0.50%, the Discount rate to 1% from 0.75%, and raises the Reverse Repo rate (deposit) to 0.25% from 0.05%. Since 12/16/08 (nearly 8yrs) Fed Funds rates has been near 0% - last tightening cycle (3yrs 3mos) began 6/30/04 with Fed Funds rate raised to 1.25% from 1% ending at 5.25% on 9/18/07.
Obama signs (12/18) Protecting Americans from Tax Hikes Act of 2015 a $1.15 trillion spending bill, a $680B tax package (over 10yrs) extending nearly 50 tax breaks, and removes the U.S. ban on exporting crude oil.
ECB lowers (12/2) overnight deposit rate by 10bps to -0.3% (lending rate remains 0.05%), extends QE until March 2017, ECB will reinvest QE principal payments and include purchases of municipal bonds (local and regional).
WTI/Brent oil trades $34.53/35.99 (12/14,22) WTI down 70% from $113.97 4/28/11; Brent down 71.6% from $127.02 4/11/11.
Gold trades $1045.40 (12/3) down 46% from $1,923.70 (9/6/11). Silver trades $13.62 (12/14) down 73% from $49.82 (4/25/11). Platinum trades $825 (12/3) down 64% from $2308.80 (3/4/08). CRB index trades 170.0562 (12/17) down 54% from $370.72 (5/2/11).
Puerto Rico announces its partial default on (1/1/2016) paying $328.7M in GO debt and skipping $37.3M.
Italy's PM Matteo Renzi establishes a €160B 5yr economic growth plan by funding CDP (Italy's national promotional bank, Cassa Depositi e Prestiti) - venture capital investments in private, infrastructure, real estate, and local and regional municipalities.
Fiat Chrysler to pay (12/9) $70M that it failed to disclose to NHTSA vehicle crash death and injury reports.
BMW to pay (12/21) $40M for not complying with minimum crash protection standards, failing to timely notify owners of recalls, and failing to provide accurate information to NHTSA.
JP Morgan Chase to pay (12/18) $307M for failing to disclose conflicts of interest with its wealth management clients. JP Morgan Chase to pay (12/21) $150M to investors for hiding $6.2B in losses from London Whale trades of 2012.
Julius Baer to pay (12/30) $547M for aiding Americans evade taxes.
Month of November 2015
Dow month: 0.32%, 6 mo: -1.62%, ytd: -0.58%
S&P 500: 2,080
S&P 500 month: 0.05%, 6 mo: -1.28%, ytd: 1.02%
NASDAQ month: 1.09%, 6 mo: 0.77%, ytd: 7.87%
U.S. unemployment remains 5.0%, adding 280,000 jobs.
Obama signs (11/2) Bipartisan Budget Act of 2015 a 2yr budget deal (through September 2017) which also raises the national debt limit (until mid-March 2017) by lifting sequester spending caps and boosting spending by $80B.
IMF to add (11/30, effective late 2016) China's yuan to IMF's reserve-currency Special Drawing Right (SDR) lending basket: the U.S. dollar, Euro, Pound and Yen.
Financial Stability Board to require (11/9, G-20 must endorse) 30 largest global lenders to raise $1.2T by 2022 (in debt or other securities that can be written off when winding down a failing bank): JP Morgan & HSBC (2.5% capital buffer); Barclays, BNP Paribas, Citigroup, Deutsche Bank (2.0% capital buffer); Bank of America, Credit Suisse, Goldman Sachs, Mitsubishi Bank, Morgan Stanley (1.5% capital buffer); Agricultural Bank of China, Bank of China, Bank of New York Mellon, China Construction Bank, Groupe BPCE, Groupe Credit Agricole, Industrial and Commercial Bank of China, ING Bank, Mizuho, Nordea, RBS, Santander, Societe Generale, Standard Chartered, State Street, Sumitomo Mitsui, UBS, Unicredit Group, Wells Fargo (1.0% capital buffer) - leverage ratio (capital held against its total assets) of at least 6% by 2019 rising to 6.75% by 2022.
Takata settles (11/3) $70M with NHTSA for failing to alert regulators of defective air-bag inflaters that explode and spray shrapnel - 12 automakers recall 19 million vehicles.
Novartis Pharmaceuticals to pay (11/20) $390M for paying specialty pharmacies illegal kickbacks for inducing patients to refill certain medications.
Wells Fargo to pay (11/5) $81.6M to home owners for failure to notify for increasing mortgage payments in violation of federal bankruptcy laws.
Barclays to pay (11/18) an additional $150M penalty (total $2.5B) to N.Y. Dept. of Financial Services for order execution forex related misconduct.
Month of October 2015
Dow month: 8.47%, 6 mo: -2.00%, ytd: -0.89%
S&P 500: 2,079
S&P 500 month: 8.28%, 6 mo: -1.38%, ytd: 0.98%
NASDAQ month: 9.39%, 6 mo: 0.98%, ytd: 6.71%
U.S. unemployment falls to 5.0%, adding 307,000 jobs. U.S. participation rate falls to 62.4% lowest since October 1977 (peaked 67.2% 12/1997).
FOMC neutral stance (Oct 28) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%.
- U.S. Treasury's sells (10/5) $21B of 3-month bills at 0% yield for the first time.
China's PBOC cuts (10/24) 1yr lending rate to low 4.35% (10.98% high, 7/93-6/96) and deposit rate to 1.50% and Reserve requirement ratio (RRR, for commercial banks) cut 50bps to 17.5%.
Trans Pacific Partnership trade pact awaits (10/5) congressional approval - would lower tariffs and set common standards for 12 economies (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and the U.S.) accounts for 40% of global economy.
BP settles (10/5) $20.8B for 2010 Gulf of Mexico Deepwater Horizon oil spill (including largest Clean Water Act fine), 3.2M barrels / 134M gallons (34M gallons recovered) - Justice, Commerce, Agriculture, Interior departments, EPA and Alabama, Florida, Louisiana, Mississippi and Texas - increasing total cost to about $55B.
VW to recall (10/15) 8.5 million VW, Audi and Porsche diesel-engine cars in the European Union, VW admitted (9/21) to EPA fraud effecting 11 million diesel (482,000 diesel & 85,000 gasoline cars in U.S.) 2009-2016 - Justice dept. initiates criminal investigation, possible EPA fines over $18B ($37,500/per vehicle).
LifeLock to pay (12/17) $100M for deceptive claims about its identity-theft protection services and failing to protect user data.
Goldman Sachs (10/28) to pay $50M and 3yr limited ban for Rohit Bansal's leaking confidential information from the Federal Reserve Bank of New York.
Earnings season for 3Q15 YOY growth for the S&P 500 index was negative, -1%.
Month of September 2015
Dow month: -1.88%, 6 mo: -8.39%, ytd: -8.63%
S&P 500: 1,920
S&P 500 month: -3.13%, 6 mo: -7.16%, ytd: -6.75%
NASDAQ month: -3.29%, 6 mo: -5.73%, ytd: -2.45%
U.S. unemployment remains 5.1%, adding 145,000 jobs.
FOMC neutral stance (Sept 17) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%.
U.S. Dollar (26 Broad Currencies) Trade Weighted Index trades 121.2 (9/23) appreciating 27% from 93.86 (5/2/11, low 89.03 5/8/95) highest since 5/2003 (high 130.20 1/28/02).
GM to pay (9/17) $900M deferred-prosecution agreement for ignition-switch defects, recalling 2.6 million vehicles, and a victim's compensation fund of $625M for 124 death and 275 injury claims.
Credit Suisse ordered (9/4) to pay $287.5M to Highland Capital Management for fraudulent real-estate transaction.
12 banks settle (9/11) $1.865B for investor claims of blocking competitive fair pricing in the CDS market ($58T 2007 and $16T end of 2014) - JPMorgan Chase $595M, Morgan Stanley $230M, Barclays $175M, Goldman Sachs $164M, Credit Suisse $160M, Deutsche Bank $120M, Bank of America $90M, (and $331M from:) BNP Paribas, Citigroup, HSBC, Royal Bank of Scotland and UBS.
Month of August 2015
Dow month: -6.18%, 6 mo: -8.47%, ytd: -6.88%
S&P 500: 1,982
S&P 500 month: -5.80%, 6 mo: -5.84%, ytd: -3.74%
NASDAQ month: -6.84%, 6 mo: -3.77%, ytd: 0.86%
U.S. unemployment falls to 5.1%, adding 153,000 jobs.
DJIA falls 1,089 pts. (8/24, 6.6%) on opening on concerns of slowing global growth, Volatility index trades up 90% to 53.29 (8/24, up 390% from 10.88 on 8/5 in 13 days) from 28.03 (8/21).
WTI/Brent oil trades $37.75/42.22 (8/24) WTI down 67% from $113.97 4/28/11; Brent down 67% from $127.02 4/11/11. Russian ruble trades ₽71.69 (8/25) depreciates 46% (3 months) from ₽48.14 (5/18). CRB index trades 185.13 (8/24) down 50% from $370.72 (5/2/11). Silver trades $13.91 (8/26) down 72% from $49.82 (4/25/11). Copper trades $2.209/lb (8/24) down 52% from $4.64/lb (2/15/11).
China's PBOC cuts (8/25) 1yr lending rate to low 4.6% (10.98% high, 7/93-6/96) and deposit rate to 1.75% and Reserve requirement ratio (RRR, for commercial banks) cut 50bps to 18%.
- Shanghai Composite Index declines 45% from 5,178.19 (6/12) to 2,850.71 (8/26) after rising from 1,849.65 (6/25/13) and 1,991.06 (5/21/14) up 160% in 13 months. Shenzhen Composite Index declines 47% from 3,156.96 (6/12) to 1,672.16 (8/26) after rising from 734.28 (12/12/12) and 1,007.27 (4/28/14) up 213% in in 14 months.
- PBOC devaluation (8/11) of Chinese yuan from 元6.20 (8/10) to 元6.59 (8/12, depreciating 6.3% in international trade).
Greece's receives (8/20) 3rd bailout €86B ($96B, total bailout €320B), pays (8/20) the ECB €3.2B, Greek Prime Minister Alexis Tsipras submit his resignation (8/20) and calls for elections on Sept 20. Greece's parliament passed reforms (8/14, more spending cuts, pension reforms, and market liberalizations) for 3rd bailout - ECB, EU Commission, ESM rescue fund and IMF (pending).
- Athens Stock Exchange reopens (8/3) after 5 weeks falling 22.9% from 797.52 (6/26) to 615.08 (8/3), trades 562.87 (8/24). Greek 10yr bond trades 8.954% (8/17) down 54% from 19.58% (7/8).
Ukraine secures agreement (8/27) to restructure its $72B of government debt - bond repayments extended by 4yrs coupon payments rise to 7.75% from 7.2% cutting $3.6B.
Puerto Rico (PFC, Puerto Rico Government Development Bank subsidiary) defaults (8/3) on moral obligation bonds (not issued by legislature) missing $58M payment of principal and interest.
Dole Food's CEO David Murdock (and COO Michael Carter) to pay (8/27) investor shareholders $148.1M for undervaluing company in 2013 $1.2 billion buyout deal.
SEC charges (8/11) 32 with fraud for profiting from stolen non-public information about corporate earnings announcements, more than $100 million in illegal profits.
9 banks settle (8/14) $2B for conspiring in manipulating the $5.3T/day foreign exchange market: Barclays $375M, BNP $115M, Goldman Sachs 129.5M, HSBC $285M, and RBS - includes $808.5M of earlier agreements (Citigroup $394M, Bank of America $180M, UBS $135M, and JPMorgan $99.5M).
Goldman Sachs settles (8/13) $272M with investors about sales of $6B of residential mortgage-backed securities in 2007-08.
Month of July 2015
Dow month: 0.40%, 6 mo: 3.06%, ytd: -0.75%
S&P 500: 2,104
S&P 500 month: 1.99%, 6 mo: 5.46%, ytd: 2.19%
NASDAQ month: 3.22%, 6 mo: 10.64%, ytd: 8.28%
U.S. unemployment remains 5.3%, adding 223,000 jobs.
FOMC neutral stance (Jul 29) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%.
Gold trades (7/24) $1,072.3 down 44% from $1,923.70 (9/6/11), lowest since Nov 2009.
China Securities Regulatory Commission (CSRC) bans (7/8) major shareholders, corporate executives and directors from selling shares in listed companies for 6 months. Shanghai Composite Index declines 35% from 5,178.19 (6/12) to 3,373.54 (7/9) and Shenzhen Composite Index declines 41% from 3,156.96 (6/12) to 1,851.61 (7/8). China's $485B support of their currency and stock market in recent days (China's foreign exchange reserves, $3.65T as of July 31)
Greek parliament passes sweeping reforms (7/15, Greek banks solvency assured on 7/7 by ECB President Mario Draghi) complying with EU demands to get 3rd bailout of €86B ($96B): pension reform, increasing VAT from 13% to 23%, overhauling labour collective bargaining, limits on public spending, and sequestering €50B of public assets as collateral - following Greek referendum (7/5) with 61% voting "NO" for continued austerity. Greek 10yr bond trades 19.58% (7/8) yield up 255% (10 months) from 5.52% (9/8/14).
- Greece receives 3 month loan from EU and ECB approve (7/17) a €7.16B EFSM (European Financial Stabilisation Mechanism). ECB ELA raised (7/16) from €88.6B to €89.5B for Greece pending implementation of Greece's 3rd bailout from ESM (European Stability Mechanism). ECB has provided €130B of funding on €120B of Greek deposits.
- Greek banks reopen (7/20) with capital controls intact after 23 days. Greece pays overdue IMF debt €2.05B, no longer in arrears. Greece pays ECB €4.2B, due 7/20 and €470M to the Bank of Greece. Greek parliament passes reforms (7/22) to qualify for 3rd EU bailout before ECB payment (8/20), Greek 10yr bond trades 10.95% (7/20) down 44% from 19.58% (7/8).
Fiat Chrysler fined (7/27) by NHTSA $105M, and buy back 500,000 trucks, and offer 1 million owners of Jeeps Cherokee above market repurchase for recall lapses affecting more than 11 million vehicles.
Jon Corzine (and other former MF Global officials) to pay (7/7) $64.5M to MF Global shareholders. Underwriters settle (12/11/14) for $74.9M (Citigroup, Deutsche Bank, Goldman Sachs, J.P. Morgan, Merrill Lynch, RBS and Sandler O'Neill). PricewaterhouseCoopers settles (4/17/15) for $65M. MF Global's unsecured creditors to recover $0.72/$1.
JPMorgan Chase settles (7/17) $388M with investors misled about $10B of sold residential mortgage-backed securities. JPMorgan Chase settles (7/8) $166M for improper collection and sales of credit-card debt.
Citigroup settles (7/21) $770M for illegal credit card practices ($700M consumer relief for 7 million and $70M in civil penalties).
Earnings season for 2Q15 YOY growth for the S&P 500 index was positive, 1%.
Month of June 2015
Dow month: -2.17%, 6 mo: -1.14%, ytd: -1.14%
S&P 500: 2,063
S&P 500 month: -2.09%, 6 mo: 0.20%, ytd: 0.20%
NASDAQ month: -2.01%, 6 mo: 4.90%, ytd: 4.90%
U.S. unemployment falls to 5.3%, adding 245,000 jobs, U.S. participation rate participation rate falls to 62.6%, the lowest rate since October 1977.
FOMC neutral stance (Jun 17) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%.
Greek capital controls imposed (6/28, €60 daily ATM withdrawal and bank transfers/payments abroad banned) - banks and Athens Stock Exchange not to open monday (6/29). ECB's ELA (Emergency Liquidity Assistance) to the Greek central bank rose to €88.6B (6/26) to slow bank run. Greece defaults (6/30, first developed country - 26th nation in arrears since 1980) owing the IMF €1.6B ($1.8B) - Greece's 5yr old EU rescue program expired 6/30. Greek PM Alexis Tsipras' announced public referendum (7/5) to vote on creditors' proposal - Iceland (10/27/2008) and Cyprus (3/25/2013) implemented capital controls as part of their bailout package. €323B Greek outstanding debt - €246B bailout: €56B Germany, €42B France, €37B Italy, €34B other EU nations, €32B IMF, €25B Spain, €20B ECB and €77B non-EU/ECB/IMF: private Greek bonds €48.8B, Greek banks €11B, private Greek loans €10.5B, Bank of Greece €4.3B, Foreign banks €2.4B. Greek 10yr bond trades 15.61% (6/30).
China's PBOC cuts (6/27) 1yr lending rate to low 4.85% (10.98% high, 7/93-6/96) and deposit rate to 2%. Shanghai Composite Index declines 25% from 5,178.19 (6/12) to 3,875.05 (6/29).
Puerto Rico's governor Alejandro Garcia Padilla announced (6/29) the commonwealth (pop. 3.6 million) must restructure its $72B of debt and $37B in pension obligations - the U.S. territory is insolvent.
Brazil (6/9) announces a $65B infrastructure package including a $40B bi-oceanic railway line connecting Brazil with the Pacific through Peru for trade with China.
2Q15 U.S. merger and acquisition deals of $631.2B exceed 2Q98 of $557.04B.
Trinity Industries to pay (6/9) $663M judgement for manufacturing faulty guardrails that jam and spear through vehicles.
Computer Sciences Corp (6/5) settles $190 million penalty with SEC for manipulating financial results.
Medicare fraud criminal charges (6/17) against 243 doctors, nurses, and medical professionals - $712M in false billing, FBI currently has 2,700 open investigations.
Month of May 2015
Dow month: -0.07%, ytd: 1.05%, 6 mo: 1.03%
S&P 500: 2,107
S&P 500 month: -0.05%, ytd: 2.34%, 6 mo: 1.89%
NASDAQ month: 1.30%, ytd: 7.05%, 6 mo: 5.91%
U.S. unemployment rises to 5.5%, adding 260,000 jobs.
Verizon and Sprint to pay (5/12) $158M for violations in billing customers, cramming charges.
5 banks to pay (5/20) $5.8B and plead guilty to criminal felony charges (SEC to provide waivers to conduct business) of conspiring to manipulate LIBOR: Barclays $2.38B, Citigroup $1.27B (including a $925 million antitrust penalty), JP Morgan $892M, RBS $669M, and UBS pleads guilty to wire fraud $203M (and $342M for manipulation of forex rates). Bank of America to pay $205M for unsafe and unsound practices in the foreign exchange markets.
Month of April 2015
Dow month: 1.40%, ytd: 1.13%, 6 mo: 3.64%
S&P 500: 2,108
S&P 500 month: 1.93%, ytd: 2.38%, 6 mo: 4.46%
NASDAQ month: 2.12%, ytd: 5.68%, 6 mo: 8.08%
U.S. unemployment falls to 5.4%, adding 187,000 jobs.
FOMC neutral stance (Apr 29) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%.
German 10yr bond trades (4/17) 0.049% yield falls 98% (19 months) from 2.087% (9/11/13), while Greek 10yr bond trades 13.93% (4/22) yield up 152% (7 months) from 5.52% (9/8/14). Russian central bank international reserves fall to $350B in April, from an all-time high $600B (8/2008).
China's PBOC cuts (4/20) Reserve requirement ratio (RRR, for commercial banks) by 100bps to 18.5% and RRR (non-bank, shadow-banking) cut by 300bps.
Deutsche Bank settles (4/23) $2.5B for manipulation of LIBOR.
Earnings season for 1Q15 YOY growth for the S&P 500 index was positive, 2%.
Month of March 2015
Dow month: -1.97%, ytd: -0.26%, 6 mo: 4.30%
S&P 500: 2,068
S&P 500 month: -1.76%, ytd: 0.44%, 6 mo: 4.87%
NASDAQ month: -1.27%, ytd: 3.48%, 6 mo: 9.08%
U.S. unemployment falls to 5.5%, adding 119,000 jobs.
FOMC neutral stance (Mar 18) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%.
ECB begins (3/9) QE €1.14T ($1.2T) €60B/month ($68.8B) of bond purchases. €2.8T of EU sovereign debt yields less than zero (50% of €5.6T, 3/31). Euro depreciates to 1.0473 (3/13) against the dollar, lowest since January 2003. German 10yr bond trades 0.186% (3/12), Japanese yen depreciates to ¥122.03 (3/10). Japan is the world's most indebted country at $8.9T (GDP ratio of 211%), Greece with $358B (173%), Italy (139%), Portugal (133%), UK (113%), Ireland (112%), and Belgium (110%).
U.S. Dollar (7 Major Currencies, Euro, Canada, Japan, United Kingdom, Switzerland, Australia, and Sweden) Trade Weighted Index trades 93.3723 (3/13/15) appreciating 37% from 67.9944 low (5/2/11) highest since 4/2003 (113.0988 1/28/02, high 148.1244 2/25/85).
Commerzbank settles (3/12) deferred prosecution for $1.45 billion for dealings with Iran, Sudan, Cuba and Myanmar and violations of money laundering controls.
Bank of New York Mellon to pay (3/19) $714M for overcharging clients on foreign currency transactions.
GAO estimates (3/4) Federal improper payments totaled $124.7B in 2014 (across 124 programs in 22 agencies), 3 programs accounted for over $95B of waste, fraud, abuse, and mismanagement: Medicare ($60B of $603B), Medicaid ($17.5B), and IRS EITC ($17.7B).
Month of February 2015
Dow month: 5.64%, ytd: 1.74%, 6 mo: 6.05%
S&P 500: 2,105
S&P 500 month: 5.51%, ytd: 2.24%, 6 mo: 5.09%
NASDAQ month: 7.10%, ytd: 4.81%, 6 mo: 8.38%
U.S. unemployment falls to 5.5%, adding 264,000 jobs.
EU finance ministers extend (2/20) Greece's €172B bailout (to receive last €7.2B in aid) by 4 months and accepts (2/24) Greece's list of reforms.
Morgan Stanley to pay (2/25) $2.6B to settle claims from its sale of residential mortgage-backed securities.
Standard & Poor's settles (2/3) $1.5 billion for fraud ($687.5M Justice Dept., and $687.5M to states, and $125M with California Public Employees Retirement System) - inflated ratings of mortgage-backed securities.
Ukraine secures (2/12) up to $40 billion IMF international bailout package over 4yrs.
Month of January 2015
Dow month: -3.69%, ytd: -3.69%, 6 mo: 3.63%
S&P 500: 1,995
S&P 500 month: -3.10%, ytd: -3.10%, 6 mo: 3.31%
NASDAQ month: -2.13%, ytd: -2.13%, 6 mo: 6.06%
U.S. unemployment rises to 5.7%, adding 201,000 jobs.
FOMC neutral stance (Jan 28) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%.
ECB QE recommends (1/22) bond purchases of €1.14T ($1.3T) (€60B/month, $68.8B) starting March 9 through September 2016. ECB 2nd TLTRO (1/8, Targeted Long Term Refinancing Operations) take-up to lenders €212B ($252 billion) - 6 more TLTRO auctions through 2016. EURO 1.1102 (1/26) down 20.5% (8 months) from €1.399 (5/6), German 10yr bond 0.298% (1/30), Greek 10yr bond 11.215% (1/30).
WTI/Brent oil trades $43.58/45.19 (1/29 and 1/13, U.S. shale oil oversupply) lowest since Jan 2009 commodity collapse. WTI falls 62% from $113.93 high 4/29/11; Brent falls 64% from $127.02 high 4/11/11.
U.S. 30yr Treasuries trade (1/30) 2.219%, U.S. 10yr Treasuries trade 1.6357% (1/30), Japan 10yr bond trades 0.198% (1/20).
Swiss National Bank drops (1/14) its minimum exchange rate of ₣1.20 (9/6/11) against the Euro. Swiss franc trades (1/15) ₣0.8517 from ₣1.2011 (29% apreciation against the Euro) and trades ₣0.7406 from ₣1.0221 against the U.S. dollar (27.5% apreciation). Swiss Market Index trades (1/16) 7,852.83 from 9,292.44 (1/13) a 15% loss.
China accelerates (1/5) 300 infrastructure projects, 元7T yuan ($1.1T) to support growth.
Russian stimulus package (1/28) ₽2.3T ($35B) of 60 measures including recapitalisation of the banking system and capital injection into Vnesheconombank (VEB), the state development bank.
JPMorgan Chase pays (1/30) $99.5 million for antitrust rigging of foreign exchange market prices in $5.3T/day market.
Standard & Poor's settles (1/21) $77 million and barred for 1 year from rating commercial mortgage-backed securities for misleading investors about the methodology it used.
Earnings season for 4Q14 for the S&P 500 index was positive, 7%.
Month of December 2014
Dow month: -0.03%, 6 mo: 5.92%, ytd: 7.52%
S&P 500: 2,059
S&P 500 month: -0.44%, 6 mo: 5.05%, ytd: 11.39%
NASDAQ month: -1.06%, 6 mo: 7.44%, ytd: 13.40%
U.S. unemployment falls to 5.8%, adding 252,000 jobs.
FOMC neutral stance (Dec 17) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%. Federal Reserve extends (12/18) compliance of Volcker rule from 7/21/15 to July 21, 2017 for "legacy covered funds" (covered funds and foreign funds prior to 12/31/13); Federal Reserve previously extended (4/7) collateralized loan obligations (CLOs) compliance to July 21, 2017.
Obama signs (12/19) Tax Increase Prevention Act of 2014 - individual, business, energy tax extenders through 12/31/14, $41.6 billion in tax relief.
Russian ruble trades ₽81.1 (12/16) falls 59% (6 months) from ₽33.55 (6/27, ruble high ₽23.15 7/15/2008 4 days after oil hit $147.27, ₽27.15 on 5/5/11). Russia's central bank raises interest rate to 17% from 10.5% (12/15). Russia's RTS Index falls 73% to 578.21 (12/16) from 2,134.23 (4/11/11). Russia's central bank's reserves fell from over $509.6B to under $388B defending the ruble. Russia's Deposit Insurance Agency takes control (12/22) of National Bank Trust (15th-largest by retail deposits) with ₽127B ($2.1B) bailout, Russia's National Wealth Fund injects (12/31) ₽100B ($1.7B) into VBT Bank (2nd-largest) and injects (12/31) ₽150B ($2.5B) into Yamal LNG (the Arctic gas project of Novatek). WTI/Brent oil trades $52.44/55.82 (12/31) falls 53/51% (16 months) from $112.24/117.29 (8/26/13). Silver falls to $14.10 (12/1) down 72% from $49.82 (4/25/11). Gold trades $1130.4 (11/7) down 41% from $1,923.70 (9/6/11), 5-year low. CRB index falls to 228.99 (12/31) down 38% from $370.72 (5/2/11). German 10yr trades 0.535% (12/30) yield falls 74% (16 months) from 2.087% (9/11/13). Greek 10yr trades 9.80% (12/31) yield up 65% (3 months) from 5.52% (9/8). Japanese 10yr yield fell to all time low of 0.305% (12/26). Yen trades ¥121.85 (12/8) down 62% (2 years) from ¥75.31 (10/31/11). Kyiv parliament's renunciation (12/23) of Ukraine's neutral status a move towards joining NATO.
Treasury sold (12/18) of remaining $1.25B Ally Financial with $2.4B profit ($19.6B returned of $17.2B loaned). TARP ownership positions end in: AIG, Citigroup, Bank of America, Fannie Mae, Freddie Mac, General Motors, Chrysler, GMAC, and Ally Financial.
TARP closed (12/18) with $15.35B profit - $426.35B disbursed with repayments of $441.7B, U.S. Treasury sold over $80 billion of stock and convertible warrants from 2010-12. AIG - total $182.3B ($67.8B disbursed), profit $5.1B. Banks: Capital Purchase Program (CPP), Targeted Investment Program (TIP), Asset Guarantee Program (ASP), Temporary Liquidity Guarantee Program (TLGP), Small Business Lending Fund (SBLF), Community Development Capital Initiative (CDCI) - total 245.1B, profit $29.7B. Auto: Automotive Industry Financing Program (AIFP), Auto Supplier Support Program (ASSP) - total $79.7B, lost $9.35B. Credit: Term Asset-backed Loan Facility (TALF), Public Private Investment Funds (PPIF), Small Business Administration (SBA7a) - total $19.1B, profit $4.5B. Housing: Home Affordable Modification Program (HAMP), Home Affordable Refinance Program (HARP), and Making Home Affordable (MHA), Home Affordable Modification Program SM (HAMP SM), Second Lien Modification Program (2MP), New Issue Bond Program (NIBP), Temporary Credit and Liquidity Program (TCLP), Hardest Hit Fund (HHF) - total $14.6B, lost $14.6B.
Japan approves 12/27 ¥3.5T ($29 billion) fiscal stimulus package to boost economy.
Bank Leumi Le-Israel settles (12/22) deferred-prosecution agreement for $400 million admitting to helping American clients evade taxes.
Alstom guilty of violating Foreign Corrupt Practices Act settles (12/22) $772M for bribery and failing to have adequate control to win power-plant contracts.
MF Global (12/24) fined $100M penalty ($1.2B of client funds ordered returned) for misuse of customers funds and supervisory violations by CFTC.
Month of November 2014
Dow month: 2.51%, 6 mo: 6.65%, ytd: 7.55%
S&P 500: 2,068
S&P 500 month: 2.48%, 6 mo: 7.48%, ytd: 11.88%
NASDAQ month: 3.37%, 6 mo: 12.82%, ytd: 14.62%
U.S. unemployment unchanged at 5.8%, adding 321,000 jobs.
European Fund for Strategic Investment (11/26) €21B (€16B EU and €5B from the European Investment Bank) invested to issue €60B in bonds, proceeds will then be invested in €315B of loans for infrastructure and small businesses. ECB (11/21) begins purchases of €1T of asset-backed securities.
PBOC (11/21) cuts 1yr lending rate (first since July 6, 2012) to 5.6% from 6.0% and 1yr deposit rate to 2.75% from 3.0% - PBOC's new Medium-term Lending Facility injected 元769.5B yuan ($126B) to lenders in September and October. China's outstanding value of shadow-banking products estimated 元21.87T yuan ($3.52T).
Apple settles (11/21) $450M for harming consumers by colluding in raising e-book prices.
Banks (11/12) settle $4.3B for rigging foreign exchange benchmarks: Citigroup $1.02B, JPMorgan Chase $996M, UBS $800M, RBS $634M, HSBC $618M, and Bank of America $250M to U.S's CFTC & OCC, the U.K.'s FCA, and the Swiss FMSA.
Month of October 2014
Dow month: 2.04%, 6 mo: 4.89%, ytd: 4.91%
S&P 500: 2,018
S&P 500 month: 2.33%, 6 mo: 7.12%, ytd: 9.18%
NASDAQ month: 3.07%, 6 mo: 12.55%, ytd: 10.88%
U.S. unemployment falls to 5.8%, adding 243,000 jobs.
FOMC neutral stance (Oct 29) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%. QE3/QE4 ended in October. FMOC "decided to conclude its asset purchase program this month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction." Federal Reserve's balance sheet stands at $4.48T.
US 10yr Treasuries trades 1.8622% (10/15) yield falls 39% (10 months) from 3.0516% (1/2) and 30yr Treasuries trades 2.6744% (10/15) yield falls 33% (10 months) from 3.9744% (1/2). VIX trade 31.06 (10/15) rises 202% (3 months) from 10.28 (7/3). Russian ruble trades ₽41.148 (10/17) falls 23% (3.5 months) from ₽33.5503 (6/27, ruble high ₽23.15 7/15/2008 4 days after oil hit $147.27, ₽27.15 on 5/5/11). WTI/Brent oil trades $79.10/82.94 (10/16) falls 29% (14 months) from $112.24/117.29 (8/26/13). Gold trades $1183.3 (10/6) near 5-year low ($1180 11/25/09, $1,179.40 6/2/13, $1181.4 12/30/13). German 10yr trades 0.715% (10/16) yield falls 66% (14 months) from 2.087% (9/11/13). Greek 10yr trades 9.101% (10/17) yield up 65% (5 weeks) from 5.52% (9/8). Euro trades €1.2506 (10/6) down 11% (5 months) from €1.399 (5/6). Yen trades ¥110.09 (10/1) down 46% (2 years) from ¥75.31 (10/31/11). Europe deflation fears, Russia incursion in Ukraine, Greece explores ending EU support on Dec 31, Ebola outbreak, and ISIS Islamic fighters in Syria/Iraq.
Bank of Japan (10/31) to buy ¥80T annually ($716B) increased from ¥60-70T under Quantitative and Qualitative Easing (QQE) on April 4, 2013 monetary easing stimulus - extending the "average remaining maturity" to 7-10 years (up from 3 years of Japanese government bonds) and triple its purchases to ¥3T for ETFs, ¥90B for J-REITs. BOJ holds about 20% of Japan's outstanding government bonds, yen trades ¥112.48 (10/31) a 7 year low ¥111.61 8/17/2007, gold trades $1160.5 (10/31) a 5 year low 11/23/09. Japan's Government Pension Investment Fund (GPIF, $1.2T, ¥127.3T the world's largest pension fund) would increase its Japanese and overseas equity holdings to 25% each (from 12%), 15% in foreign bonds (from 11%), and reducing Japanese debt to 35% from 60%.
ECB (10/26) tests 130 EU banks (covering 85%) ability to withstand future crises. 25 banks failed stress tests (17 have already covered their capital shortfalls) remaining shortfall €6.35B ($8B) and non-performing EU bank exposure about €879B. ECB (10/20) begins purchases of €1T of covered-bonds - EU has a €2.6T covered-bond market.
Fannie Mae (10/24) settles $170M for misleading shareholders about its finances, risk management and mortgage exposure before it was seized by the U.S. government during the 2008 financial crisis.
Earnings season for 3Q14 for the S&P 500 index was positive, 10.5%.
Month of September 2014
Dow month: -0.32%, 6 mo: 3.55%, ytd: 2.81%
S&P 500: 1,972
S&P 500 month: -1.55%, 6 mo: 5.34%, ytd: 6.69%
NASDAQ month: -1.90%, 6 mo: 7.00%, ytd: 7.58%
U.S. unemployment falls to 5.9%, adding 256,000 jobs. U.S. participation rate falls to 62.7% lowest since February 1978 - 155,862,000 of 248,446,000 civilian noninstitutional population (16yrs and older, not Armed Forces, health/mental facilities, or incarcerated).
FOMC neutral stance (Sep 17) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%. QE3/QE4 reduced in October from $10B per month of agency mortgage-backed securities to $5B and $10B of longer-term Treasury securities from $15B.
ECB cuts (6/4) lending rate to 0.05% (from 0.15%) and overnight deposit rate to -0.2% (from -0.1%). Starting 10/1 ECB will purchase ABS (asset-backed securities) and covered bonds. ECB balance sheet to rise from €2T to €2.7T euros (3/1/12, record €3.02T, $3.96T). TLTRO facility (9/18, 4yrs) €82.6B ($106.5B) to 255 EU banks at 0.15%.
Alibaba IPO (9/19, $68 a $167.6B market capitalization) sold 368M shares raising $25B - opening $92.70 ($228.5B market cap) with 2013 gross receipts of $248B (vs Amazon $116B). Agricultural Bank of China IPO $22.1B in 2010, Industrial & Commercial Bank of China $21.9B in 2006, Visa's $19.7B in 2008, General Motor's $18.1B in 2010 and Facebook's $16B in 2012.
HSBC settles (9/12) $550M for failing to disclose the risks on mortgage bonds it sold to Fannie Mae and Freddie Mac.
Hewlett-Packard fined (9/13) $108M for paying bribes through its subsidiaries in Russia, Poland and Mexico.
Halliburton to pay (9/2) $1.1B to Gulf Coast residents, local governments and businesses for fatal 2010 Macondo well oil spill.
PG&E to pay (9/2) $1.4B for fatal natural-gas pipeline explosion in San Bruno, California.
Mathew Martoma sentenced (9/8, SAC Capital Advisors) 9 years (and forfeit $9.3M) for record insider trading of $275M of illegal gains and avoided losses.
Month of August 2014
Dow month: 3.23%, 6 mo: 4.75%, ytd: 3.15%
S&P 500: 2,003
S&P 500 month: 3.73%, 6 mo: 7.75%, ytd: 8.37%
NASDAQ month: 4.81%, 6 mo: 6.31%, ytd: 9.66%
U.S. unemployment falls to 6.1%, adding 203,000 jobs.
Portugal will spend €4.9B ($6.58B, 8/3) to rescue Banco Espirito Santo "good bank" (Novo Banco) and a "bad bank" (losses incurred by junior bondholders and shareholders), dipping into Portugal's EU/IMF bank resolution fund (2012) of €6.4B.
Pricewaterhouse Coopers fined (8/18) $25M for sanitizing reports to regulators on sanctions and money-laundering controls for Bank of Tokyo-Mitsubishi.
AIG settles (8/4) $960M to investors for not disclosing its financials accurately from 2006-08.
Standard Chartered settles (8/19) $300M and indefinitely suspends some dollar clearing for money laundering compliance failures required in their 12/10/12 settlement.
Goldman Sachs will repurchase (8/22) $3.15B of FHFA mortgage-backed securities ($2.15B from Freddie Mac and $1B from Fannie Mae - a 62% premium of $1.2B).
Bank of America settles (8/21) $16.65B (including $245M to SEC) for selling mortgage-backed securities (MBS) and collateralized debt obligations (CDO) to investors ($9.65B Justice Department and $7B consumer relief). Tobacco industry settled (11/1998) $246B agreement over 25 years and federal regulatory oversight - Philip Morris, R. J. Reynolds, Brown & Williamson, Lorillard and Liggett & Myers.
Month of July 2014
Dow month: -1.57%, 6 mo: 5.50%, ytd: -0.08%
S&P 500: 1,931
S&P 500 month: -1.48%, 6 mo: 8.30%, ytd: 4.47%
NASDAQ month: -0.86%, 6 mo: 6.48%, ytd: 4.63%
U.S. unemployment rises to 6.2%, adding 243,000 jobs.
FOMC neutral stance (July 30) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%. QE3/QE4 reduced in August from $15B per month of agency mortgage-backed securities to $10B and $15B of longer-term Treasury securities from $20B.
Argentina defaults (7/30) for second time (2001) with about $200B in foreign-currency debt (including $29B of restructured bonds) - ISDA (International Swaps & Derivatives Association) determines Argentina's failure is a credit event that will trigger settlement of $1B of CDSs. Argentina defaulted (12/26/2001) on $102.6B (National bank run), on (1/14/2005) Argentina restructured 76.2% of debt ($62.3B), on (8/11/2010) Argentina debt exchange restructuring rose to 92.6% ($12.4B).
BRICs (7/15) Brazil, Russia, India, China and South Africa establish $100B development bank.
China's foreign reserves reaches $4T ($3T, 4/14/11), China holds $1.27T of U.S. Treasury market (10.6% of the $12T).
Lloyds' settles (7/28) for $370M for LIBOR rate rigging.
Morgan Stanley settles (7/24) $275M with SEC for misleading investors about mortgage-backed securities.
SunTrust Banks to pay (7/3) up to $320M to resolve a criminal probe in administering HAMP from 3/2009-12/2010.
Bank of America settles (7/30) $1.27B for defective mortgages sold by Countrywide to Fannie Mae and Freddie Mac in 2007 and 2008. Bank of America settles (7/16) $650M payment to AIG for mortgage-backed securities sold. AIG also recovered $1.3B from JP Morgan Chase, Morgan Stanley and others - AIG had purchased mortgage bonds and sold over $50B of mortgage CDSs.
Citigroup settles (7/14) $7B ($4B Justice Department, $2.5B in consumer relief and $500B FDIC and 5 states) for fraud related to mortgage-backed securities.
Earnings season for 2Q14 for the S&P 500 index was positive, 8.5%.
Month of June 2014
Dow month: 0.66%, 6 mo: 1.51%, ytd: 1.51%
S&P 500: 1,960
S&P 500 month: 1.87%, 6 mo: 6.04%, ytd: 6.04%
NASDAQ month: 3.89%, 6 mo: 5.54%, ytd: 5.54%
U.S. unemployment falls to 6.1%, adding 267,000 jobs.
FOMC neutral stance (June 18) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%. QE3/QE4 reduced in July from $20B per month of agency mortgage-backed securities to $15B and $20B of longer-term Treasury securities from $25B.
ECB initiates negative rates (6/5): deposit rate to -0.1%, benchmark to 0.15% (down 10bps), and emergency borrowing rate to 0.4% (down 35bps). Also, a €400B ($542B) TLTRO facility to increase lending (Targeted Longer-Term Refinancing Operations in 9/18/2014 and 12/2014) and possible future asset-purchase plan. Denmark's Nationalbanken (Jul 5, 2012 - Apr 24, 2014) cut CD rate to -0.20% (down 25bps, to maintain Danish Krone's peg to the Euro). Swedish Riksbank from July 8, 2009 - Sept. 7, 2010 deposit rate -0.25%.
PBOC cuts (6/16) Reserve Requirement Ratio (RRR, 20%) for Rural Commercial Banks (RCBs) to 18% and Rural Credit Cooperatives (RCCs) to 16% - China raised (from 7.5%) its RRR 19 times (to 17.5%) from 7/2006 to 7/2008 to moderate growth, then cut RRR 3 times 9/2008 to 12/2008 (to 15.5%) to support the global downturn, then starting in 1/2010 raised 13 more times to cool their property market to 21.5% (a high in June 2011) before cutting in 11/2011.
General Motors (6/30) has recalled 27 million cars in North America, recall repairs expected to cost $2.5B and establishes a fund to provide financial payouts to victims killed or injured in accidents.
GE Capital settles (6/14) $169M for credit card lending discrimination.
U.S. Bancorp, settles (6/30) $200M for mortgages to Fannie Mae and Freddie Mac, from 2006-11.
Citigroup will pay (6/9) SEC $285M to settle fraud for CDO sold in 2007 (Class V Funding III).
SunTrust Banks settles (6/17) $968M for mortgages to Fannie Mae and Freddie Mac.
BNP Paribas settles (6/30) for $8.97B and pleads guilty to criminal charges of filing false business records and conspiracy - attempting to conceal (more than $190B processed) almost $9B in banned transactions from 2002-12 involving Sudan, Iran and Cuba. BNP also banned from dollar clearing for clients for 2015. Credit Suise (2009) $1.2B banned transactions $536M settlement. ABN Amro (2010) $3.2B banned transactions $50M settlement. Standard Chartered (2012) $667M banned transactions $667M settlement. RBS (2013) $32M banned transactions $100M settlement.
Month of May 2014
Dow month: 0.82%, ytd: 0.85%, 6 mo: 3.92%
S&P 500: 1,924
S&P 500 month: 2.13%, ytd: 4.09%, 6 mo: 6.53%
NASDAQ month: 3.12%, ytd: 1.59%, 6 mo: 4.51%
U.S. unemployment unchanged at 6.3%, adding 229,000 jobs.
Credit Suisse pleads guilty (5/19) $2.615B to helping Americans evade taxes (since 2009 about 18,900 Americans closed their CS accounts rather than surrender). February 4, 2004 - Credit Lyonnais last pleaded guilty ($770M) to criminal charges of making false statements to the Federal Reserve related to the purchase of California insurer Executive Life. 106 Swiss banking institutions have agreed with IRS tax evasion disclosure initiatives by the Dec. 31, 2013 deadline. To date 45,000 America tax evaders have accepted IRS offshore accounts amnesty program and paid more than $6.5B in back taxes, interest and penalties. 77,000 foreign banks will share information about US $50k (or greater) account holders - complying with Foreign Account Tax Compliance Act (7/1/14, FATCA) and stemming offshore tax evasion.
Wells Fargo settles (5/29) $62.5M to institutional investors for improperly advertising a risky securities lending program as safe.
Medicare Fraud Strike Force (5/13) charges 90 doctors, nurses, licensed medical professionals, health care company owners and others of conspiring to submit approximately $260M in fraudulent billings. Since its inception (March 2007) 1,900 charged for almost $6B of fraudulent billings.
Month of April 2014
Dow month: 0.75%, ytd: 0.03%, 6 mo: 6.66%
S&P 500: 1,884
S&P 500 month: 0.64%, ytd: 1.92%, 6 mo: 7.22%
NASDAQ month: -2.01%, ytd: -1.49%, 6 mo: 4.96%
U.S. unemployment falls to 6.3%, adding 304,000 jobs.
FOMC neutral stance (Apr 30) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%. QE3/QE4 reduced in May from $25B per month of agency mortgage-backed securities to $20B and $25B of longer-term Treasury securities from $30B. Federal Reserve revises terms (4/7) of Overnight Fixed-Rate Reverse Repurchase Agreement facility for maintaining short-term interest rates.
Greece issues (4/10) $4.14B (€3B) of 5yr bonds yielding 4.95%, unlocking €8.3B of bailout funds - 6 years of recession, 240b euros in rescue loans from EU and IMF, current debt 175.6% of GDP 12/31/13. Ireland issued (3/13/2013) €5B ($6.52B) of 10yr bonds at 4.15%. Ireland (12/15/2013) received final bailout loan from EU and IMF pending budget reforms - financial rescue €85B ($117B) program. Portugal (4/23) issued €750M ($1.04B) of 10yr bonds at 3.575% - €78B ($107.8B) bailout and ends rescue programs on May 17. Portugal bought back (2/27) €1.32B ($1.8B) of bonds (first buyback since 3/9/2011).
EU Single Resolution Mechanism (SRM 4/16, EU banks) to unwind/restructure lenders. Bank Recovery and Resolution Directive (BRRD) requires 8% of failing bank's liabilities wiped out before rescue. Cross-border bank resolution fund €55B ($76B) financed by bank levies. Clients' bank deposits insured up to 100,000 euros (starting 11/2014). ECB will supervise EU's largest banks - EU governments provided €592B ($818B) to support banks from 10/2008-12/2012. 124 major EU banks (over 50% of banking assets in each member state) will be stress tested (common Tier 1 capital above 5.5% of risk-weighted assets).
Bank of America settles (4/9) $783M for deceiving customers in sales of credit-card debt cancellation and theft-protection insurance.
Citigroup settles (4/7) $1.13B with institutional mortgage-bond investors resolving RMBS from 2005-2008.
Anadarko Petroleum (4/3) settles $5.15B of environmental liabilities for Kerr-McGee acquisition in 2006.
Ukraine's emergency rescue package IMF approved (4/30) $17B and unlocks an additional $15B in international financing.
Earnings season for 1Q14 for the S&P 500 index was positive, 5.5%.
Month of March 2014
Dow month: 0.83%, ytd: -0.72%, 6 mo: 8.78%
S&P 500: 1,872
S&P 500 month: 0.70%, ytd: 1.28%, 6 mo: 11.30%
NASDAQ month: -2.53%, ytd: 0.54%, 6 mo: 11.35%
U.S. unemployment unchanged at 6.7%, adding 203,000 jobs.
FOMC neutral stance (Mar 19) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%. QE3/QE4 reduced in April from $30B per month of agency mortgage-backed securities to $25B and $30B of longer-term Treasury securities from $35B.
U.S. GDP fell -2.1% 1Q14, largest since 1Q09.
Feds stress tests (3/26) Comprehensive Capital Analysis and Review (CCAR) and Dodd-Frank Act (DFA) annual stress tests found 25 of the 30 largest U.S. banks could withstand a deep recession and still pay dividends - except Citigroup, HSBC, RBS, Santander, and Zions Bancorporation.
Toyota (3/19) settles $1.2B for cars unintended vehicle acceleration between 2009 and 2010, recalling more than 10 million U.S. vehicles.
Credit Suisse (3/21) settles $885M with FHFA for mortgages sold to Fannie Mae and Freddie Mac between 2005 and 2007.
Bank of America (3/26) settles with FHFA $9.5B ($6.3B and buy back $3.2B of mortgage bonds) for mortgages sold to Fannie Mae and Freddie Mac between 2005 and 2007.
Kiev, Ukraine (3/27) over $30B in IMF bilateral and multilateral support over the next 2 years. U.S. (3/27) grants $1B in loan guarantees to Ukraine and sanctions against Russia for takeover of Crimea. UN votes Crimea secession invalid. Russian ruble falls (3/3) to $0.027/36.9 - below $0.027/36.4 its crisis level on Feb 18 '09. RTS Russian index falls to 1016.01 (3/14) from 2,123.56 on 4/8/2011 down 52%.
Month of February 2014
Dow month: 3.97%, ytd: -1.54%, 6 mo: 10.21%
S&P 500: 1,859
S&P 500 month: 4.26%, ytd: 0.58%, 6 mo: 13.84%
NASDAQ month: 4.97%, ytd: 3.15%, 6 mo: 20.00%
U.S. unemployment rises to 6.7%, adding 222,000 jobs.
Credit Suisse (2/21) settles $196.5M with SEC for regulatory violations related to clients avoiding paying U.S. taxes. Credit Suisse cross-border services (2002-08) of 22,000 U.S. client with up to $12B of assets.
JPMorgan Chase settles (Feb 14) $614M they defrauded FHA and VA by selling RMBS packaged mortgage loans. JPMorgan Chase (Feb 28) pays bond insurer Syncora Guarantee $400M selling RMBS packaged mortgage loans.
Morgan Stanley settles (2/4) $1.25B for selling mortgage-backed securities to Fannie Mae and Freddie Mac.
Mathew Martoma (SAC, 2/6) guilty 2 counts securities fraud and 1 count conspiracy in $275M insider trading.
Sochi 2014 Olympics - Norway's Ole Einar Bjoerndalen becomes most medaled winter Olympian with 13 (8 gold medals, 2 in Sochi). Russia wins 13 golds and 33 total; US wins 9 golds and 28 total.
Month of January 2014
Dow month: -5.29%, ytd: -5.29%, 6 mo: 1.28%
S&P 500: 1,783
S&P 500 month: -3.54%, ytd: -3.54%, 6 mo: 5.75%
NASDAQ month: -1.74%, ytd: -1.74%, 6 mo: 13.18%
U.S. unemployment falls to 6.6%, adding 144,000 jobs.
FOMC neutral stance (Jan 29) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%. QE3/QE4 in February reduced from $35B per month of agency mortgage-backed securities to $30B and $35B of longer-term Treasury securities from $40B.
CFPB (Consumer Financial Protection Bureau, 1/10) new mortgage rules ensure that consumers can repay mortgages with protections (if problems occur) to avoid foreclosure. Lenders must document consumer's income and assets, along with debt, against the long-term monthly payments.
Federal Reserve new chairwoman Janet Yellen (1/6) confirmed first woman ever to head bank.
Chinese yuan apreciates to 元6.0393 (1/14) up 13% from 6.83 (6/17/10).
Bank of America (Countrywide) $8.5B 11/18/13 settlement (1/31 approved) with institutional investors. Bank of America sold RMBS ($424B with $100B losses), Bank of America will buyback $5.5B in bonds Countrywide originated (defect rate 36%). Private RMBS totaled $2.2T (2008), with losses 2006-2012 of $449B (exceeding total losses on $9T of non-private mortgage debt).
Earnings season for 4Q13 for the S&P 500 index was positive, 10%.
Month of December 2013
Dow month: 3.05%, 6 mo: 11.18%, ytd: 26.50%
S&P 500: 1848.36
S&P 500 month: 2.35%, 6 mo: 15.09%, ytd: 29.60%
NASDAQ month: 2.87%, 6 mo: 22.73%, ytd: 38.32%
U.S. unemployment falls to 6.7%, adding 75,000 jobs.
FOMC neutral stance (Dec 18) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%. QE3/QE4 in January reduced from $40 billion per month of agency mortgage-backed securities to $35 billion and $40 billion of longer-term Treasury securities from $45 billion. QE4 may extend thru 2014 and unemployment below 6.5%. Fed's balance sheet exceeds $4 trillion ($891M end of 2007) 2.2T U.S. Treasuries, $1.5T mortgage backed securities, $326M other.
Volcker rule (12/10) prohibits "any transaction or activity...that would substantially increase the likelihood that the banking entity would incur a substantial financial loss". To hedge "demonstrably reduces or otherwise significantly mitigates one or more specific, identifiable risks [and provide] ongoing recalibration". Must qualify for the market-making exemption and inventories cannot exceed "reasonably expected near-term demands of customers". Limited investments in private equity, hedge funds and commodity pools. An exemption for some securities tied to foreign sovereign debt. Compliance by July 21, 2015 - beginning June 30, 2014, banks with $50 billion must report 7 quantitative measurements to Supervision: OCC, CFTC and the SEC.
GM, U.S. Treasury completes divestiture (12/9) losing $10.5 billion on its GM investment of $49.5 billion, now UAW retiree health-care trust owns 9.2% and the Canadian governments 7.2%.
Labor force participation rate falls to 62.8% lowest since 8/1978 (25 yrs) it peaking at 67.3% in 2000. Currently 92 million Americas are not counted as part of the labor force.
European Union settles (12/5) 1.71 billion Euros ($2.3 billion) record antitrust Libor interest rates rigging: Deutsche Bank 725 million euros, Societe Generale 446 million euros, RBS 391 million euros, J.P. Morgan 80 million euro, Citigroup 70 million euro, RP Martin Holdings Ltd. 247,000 euros.
Fiat buys (1/1) the remaining stake in Chrysler from UAW retiree health-care trust for $4.35 billion.
Bank of America settles (12/7) $500 million with investors for Countrywide's misleading mortgage-backed securities offerings from 2005-07. Bank of America settles (12/2) $404 million with Freddie Mac for mortgages sold from 2000-09 (716,000 loans). Bank of America settled (5/8) $315 million with investors for Merrill Lynch's misleading mortgage-backed securities offerings from 2005-07. Bank of America (Merrill Lynch) settles (12/12) $131.8 million for deceptive disclosures of CDOs sold to investors.
Ally Financial settles (12/20) $98 million with U.S. Justice Depart. for discriminatory lending practices to 235,000 minority borrowers, since 2011.
Deutsche Bank settles (12/20) 1.4 billion euros ($1.9 billion) for mortgage-backed securities sold to Fannie Mae and Freddie Mac, from 2005 to 2007.
JPMorgan Chase settles 2 years bank probation (12/31, deferred prosecution) and $2.2 billion to resolve complicity in Madoff Ponzi scheme - $1.7 billion to Justice Dept., $350 million to OCC and $543 million to trustee (Irving Picard) of victims fund.
Michael Steinberg (SAC, Sigma Capital) found guilty (12/18) of 4 counts of securities fraud and one count of conspiracy.
Month of November 2013
Dow month: 3.47%, 6 mo: 6.42%, ytd: 22.76%
S&P 500: 1,806
S&P 500 month: 2.79%, 6 mo: 10.73%, ytd: 26.63%
NASDAQ month: 3.57%, 6 mo: 17.48%, ytd: 34.46%
U.S. unemployment falls to 7.0%, adding 274,000 jobs.
ECB (11/7) cut refinancing rate from 0.50% to 0.25%, rate paid on bank deposits remains 0%, and cuts its emergency borrowing rate from 1.00% to 0.75%.
Royal Bank of Scotland (11/7) settles $153.7 million with SEC that it misled investors in its mortgage-backed security offerings.
Wells Fargo (11/6) settles $335 million with FHFA that it misled investors in its mortgage-backed security offerings.
Residential Capital LLC (Ally Financial subsidiary filed for bankruptcy 5/14/12) settles (11/29) $1.2 billion with FHFA for subprime mortgages.
J.P. Morgan Chase settles (11/19) $13 billion that it misled investors and the public in selling residential mortgage-backed securities. $9 billion for Federal ($4 billion to FHFA, $4 billion in consumer-relief: mortgage write-downs, demolition in blighted areas, and lower monthly mortgage payments) and $1 billion State claims (New York $613.8m, California $298.9m, Illinois $100m, Massachusetts $34.4m and Delaware $19.7m); $2 billion to Justice Department; $1.4 billion to NCUA and $515.4 million to FDIC.
JPMorgan Chase settles (11/15) $4.5 billion with 21 institutional investors it sold 330 mortgage bond trusts from 2005-08.
Johnson & Johnson (11/4) settles $2.2 billion for violations in marketing drugs for unapproved uses and paid "kickbacks" to doctors and nursing homes. Whistleblowers in 3 states will collect $167.7 million under the False Claims Act.
Johnson & Johnson (11/19) settles $2.475 billion for basic awards and significant injuries, $250k for each of 8,000 U.S. hip replacements.
SAC pleads guilty (11/4) to 4 counts of securities fraud and 1 count of wire fraud; a total settlement amount of $1.8 billion ($900m in fines and $900m of forfeiture includes a $616m settled with SEC on 3/15) and ends its investment advisory business. 87 people charged with insider trading and 75 convictions and guilty pleas, since 2010.
Month of October 2013
Dow month: 2.75%, 6 mo: 4.76%, ytd: 18.63%
S&P 500: 1,757
S&P 500 month: 4.46%, 6 mo: 9.95%, ytd: 23.20%
NASDAQ month: 3.95%, 6 mo: 17.75%, ytd: 29.82%
U.S. unemployment rises to 7.3%, adding 200,000 jobs.
FOMC neutral stance (Oct 30) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%. Federal Reserve continues temporary bilateral liquidity swap arrangements with the European Central Bank, Bank of Japan, Bank of England and central banks of Canada and Switzerland "until further notice" (set to expire 2/1/14).
Federal shutdown (10/1, partial first since 1996) up to 870,000 of 2.9 million federal employees sent home. Obama signs (10/17) Continuing Appropriations Act, 2014 which finances the federal government until Jan 15 2014, maintains "sequester" spending levels, Congress required to agree to long-term budget plan by 12/13, national debt raised until Feb 7, 2014.
JPMorgan Chase settles (10/25) $5.1 billion with FHFA over $33 billion in mortgage bonds sold to Fannie Mae and Freddie Mac (9/7/05-9/19/07). JPMorgan Chase settles (10/15) $100 million with CFTC related to "London whale" trades.
Rabobank settles (10/29) $1.07 billion for LIBOR violations with U.S., U.K., Japan and the Dutch.
SunTrust Bank settles (10/10) $968 million ($468 million fine and $500 million of consumer relief). SunTrust Bank settles (10/10) $228 million with Fannie Mae to repurchase loans. SunTrust Bank settled (9/30/12) $65 million with Freddie Mac over 312,000 loans sold between 2000-08.
HSBC (Household International) must pay investors (10/17) $2.46 billion ($1.48 billion in damages and $986 million in interest) for securities fraud.
Earnings season for 3Q13 for the S&P 500 index was positive, 6%.
Month of September 2013
Dow month: 2.16%, 6 mo: 3.78%, ytd: 15.46%
S&P 500: 1,682
S&P 500 month: 3.00%, 6 mo: 7.20%, ytd: 17.94%
NASDAQ month: 5.04%, 6 mo: 15.39%, ytd: 24.89%
U.S. unemployment falls to 7.2%, adding 175,000 jobs.
FOMC neutral stance (Sept 18) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%. NY Federal Reserve (9/23) accepted $11.81 billion new reverse repurchase agreements, temporarily draining cash by borrowing funds overnight from banks at 1 basis point.
BRICS (9/5) will establish a $100 billion currency reserve pool, China commits $41b, Brazil, India and Russia $18b each, and South Africa $5b after ratification by each country's parliament. The joint BRICS Development bank, with capital of up to $50b, not established yet.
Verizon (9/11) sells record $49 billion bond offering to fund $130 billion buyout of partner Vodafone Group.
FDIC selling (9/11) $2.42 billion of Citigroup bonds exiting U.S. government holdings linked to financial crisis.
Citigroup settles (9/25) $395 million covering 3.7 million loans sold to Freddie Mac between 2000-12.
Wells Fargo settles (9/27) $869 million to Freddie Mac for 6.7 million loans sold between 2000-08.
JP Morgan Chase settles (9/19) $920 million ($700 million OCC, Fed Res, and SEC) and $220 million to the UK's FCA for $6.2 billion loss on derivatives bets. "London whale" (Bruno Iksil) and indicted Javier Martin-Artajo and Julien Grout for cover-up. JP Morgan Chase also settles (9/19) $389 million for debt-collection lawsuits and harming credit-card customers ($309 million to 2.1 million credit-card customers and $80 million in OCC fines).
Month of August 2013
Dow month: -4.45%, 6 mo: 5.38%, ytd: 13.02%
S&P 500: 1,633
S&P 500 month: -3.14%, 6 mo: 7.79%, ytd: 14.50%
NASDAQ month: -0.99%, 6 mo: 13.61%, ytd: 18.89%
U.S. unemployment falls to 7.3%, adding 238,000 jobs.
30yr fixed mortgages rise to 4.73% (8/26) above jumbo mortgages 4.71% (exceed $417,000 / $625,500). $281 billion in jumbo mortgages securitized in 2005 with the spread of jumbo above conforming loans peaked at 1.8% in 2008.
U.S.-Swiss tax treaty (8/29) deadline 12/31/13: penalty 20% value of Swiss accounts not disclosed on 8/1/08; 30% opened 8/1/08-2/28/09; 50% opened after 2/28/09. U.S. has prosecuted 68 tax evaders and more than 30 bankers for offshore tax crimes.
Fabrice Tourre found guilty (8/1) of fraud in misleading buyers of Goldman's 2007 $1 billion CDO shorted by John Paulson.
Month of July 2013
Dow month: 3.96%, 6 mo: 11.82%, ytd: 18.28%
S&P 500: 1,686
S&P 500 month: 4.98%, 6 mo: 12.55%, ytd: 18.22%
NASDAQ month: 6.55%, 6 mo: 15.40%, ytd: 20.09%
U.S. unemployment falls to 7.4%, adding 89,000 jobs.
FOMC neutral stance (July 31) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%.
Detroit files Chapter 9 bankruptcy (7/18) largest U.S. municipal bankruptcy with total liabilities of $18.8 billion. Vallejo CA filed May 6, 2008, Central Falls RI filed Aug. 1, 2011, Boise County ID filed Sept. 8, 2011, Jefferson County GA filed Nov. 9, 2011, Harrisburg PA filed March 10, 2012, Stockton CA filed June 28, 2012, Mammoth Lakes CA filed July 3, 2012 and San Bernardino CA filed Aug. 1, 2012.
Citigroup settles (7/1) $968 million covering 3.7 million mortgages originated from 2000 to 2012 and sold to Fannie Mae.
UBS settles (7/25) $885 million ($415 million to Fannie Mae and $470 million to Freddie Mac) with Federal Housing Finance Agency (FHFA) for misrepresenting mortgage-backed bonds sold from 2004-2007. General Electric (Jan '13) and Citigroup (May '13) have settled for undisclosed amounts.
J.P. Morgan Chase (7/30) settles $410 million to Federal Energy Regulatory Commission (FERC) for manipulating electricity markets in California and the Midwest. Barclays settles (FERC, 7/16) record $487.9 million for its alleged manipulation of the California energy markets from 2006 to 2008.
Steven Cohen, SAC Capital, charged (7/22) by SEC with violations related to insider trading. SAC (7/25) charged with 4 counts of securities fraud and 1 count of wire fraud by the Justice Department. The insider trading was "substantial, pervasive and on a scale without known precedent", 6 employees already found guilty.
Earnings season for 2Q13 for the S&P 500 index was positive, 5%.
Month of June 2013
Dow month: -1.36%, 6 mo: 13.78%, ytd: 13.78%
S&P 500: 1,606
S&P 500 month: -1.53%, 6 mo: 12.61%, ytd: 12.61%
NASDAQ month: -1.53%, 6 mo: 12.70%, ytd: 12.70%
U.S. unemployment unchanged at 7.6%, adding 172,000 jobs.
FOMC neutral stance (June 19) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%.
Gold falls to $1,179.40 (6/27) down 38.7% from $1,923.70 (9/6/11). Silver falls to $18.185 down 63.5% from $49.82 (4/25/11). Jefferies CRB trades 275.54 (6/26) down 14.26% from 321.36 (9/14/12).
State's unfunded liabilities: California $640b (liabilities of $1.1t), Ohio $287b ($433b), Illinois $287b ($378.5b), New York $260b ($490b), and Texas $244b ($427b). Worst per capita: Connecticut $76.7b ($102.2b), Kentucky $71.1b ($97.2b), Kansas $32.9b ($46.1b), Alaska $23.7b ($34b), Mississippi $48.8b ($69.2 b), New Hampshire $13.9b ($19.7b), Hawaii $27b ($39.2b), Louisiana $74.9b ($108.5b), North Dakota $7.3b ($10b).
Food-stamp (SNAP, Supplemental Nutrition Assistance Program) benefits rose to 47.8 million Americans and a record $82.5 billion (2013) - 26 million Americans and about $30 billion, in 2007.
IntercontinentalExchange (ICE) gets EU approval (6/24) for its $8.2 billion bid for NYSE Euronext.
Month of May 2013
Dow month: 1.86%, ytd: 15.35%, 6 mo: 16.04%
S&P 500: 1,631
S&P 500 month: 2.07%, ytd: 14.46%, 6 mo: 15.18%
NASDAQ month: 3.81%, ytd: 10.25%, 6 mo: 14.82%
U.S. unemployment unchanged at 7.6%, adding 176,000 jobs.
FOMC neutral stance (May 1) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%.
ECB lowers interest rate (5/2) by 25bps to 0.50%.
Liberty Reserve (5/28) charged in a $6 billion money-laundering operation.
Month of April 2013
Dow month: 1.79%, ytd: 13.25%, 6 mo: 13.32%
S&P 500: 1,598
S&P 500 month: 1.85%, ytd: 12.05%, 6 mo: 13.66%
NASDAQ month: 1.87%, ytd: 10.25%, 6 mo: 11.82%
U.S. unemployment unchanged at 7.6%, adding 199,000 jobs.
Japan restarts (4/4) monetary easing program "QE", $1.43tn in 24 months targeting 2% inflation. Bank of Japan Governor Haruhiko Kuroda plans to purchase 7.5 trillion yen ($78.6 billion) of bonds a month and double the monetary base - the central bank will increase its holdings of ETFs, REITs and government bonds with maturities up to 40 years. 10 year yields fell to all time low of 0.315% on 4/5 (0.446% in 6/03). Japanese yen falls to 100 (4/11) all-time high of Â¥75.31 (10/31/11).
Apple issues $17 billion (4/30) of floating-rate notes and fixed-rate securities with maturities from 3 to 30 years (exceeding Roche Holding's $16.5 bn corporate bond issue in 2009).
Earnings season for 1Q13 for the S&P 500 index was positive, 5%.
Month of March 2013
Dow month: 3.74%, ytd: 11.25%, 6 mo: 8.50%
S&P 500: 1,569
S&P 500 month: 3.56%, ytd: 10.01%, 6 mo: 8.88%
NASDAQ month: 3.42%, ytd: 8.23%, 6 mo: 4.88%
U.S. unemployment falls to 7.6%, adding 142,000 jobs.
FOMC neutral stance (Mar 20) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%.
Cyprus (3/25), an island of 1.1 million people, becomes the 5th EU nation to receive a bailout (from EU, ECB and IMF) a âï¿½¬10 billion rescue plan (âï¿½¬18 billion economy equal to 60% of GDP, compared with 40% for Ireland, 27% for Greece and 6.5% for Spain). 37% of all bank deposits in Cyprus are from nonresidents with total bank assets over âï¿½¬126 billion 7.5 times the size of the economy. The bailout will protect 361,000 depositors under âï¿½¬100,000. Of the âï¿½¬68 billion in bank deposits approximately 10,000 uninsured depositors (âï¿½¬38 billion) have more than âï¿½¬100,000 and will suffers losses (haircut) of up to 60% (37.5% of uninsured deposits will be converted into bank equity, 22.5% is a buffer and 10% of the remaining 40% is frozen). Laiki Bank the country's 2nd largest lender will be closed as a "bad bank", the depositors under âï¿½¬100,000 will be moved to the larger Bank of Cyprus. 9 billion euros funded by EU's ESM and 1 billion from the IMF.
Pope Francis (76, 3/13), the name taken by Cardinal Jorge Mario Bergoglio of Argentina, was elected as the first non-European pope in more than 1,200 years. The first non-European since the death of Syrian Gregory III in 741. Pope Benedict XVI (2/28) stepped down, the first Pope to step down since Pope Gregory XII's resignation in 1415.
Chinese People's Political Consultative Conference and the National People's Congress (3/5) replaces outgoing President Hu Jintao and Premier Wen Jiabao - Xi Jinping named head of state and Li Keqiang named premier.
Microsoft (3/6) fined $730 million by EU for failing to honor an EU agreement on non-monopoly practices regarding browsers.
SAC Capital (3/15) settles $614 million civil insider trading charges that it profited after trading shares of Wyeth and Elan in advance of the release of negative clinical drug trial results.
Citigroup (3/18) settles $730 million that it misled (misstatements and omissions in disclosures) investor's in the sale of Citigroup's debt and preferred stock between 2006 and 2008.
Month of February 2013
Dow month: 1.39%, ytd: 7.25%, 6 mo: 7.35%
S&P 500: 1,515
S&P 500 month: 1.13%, ytd: 6.23%, 6 mo: 7.68%
NASDAQ month: 0.57%, ytd: 4.65%, 6 mo: 3.03%
U.S. unemployment falls to 7.7%, adding 332,000 jobs.
RBS (2/6) will pay $612 million in fines to U.S. and U.K. regulators for LIBOR manipulation.
SEC (2/4) implements 1) "limit up-limit down" mechanism that prevents trades in individual exchange-listed stocks from occurring outside of a specified price band and 2) updates existing market-wide circuit breakers that when triggered, halt trading in all exchange-listed securities throughout the U.S. markets.
Standard & Poor credit-ratings agency charged (2/4) in civil fraud (violations of Financial Institutions Reform, Recovery and Enforcement Act of 1989, 16 states and the District of Columbia join) for "knowingly and with the intent to defraud, devised, participated in, and executed a scheme to defraud investors" between 9/2004-10/2007 S&P rated more than $2.8 trillion of residential mortgage-backed securities and about $1.2 trillion of collateralized-debt obligations, $5 billion sought in CDO mortgage-related securities fraud.
Month of January 2013
Dow month: 5.78%, ytd: 5.78%, 6 mo: 6.55%
S&P 500: 1,498
S&P 500 month: 5.04%, ytd: 5.04%, 6 mo: 8.63%
NASDAQ month: 4.06%, ytd: 4.06%, 6 mo: 6.87%
U.S. unemployment rises to 7.9%, adding 148,000 jobs.
FOMC neutral stance (Jan 30) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%.
Obama signs American Taxpayer Relief Act of 2012 (1/2, $4 trillion over 10 years) in tax relief, top tax rates back to 39.6% for households income above $450,000 and $400,000 for individuals, 40% on Estates valued at more than $5 million, Capital gains and dividends taxes to 20% on higher-income households, extends a 1 year extension of long-term unemployment benefits to 2 million Americans, makes permanent the alternative minimum tax "patch", reduces deductions for households earning more than $250,000, also includes a 9 month extension of the Farm bill, other tax credits would also be extended for 5 more years, postpones for 2 months a $109 billion "sequester" of sweeping spending cuts on military and domestic programs.
Basel Committee on Banking Supervision (1/6, representing 27 countries and nearly all the world's markets) gave banks 4 more years. Basel III bank capital and liquidity accord, LCR (liquidity coverage ratio) not be fully enforced until 2019 (not 2015) with greater flexibility to build up cash buffers.
Transocean agrees (1/3) to $1.4 billion settlement with Justice Dept. to resolve civil and criminal claims for its role in the BP Gulf of Mexico oil spill.
Bank of America settles $11.6 billion (1/7) with Fannie Mae, Countrywide Financial subsidiary loans 2000-08 - $3.55 billion cash payment, $6.75 billion repurchases of residential mortgage and $1.3 billion as a loan payment processor. The agreement covers $300 billion in outstanding principal and also agreed to sell servicing rights on $306 billion in home loans.
13 banks settle $9.3 billion (Bank of America $2.9 billion, JPMorgan Chase $2 billion, Wells Fargo $2 billion, Goldman Sachs, Morgan Stanley, HSBC, Citibank, MetLife, PNC Financial Services Group, Sovereign Bank, SunTrust Banks, US Bancorp and Aurora Bank) for wrongful foreclosure on homeowners - $5.7 billion in mortgage assistance (modifying loans and forgiveness of deficiency judgments) and $3.6 billion in cash direct payments to wronged borrowers. 4.2 million borrowers will receive an average payout of $867.
Earnings season for 4Q12 for the S&P 500 index was positive, 6%.
Month of December 2012
Dow month: 0.60%, 6 mo: 1.74%, ytd: 7.26%
S&P 500: 1,426
S&P 500 month: 0.72%, 6 mo: 4.71%, ytd: 13.41%
NASDAQ month: 0.32%, 6 mo: 2.88%, ytd: 15.91%
FOMC neutral stance (Dec 12) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%. Federal Reserve (QE4) will "continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The Committee also will purchase longer-term Treasury securities after its program to extend the average maturity of its holdings of Treasury securities is completed at the end of the year, initially at a pace of $45 billion per month". Fed extends (12/13) dollar liquidity swaps to foreign central banks through February 2014.
U.S. unemployment risess to 7.8%, adding 155,000 jobs.
European finance ministers (12/13) agree to give the ECB new supervisory powers over 200 Eurozone banks with either more than 30 billion euros ($39 billion) in assets or which have a large presence within a member economy.
Greek bondholders tendered (12/11) more than €31.8 billion receiving €11.2 billion (average price $0.338), Greece's 5 biggest banks participated in buyback. Greece to receive €43.7 billion in 3 installments through Q1 2013, to pay €34.3 billion installment by December 13. Greece's debt from 190% gdp in 2014, to 124% gdp in 2020, and "substantially lower than" 110% gdp by 2022. Reduced interest on existing loans to 50 basis points above financing costs (down 100 bps) once Greece achieves a primary budget surplus of 4.5% of GDP, an extension of Greece's bailout maturities by 15 years, and a debt-buyback operation (€11.2 billion) to private-sector Greek government bond-holders.
General Motors to purchase $5.5 billion of its stock (200 million shares, $27.50) repaying part of the $49.5 billion, Treasury will still hold about 19%, 300 million shares.
AIG (12/11) ends Treasury's equity ownership (6th offering since 2008, $182.3 billion bailout) for $7.6 billion ($22.7 billion profit), leaving Treasury only holding AIG warrants.
Standard Chartered (12/10) settles $327 million with U.S. authorities (transactions 2001-07) with Iran, Burma, Libya and Sudan.
UBS settles (12/19) $1.5 billion (incl. record CFTC $700 million) fine, rigging LIBOR and U.S. criminal charges against 2 former traders.
HSBC record $1.92 billion settlement (12/11, $1.256 billion to Justice Dept. and $665 million to U.S. regulators) violating the Bank Secrecy Act and the Trading With the Enemy Act, drug lords in Mexico and firms linked to Iran, Cuba, Sudan, Libya and Myanmar.
Month of November 2012
Dow month: -0.53%, 6 mo: 5.11%, ytd: 6.62%
S&P 500: 1,416
S&P 500 month: 0.71%, 6 mo: 8.09%, ytd: 12.60%
NASDAQ month: 1.11%, 6 mo: 6.47%, ytd: 15.54%
U.S. unemployment falls to 7.7%, adding 161,000 jobs.
30 year fixed mortgages fall to all time low 3.31% (11/21).
SAC Capital (division employee) Mathew Martoma indicted in $276 million insider trading of Elan & Wyeth purchased by Pfizer (2009).
Discover, American Express and Capital One (11/19) credit card issuers settle $435 million in refunds to 6 million customers on deceptive credit card practices by the CFPB. Bank of America excessive $410 million settlement for debit card fees between January 2001 and May 2011.
UBS, Kweku Adoboli (11/20) sentenced to 7 years for $2.3 billion fraud by abuse of position and false accounting.
BP's $4 billion Government settlement (incl. largest criminal penalty $1.256 billion) and $525 million to the SEC and pleads guilty to 11 manslaughter felony counts related to 11 deaths. Pfizer paid $1.195 billion of $2.3 billion settlement in September 2009 over the fraudulent marketing of anti-inflammatory arthritis drug Bextra.
Month of October 2012
Dow month: -2.54%, 6 mo: -0.89%, ytd: 7.19%
S&P 500: 1,406
S&P 500 month: -2.43%, 6 mo: 0.57%, ytd: 11.80%
NASDAQ month: -4.46%, 6 mo: -2.27%, ytd: 14.27%
U.S. unemployment rises to 7.9%, adding 137,000 jobs.
FOMC neutral stance (Oct 24) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%.
ESM launched Oct. 8, €500 billion, contributions: Germany 27.15% France 20.39% Italy 17.91% Spain 11.9%.
AIG settles (10/22) $300 million, in 2012: MetLife settles (4/23) $500 million in multi-state Life insurance claims (inforce 1992-2010) - Nationwide (10/11), Forethought Group (10/8), John Hancock (4/22) and Prudential Insurance (1/13). Life Insurers agree to check SSA's Death Master File to hand unclaimed money over to beneficiaries or the State's controller's unclaimed property division.
10/29 Hurricane Sandy a historic Atlantic storm slams the Eastern seaboard landing in New Jersey. 122 people in 8 states die, over 8 million without power, around 40,000 people displaced from their homes, closing the NYSE for 2 consecutive days (first time since 1888), costing over $60 billion (total cost may be second to Hurricane Katrina).
Earnings season for 3Q12 for the S&P 500 index was flat, 0%.
Month of September 2012
Dow month: 2.64%, 6 mo: 1.70%, ytd: 9.98%
S&P 500: 1,441
S&P 500 month: 2.42%, 6 mo: 2.34%, ytd: 14.58%
NASDAQ month: 1.60%, 6 mo: 0.78%, ytd: 19.61%
U.S. unemployment falls to 7.8%, adding 132,000 jobs.
FOMC neutral stance (Sep 13) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%. Federal Reserve (QE3) will "increase policy accommodation by purchasing additional agency mortgage-backed securities at a pace of $40 billion per month [and] continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. These actions, which together will increase the Committee's holdings of longer-term securities by about $85 billion each month through the end of the year".
European Central Bank (9/6) creates an unlimited emergency sovereign bond buying program OMTs (Outright Monetary Transactions) in secondary markets - strict conditions are attached to the aid. ECB under Securities Market Program (SMP, terminated) has €209 billion of government bonds on its books.
U.S. Treasury (9/10) sells $20.7 billion of AIG shares reducing government's stake to 15.9%.
Whistleblower IRS payout (9/11) $104 million to convicted UBS employee Bradley Birkenfeld (conspiracy, June 19, 2008 40 months). $96 million (October 26, 2010) Justice Department award to Cheryl Eckard, GlaxoSmithKline employee helped $750 million settlement for manufacturing deficiencies.
Bank of America settles $2.43 billion lawsuit with investors who suffered losses during its acquisition of Merrill Lynch.
Month of August 2012
Dow month: 0.63%, 6 mo: 1.07%, ytd: 7.15%
S&P 500: 1,407
S&P 500 month: 2.03%, 6 mo: 3.03%, ytd: 11.88%
NASDAQ month: 4.32%, 6 mo: 3.37%, ytd: 17.73%
U.S. unemployment falls to 8.1%, adding 96,000 jobs.
FOMC neutral stance (Aug 1) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%.
Drought effects 1,496 counties in 32 states, 62% of the lower 48 states have moderate to extreme drought. Qualified farm operators are eligible for low-interest emergency loans which may cost $12 billion. 85% of farmers have crop insurance, in 1988 25% were covered in the last worst drought. $68.7 billion paid out from 1989 to 2009. In 2011 (with a drought in Texas) a record $10.8 billion paid ($4.5 billion premiums collected). Corn trades (8/10) high of $843.8 bushel.
Knight Trading Group (8/1, largest market maker ~17% of NYSE and NASDAQ) in 45 minute opening lost $440 million (Goldman unwound trades) implementing a new high-frequency algorithmic trading software which executed 4 million (550 million shares, $7 billion) extra trades competing against the newly launched NYSE's RLP (Retail Liquidity Program) computer driven trading system.
Standard Chartered (8/14) settles $340 million civil suit with N.Y. Dept. of Financial Services for $250 billion money laundering scheme with Iran, Myanmar, Libya and Sudan (60,000 transactions between 2001-2010). ING (6/12/2012) pays $619 million for violating the International Emergency Economic Powers Act (IEEPA) and the Trading with the Enemy Act (TWEA) economic sanctions to blacklisted countries - $2 billion moved through U.S. financial system (1990s-2007) for Cuban, Iranian and other clients. J.P. Morgan Chase (8/26/2011) payed $88.3 million - Iran, Cuba, Sudan and other clients. Barclays (8/17/2010) payed $298 million - Iran, Cuba, Libya, Myanmar, Sudan and other clients. ABN AMRO (5/11/2010, acquired by Royal Bank of Scotland 10/9/2007) payed $500 million for moving $3.2 billion 6/1995-12/2005 - Cuba, Iran, Libya, Sudan and other clients. Credit Suisse (12/16/2009) payed $536 million - Iran, Cuba, Libya and other clients. Lloyds TSB Bank (1/9/2009) payed $350 million - Iran, Sudan and other clients.
Apple (8/24) awarded $1.051 billion against Samsung for infringments on 6 of 7 patents for mobile.
Lance Armstrong (8/23) stripped of all wins back to 8/1/1998 by U.S. Anti-Doping Agency for anti-doping rule violations.
London 2012 Olympics with U.S. medal count of 104 (46 Gold), 85 nations win medals. Michael Phelps becomes most decorated Olympian with 22 (18 Golds, 2 Silvers and 2 Bronzes) winning 4 Golds and 2 Silvers in London. Usain Bolt wins 3 Golds (matching Beijing), Missy Franklin (4 Golds and 1 Silver), Allison Schmitt (3 Golds, 1 Silver and 1 Bronze) and Ryan Lochte (2 Golds, 2 Silvers and 1 Bronze).
Month of July 2012
Dow month: 1.00%, 6 mo: 2.98%, ytd: 6.48%
S&P 500: 1,379
S&P 500 month: 1.25%, 6 mo: 5.07%, ytd: 9.65%
NASDAQ month: 0.17%, 6 mo: 4.48%, ytd: 12.85%
U.S. unemployment rises to 8.3%, adding 141,000 jobs.
10 yr U.S. Treasuries trade 1.379% (7/25, April 1946 1.54%) and
30 yr U.S. Treasuries trade 2.4454% (7/25, April 1946 2.50%) historic lows. U.S. long bond yields: fell 1873 (Jan ~5.58%) to 1900 (Dec ~3.10%), rose 1900 to 1920 (Dec ~5.09%), fell 1920 to April 1946 fixed at 2.5% (10yr, Jan 1941 ~1.95%), rose 4/46 to Oct 26, 1981 at 15.21% (10yr, Sep 30, 1981 15.84%), fell 10/81 to Jun 16, 2003 at 4.14%, rose 6/03 to Jun 13, 2007 at 5.41%, 2.505%, Dec 18 2008.
European Central Bank (7/5) cut its lending rate to a record low 0.75% and its overnight deposit rate to 0%. Bank of England (7/5) to purchase £50 billion ($78 billion) of assets (adding to £325 billion of quantitative easing). PBOC (7/5) lowers its 1 year lending rates to 6.00% and deposit rates to 3.00%.
Spain (7/20) receives €30 billion emergency bank bailout through the state-run FROB (Fund for Orderly Bank Restructuring) total of €100 billion approved by EU - funds from EFSF and transferred to ESM (authorized to make infusions directly into banks). Subordinated liability exercises (SLEs or haircuts) may be forced on bank debt holders. Spain to stand behind the debts of its 17 regional governments which are struggling to refinance.
Italy's index falls to 12,295.76 (7/25) 0.3% below its 3/9/09 low of 12,332.00. Spain's 10-year Bond yields 7.751% (7.25).
9 SIFI (systemically important financial institution, 7/2) submit FDIC living wills: Bank of America, Citigroup, Goldman Sachs, J.P. Morgan Chase and Morgan Stanley, also, Barclays, Credit Suisse, Deutsche Bank and UBS - 225 banks to submit by 12/31/13.
Dodd-Frank Act, CFTC and SEC (July 10, 2012) define Interest-rate, Credit, Commodity and other derivatives to be swaps ($650 trillion global market). Exempt: Retail transactions, Life insurance, Property and casualty insurance, Interest-rate caps (on consumer mortgages and home heating oil agreements). Embedding options: Non-deliverable Foreign-exchange forwards and Currency swaps are included. Forwards exempt (if tied to non-financial commodities), Energy contracts (volumetric optionality, undetermined), Foreign-exchange swaps and other Forwards - exempt from clearing and trading requirements. Registration: Swap dealers and Major Swap participants (JPMorgan, Goldman Sachs, Bank of America, Citigroup and Morgan Stanley control 96%). Reporting: Agricultural swaps, Commodity options, Interest-rate and Credit swaps. Limits on speculation in futures and options for 28 commodities (and their derivatives): e.g. Oil, Natural gas, Wheat, etc., position limits possible. CFTC estimates 125 companies included. Clearinghouse (end-user exception): Commercial, Manufacturing companies, Banks (less than $10 billion assets), separate exemption for 10 Farm-credit associations, Credit unions and Rural electric cooperatives (that may exceed $10 billion) - CFTC estimates 30,000 entities exempt.
GlaxoSmithKline settles (7/2) U.S. criminal and civil fraud charges, a $3 billion fine for fraudulently marketing its drugs.
Visa, MasterCard and their issuers (7/13) agreed to a $7.25 billion in the largest antitrust settlement with 7 million merchants over credit and debit card fees.
Higgs boson confirmed (7/4) at Large Hadron Collider (LHC) completing the Standard Model of particle physics predicted in 1960.
Earnings season for 1Q12 for the S&P 500 index was positive 8%.
Month of June 2012
Dow month: 3.93%, 6 mo: 5.42%, ytd: 5.42%
S&P 500: 1,362
S&P 500 month: 3.97%, 6 mo: 8.30%, ytd: 8.30%
NASDAQ month: 3.82%, 6 mo: 12.66%, ytd: 12.66%
FOMC neutral stance (Jun 20) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%. Fed extends QE2 (Operation Twist) through 2012. FOMC to sell $267 billion Treasury securities of less than 6 years and purchase 32% (6-8 yrs), 32% (8-10 yrs), 4% (10-20 yrs), 29% (20-30 yrs) and 3% TIPS (6-30 yrs).
Federal Reserve to hold almost no Treasuries maturing through January 2016 by the end of 2012.
U.S. unemployment remains to 8.2%, adding 45,000 jobs.
CRB trades 502.7 (6/4) down 26.2% from the all-time high of 688.3 (Mar 7, 2011).
People's Bank of China (PBOC, 6/7/12) lowers its 1 year lending rates to 6.31% and deposit rates to 3.25% fighting a global slowdown - from a high of 6.56% and 3.50%, since 7/6/2011. PBOC (11/30/11) lowered its RRR (required reserve ratio, effective 12/5/11) to 21% from a record high 21.5% (RRR had risen 12 times since 12/25/08) as inflation declines.
U.S. Supreme Court (6/28) upholds much of Obamacare by establishing the individual mandate penalty to require Americans to buy healthcare insurance in 2014 as a tax. But strikes down the Federal government's powers to force the individual mandate and States to expand Medicaid in their State through the Commerce clause, as well as, noting that the legislative process is a democratic process.
European Union creates TCRP (Troubled Country Relief Program), 6/28-9 and agreed to spend €120 billion (Pact for Growth) to stimulate growth and create jobs. EFSF (European Financial Stability Facility) loans assumed by future ESM's (European Stability Mechanism) emergency loans to Spanish banks (waive their preferred creditor status) funding banks and bypassing their sovereign.
Spain (6/11) €100 billion bank bailout through the state-run FROB (Fund for Orderly Bank Restructuring). Greece (5/1/10, €110 billion and 2/21/12, €130 billion ), Ireland (11/29/10, €67.5 billion), Portugal (5/16/11, €78 billion). Cyprus becomes the fifth country to request a €13 billion bailout. ELA (Emergency Liquidity Assistance, started in 2008 by ECB) loans over €150 billion providing emergency liquidity to banks with unacceptable collateral - the loans require approval by the ECB's 23-member Governing Council, carries a penalty interest rate and the terms are not made public.
Peripheral European stock exchanges suffer major losses: Greece's index falls to 471.35 (6/5) down 67.7% from its 3/9/09 low of 1,457.83. Portugal's index falls to 4,371.74 (6/14) down 23.2% from its 3/9/09 low of 5,696.46. Spain's index falls to 5,987.80 (6/4) down 11.6% from its 3/9/09 low of 6,771.70. Italy's index falls to 12,568.05 (6/1) 1.9% above its 3/9/09 low of 12,332.00.
Obama signs (6/29) Surface Transportation Extension Act of 2012, $127 billion through 2014. Transportation spending to save 1.8 million infrastructure jobs and create 1 million jobs with federal loan guarantees. Postpones federal student loan interest rates doubling from 3.4% to 6.8% (on July 1) for 1 year at a cost of $6 billion for 7.4 million students. Extends funding for the National Flood Insurance Program through September 30, 2017 (expiring July 31) to protect 5.6 million households and businesses.
IRS (6/26) collects over $5 billion in back taxes, interest and penalties from 33,000 taxpayers hiding in offshore accounts under two amnesty programs.
Stockton, California became the largest city to file for Chapter 9 bankruptcy (6/28), $417 million liability. Jefferson County, Alabama (11/9/11) was biggest municipal bankruptcy $4.23 billion. Since 1980, 268 municipal bankruptcies (mostly utilities) with 49 cities, villages and counties 37 dismissed of the remaining 12 none imposed losses on bondholders - $3.7 trillion municipal bond market.
European Court of Justice (6/27) upheld 2008 fine on Microsoft for abusing its market dominance - reduced to €860 million ($1.07 billion) from €899 million (2/27/08). Microsoft fined €497.2 million (3/24/04) for anticompetitive practices, and €280.5 million (7/12/06) for additional breaches of competition rules, total of €1.7 billion. Intel appealing €1.1 billion (5/13/09) EU fine for abusing its dominance in the computer chip market against AMD.
Barclays settles (6/27) £290 million ($452.3 million) fraud to U.S. and U.K. for manipulating Libor (benchmark rate for $360 trillion) hiding their true cost of borrowing.
Bear Stearn's former 7 executives including James Cayne and Alan Schwartz settle (6/7) a State of Michigan Retirement Systems led shareholder lawsuit (12/14/06 to 3/14/08) for $275 million for misleading investors about BS's business and financial well-being.
R. Allen Stanford (6/14) sentenced to 110 years for conspiracy, wire and mail fraud, obstruction and money laundering in $7 billion Ponzi scheme. $330 million of Stanford funds in 29 foreign bank accounts, almost $3.5 billion in claims.
Month of May 2012
Dow month: -6.21%, ytd: 1.44%, 6 mo: 2.88%
S&P 500: 1,310
S&P 500 month: -6.29%, ytd: 4.17%, 6 mo: 5.05%
NASDAQ month: -7.19%, ytd: 8.52%, 6 mo: 7.90%
U.S. unemployment rises to 8.2%, adding 87,000 jobs.
Spain's government (5/25) injects an additional €19 billion (plus €4.465 billion, $29.4 billion) into nationalized Spanish lender Bankia, created out of the merger of 7 regional savings banks in 2010 with over €184 billion of illiquid real estate debt. EFSF (5/28) disbursed €18 billion to Greece's 4 largest banks through the Hellenic Financial Stability Facility.
Facebook trades 5/18, it sold 15.4% of the company for $16.08 billion the IPO priced at $38 (421 million shares, valuation of $104.2 billion). Mark Zuckerberg maintains 57.5% of the voting power - Facebook one of ~262 U.S. dual-class stocks. Record 566 million shares trade on first day surpassing General Motors at 458 million.
Month of April 2012
Dow month: 0.02%, ytd: 8.16%, 6 mo: 10.53%
S&P 500: 1,398
S&P 500 month: -0.71%, ytd: 11.16%, 6 mo: 11.57%
NASDAQ month: -1.49%, ytd: 16.92%, 6 mo: 13.49%
U.S. unemployment falls to 8.1%, adding 68,000 jobs.
FOMC neutral stance (Apr 25) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%.
IMF (4/20) increases lending by $430 billion - the fund now has just over $800 billion.
JOBS (Jumpstart Our Business Startups) Act (4/5) - 500 private company shareholders rule to 2,000 before having to publicly disclose certain financial information. Enables crowd-funding, $1 million ceiling annually. General solicitation, permitted only for accredited investors in Reg D offerings. Private emerging growth companies (EGCs, up to $1 billion in annual revenue) going public exempt from many disclosures, reporting and governance rules may operate for up to 5 years without an independent audit.
Earnings season for 1Q12 for the S&P 500 index was positive 8%.
Month of March 2012
Dow month: 2.01%, ytd: 8.14%, 6 mo: 21.07%
S&P 500: 1,408
S&P 500 month: 3.10%, ytd: 11.96%, 6 mo: 24.49%
NASDAQ month: 4.22%, ytd: 18.69%, 6 mo: 28.03%
U.S. unemployment falls to 8.2%, adding 143,000 jobs.
FOMC neutral stance (Mar 13) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%.
Greece's bond swap has triggered a credit event (International Swaps and Derivatives Association, 3/9). Greece activated its collective action clauses (CAC) to force creditors to accept private sector involvement (PSI) on loses of €199 billion of €205.5 billion in bonds regulated by Greek law. Credit default swaps insuring Greek debt will payout about $0.785 to 4,369 outstanding contracts $2.89 ($3.18 net) billion of Greek debt. EU releases €35.5 billion ($47 billion) of aid for Greece and backed the country's debt swap with private creditors. Greek 10-year Bond yields 44.212% (3/9) falling to 18.45% (3/12).
ECB (3/2) offers €529.5 billion ($712.2 billion) for 1,092 days (LTRO2) to 800 of 2,267 eligible financial institutions. ECB's balance sheet rises to a record €3.02 trillion euros ($3.96 trillion).
EU (3/30) establishes €500 billion European Stability Mechanism (ESM) and the European Financial Stability Facility (EFSF) €200bn of Irish and Portuguese funding and €102bn for Greece, lending total of €800bn.
Dodd-Frank "bank stress test" (3/13) 15 of 19 U.S. banks pass - Citigroup, Ally Financial, SunTrust and MetLife failed marginally.
SWIFT (Society for Worldwide Interbank Financial Telecommunication) halts international financial transactions for 30 Iranian banks including Iran's central bank, complying with EU sanctions (3/17). Swift transmits 17 million financial messages a day, facilitating trillions of dollars in cross-border payments, Swift had never expelled an institution (1972).
U.S. real estate markets bottom, hardest hit: Las Vegas -61.7% (8/06-3/2012), Phoenix -55.9% (6/06-9/2011), Miami -51.2% (12/06-4/2011), Detroit -49.3% (12/05-4/2011), Tampa -48.0% (7/06-2/2012), San Francisco -46.1% (5/06-3/2009)...least hit...Denver -14.3% (8/06-2/2009) and Dallas -11.2% (6/07-2/2009).
U.S. Treasury sells (3/8) $6 billion of AIG stock reducing U.S. ownership to 70% from 77%.
BP (3/2) offers $7.8 billion settlement for 120,000 claims - already $8 billion paid to individuals and $14 billion paid for cleanup.
Month of February 2012
Dow month: 2.53%, ytd: 6.01%, 6 mo: 11.52%
S&P 500: 1,366
S&P 500 month: 4.06%, ytd: 8.59%, 6 mo: 12.03%
NASDAQ month: 5.44%, ytd: 13.89%, 6 mo: 15.04%
U.S. unemployment remains 8.3%, adding 259,000 jobs.
Greece (2/21) secures €130 billion second bailout through 2014. $172 billion to finance bond exchanges, €30 billion "sweeteners" for private sector swaps, €23 billion to recapitalize Greek bank's stability and €35 billion to buy back bonds. Greece must pay €14.5 billion of maturing debt on March 20. Greece cuts debts to 120.5% of GDP by 2020, private bond holders take a 53.5% nominal writedown (74% loss, €100 billion largest sovereign restructuring - bonds exchanged to 2% coupon through 2014, 3% 2015-20 and 4.3% thereafter). Greek parliament to implement budget measures a 22% cut in the benchmark minimum wage, 150,000 more government layoffs by 2015, plus additional: tax reform, workplace liberalizations, rules against bribery and readying privatization sales. EFSF (possibly also ESM) and IMF funded.
Welfare Integrity and Data Improvement Act - $89 billion, extends the payroll tax holiday (4.2% instead of 6.2% on first $110,100 in wages) for 160 million workers and long-term unemployment compensation benefits through 2012. Averts a 27% cut in payments to Medicare physician ($50 billion, paid for) through 2012.
China has its banks roll-over $1.7 trillion (Rmb10.7tn) of loans to local governments half of those loans due over the next 3 years.
$25 billion U.S. settlement (2/10) - Bank of America $11.8 billion, Wells Fargo $5.35 billion, JP Morgan $5.29 billion, Citigroup $2.2 billion and Ally $310 million: $1.5 billion for payments to 750,000 borrowers foreclosured between 2008-11, a $2,000 cash payment. $17 billion for mortgage debt forgiveness, forbearance, short sales and other assistance to homeowners (servicers will also provide $3 billion in refinancing to lower homeowners interest rates) over the next 3 years. The balance of settlement will be applied toward mortgage modifications and other benefits for borrowers.
Month of January 2012
Dow month: 3.40%, ytd: 3.40%, 6 mo: 4.03%
S&P 500: 1,312
S&P 500 month: 4.36%, ytd: 4.36%, 6 mo: 4.36%
NASDAQ month: 8.01%, ytd: 8.01%, 6 mo: 2.10%
FOMC neutral stance (Jan 25) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%. FOMC "likely to warrant exceptionally low levels for the federal funds rate at least through late 2014."
U.S. unemployment falls to 8.3%, adding 275,000 jobs.
Earnings season for 4Q11 for the S&P 500 index was positive 9%.
Dow month: 1.42%, 6 mo: -1.80%, ytd: 5.53%
S&P 500: 1,258
S&P 500 month: 0.85%, 6 mo: -4.73%, ytd: 0.0%
NASDAQ month: -0.57%, 6 mo: -6.05%, ytd: -1.80%
U.S. unemployment falls to 8.5%, adding 223,000 jobs.
FOMC neutral stance (Dec 13) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%.
30-year fixed mortgages fall to all time low 3.91% (12/21).
Obama signs (12/23) Temporary Payroll Tax Cut Continuation Act of 2011 ($33 billion) a 2 month stopgap: 160 million Americans continue their payroll tax cuts and 2 million Americans without jobs for 6 months continue their unemployment benefits. Doctors do no get a 27% cut in their Medicare payments - paid by increases on guarantee fees on new home loans backed by Fannie Mae, Freddie Mac and Ginnie Mae.
European Central Bank (12/21) lends €489 billion ($638 billion, Long Term Refinancing Operation) to 523 banks under a (restarted) 3 year lending facility. ECB's balance sheet rose to a record €2.73 trillion ($3.55 trillion) 12/28.
ECB lowers interest rate (12/8) to 1% from 1.25%. Euro-area governments must rollover €1.1 trillion of long and short-term debt in 2012 while European banks have about $665 billion of debt coming due in the first 6 months of 2012.
Month of November 2011
Dow month: 0.76%, 6 mo: -4.16%, ytd: 4.05%
S&P 500: 1,247
S&P 500 month: -0.48%, 6 mo: -7.29%, ytd: -0.85%
NASDAQ month: -2.38%, 6 mo: -7.58%, ytd: -1.24%
U.S. unemployment falls to 8.7%, adding 157,000 jobs.
FOMC neutral stance (Nov 2) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%.
Federal Reserve (11/30) extends U.S. dollar swap lines to Feb. 1, 2013 with the European Central Bank and the central banks of Canada, Switzerland, Japan and the U.K.
ECB lowers rate (Nov 3) to 1.25% from 1.50% as Mario Draghi succeeds Jean-Claude Trichet on Nov. 1.
Jefferson County, Alabama (11/9) files largest U.S. municipal bankruptcy with more than $3 billion of sewer-system debt - Orange County, CA filed $2 billion in obligations in 1994.
Month of October 2011
Dow month: 9.55%, 6 mo: -6.67%, ytd: 3.26%
S&P 500: 1,253
S&P 500 month: 10.79%, 6 mo: -8.07%, ytd: -0.37%
NASDAQ month: 11.14%, 6 mo: -6.58%, ytd: 1.17%
U.S. unemployment falls to 8.9%, adding 112,000 jobs.
EU (10/27) agrees to sovereign debt crisis fixes: private holders of Greek debt accept a 50% writedown, European Financial Stability Facility (EFSF) leveraged to €1 trillion, 70 EU banks required to increase core capital levels to 9% and recapitalize (by June 2012) raising €106 billion in new reserves. German 10-year Bund yields 1.636% (9/23) record low, in a flight to quality, while Greek 2-year Bond yields rise to 83.48% (10/26) and Greek 10-year Bond yields 26.70% (9/15).
30yr Treasuries trade 2.6922% (10/4). 1 month Treasuries trade at a negative yield : 10/4-7, 11-12 and U.S. 3 month Treasuries negative: 10/3-7.
Obama administration expands rules on HARP (Home Affordable Refinance Program) fewer than 895,000 borrowers helped, number could double over next 2 years. Student loan forgiveness - 1.6 million student borrowers will be eligible to lower their payments 2012.
MF Global Holdings files bankruptcy (10/31) with debts of $39.7 billion and assets of $41 billion, 8 largest U.S. bankruptcy - $1.6 billion of customer money missing.
Raj Rajaratnam, founder of Galleon hedge fund (managed $7 billion), sentenced to 11 years (10/13, fined $63.8 million) for securities fraud and conspiracy through expert networks with ties to Goldman Sachs and Silicon Valley technology companies - additionally, a $93 million SEC civil settlement, 11/8. Highest profile insider trading case since Ivan Boesky (November 14, 1986, pleaded guilty to illegal stock manipulation, paying $100 million) and Michael Milken (April 24, 1990, pleaded guilty to securities and tax violations - paying $200 million in fines, $400 million to investors. Also Drexel Burnham Lambert agreed to pay $650 million (Feb 13 1990, fines and restitution half went to investor's and client's civil claims - DBL files for bankruptcy April 28 2003), also guilty Dennis Levine and Martin Siegel).
Earnings season for 3Q11 for the S&P 500 index was positive 17%.
Month of September 2011
Dow month: -6.04%, 6 mo: -11.42%, ytd: -5.74%
S&P 500: 1,131
S&P 500 month: -7.22%, 6 mo: -14.71%, ytd: -10.07%
NASDAQ month: -6.36%, 6 mo: -13.16%, ytd: -8.97%
FOMC neutral stance (Sep 21) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%. FOMC to "purchase, by the end of June 2012, $400 billion of Treasury securities with remaining maturities of 6 years to 30 years and to sell an equal amount of Treasury securities with remaining maturities of 3 years or less" and "reinvest principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. In addition, the Committee will maintain its existing policy of rolling over maturing Treasury securities at auction".
U.S. unemployment unchanged 9.1%, adding 210,000 jobs.
2yr Treasuries trade 0.1431% (9/20) and 10yr trade 1.6714 (9/23). 1 month Treasuries trade at a negative yield : 9/8-30 and U.S. 3 month Treasuries negative: 9/12, 14-19, 22-26.
FHFA (Federal Housing Finance Agency, conservator for Fannie Mae and Freddie Mac) files lawsuits against 17 financial institutions alleging over $196 billion of violations in the sale of residential private-label mortgage-backed securities: JPMorgan Chase $33 billion, Royal Bank of Scotland $30.4 billion, Countrywide $26.6 billion, Merrill Lynch (First Franklin Financial) $24.9 billion, Deutsche Bank $14.2 billion, Credit Suisse $14.1 billion, Goldman Sachs $11.1 billion, Morgan Stanley $10.6 billion, HSBC $6.2 billion, Bank of America $6 billion, Ally Financial (GMAC) $6 billion, Barclays $4.9 billion, Citigroup $3.5 billion, Nomura $2 billion, Societe Generale $1.3 billion, First Horizon National $0.88 billion and General Electric $0.55 billion.
Gold trades at an all-time high of $1,923.70 (Sep 6).
Swiss Central bank (Sep 6) intervenes imposing a Euro-Swiss franc "minimum rate of 1.20" (first intervention since 1978, against the Deutsche mark). Record EUR/CHF 1.0075 (Aug. 9), intervention from 1.1019 to 1.2189 (Sep 6, 10.6% depreciation), EUR/CHF 1.6825 on October 11, 2007.
UBS, Kweku Adoboli (9/16) charged with $2.3 billion fraud by abuse of position and false accounting.
Month of August 2011
Dow month: -4.36%, 6 mo: -5.01%, ytd: 0.32%
S&P 500: 1,219
S&P 500 month: -5.65%, 6 mo: -8.14%, ytd: -3.07%
NASDAQ month: -6.42%, 6 mo: -7.30%, ytd: -2.78%
FOMC neutral stance (Aug 9) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%. The Fed believes challenges facing the U.S. economy "are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013."
U.S. unemployment unchanged 9.1%, adding 104,000 jobs.
S&P downgrades U.S. Treasuries from AAA to AA+ also Fannie Mae, Freddie Mac, the Federal Home Loan Banks, U.S.'s 4 Clearinghouses, 744 U.S. Federal, State and Agency bonds and about 11,500 Municipal bonds. Global markets loses nearly $9 trillion from $55t (7/26) to $46t (8/10). Vix trade 48 (8/8) up from 17.15 (7/21). 460 stocks triggered the SEC short sale rule (8/4, 10% or more) when DOW falls 512. U.S. 1 month Treasuries trade at a negative yield : 8/4-8, 10-31 and U.S. 3 month Treasuries negative: 8/4-8, 19-30.
Obama signs Budget Control Act of 2011 (8/2): $917 billion deficit reduction and budget caps on spending through 2021 (excluding certain "program integrity" initiatives), requires Congress to vote on a balanced budget amendment, increases the national debt limit initially by $400 billion and future increases of $2.1-2.4 trillion. Creates a Congressional Joint Select Committee on Deficit Reduction to propose deficit reduction - $1.5 trillion in spending cuts by Nov. 23 if the committee fails establishes automatic cuts up to $1.2 trillion. Congress failings cause: U.S. 1 month Treasuries trade at a negative yield : 6/27-30, 7/6-7,13-20 and U.S. 3 month Treasuries negative: 7/5,7,13-14.
European Central Bank starts 6 month bond purchase of unlimited size (Greece, Portugal and Ireland) and Securities Markets Program (lending unlimited amounts for 1 week, 1, 3 and 6 months) through 2011. Italian 10 year bonds trade 6.40% (8/5) and Spanish 6.45% (8/2). ECB agrees to purchase Italian and Spanish Government bonds, August 5. France, Spain, Italy and Belgium impose short-selling bans, August 12.
Hurricane Irene makes U.S. landfall (Aug 27) at Cape Lookout, N.C. and works its way up the Eastern seaboard toward Maine taking 45 lives and causing over $8 billion of damage - over 7 million US homes and businesses lost power across 13 states.
Month of July 2011
Dow month: -2.40%, 6 mo: 2.12%, ytd: 4.88%
S&P 500: 1,292
S&P 500 month: -2.12%, 6 mo: 0.47%, ytd: 2.73%
NASDAQ month: -0.61%, 6 mo: 2.07%, ytd: 3.89%
U.S. unemployment falls to 9.1%, adding 127,000 jobs.
European Central Bank (ECB, 7/7) raises rates 25bps to 1.5%.
Greece (7/21) receives a €110 billion ($157 billion) restructured EU/ECB/IMF aid package. Private sector bondholders (Europe's biggest banks and insurance companies) will swap and/or rollover (€54 of €135 billion) current Greek debt getting 4 options: 3 forms of debt exchange and 1 rollover plan - with different durations (up to 30yrs) and coupons (up to 6.8%). Private investors will take a 21% loss of their current bond holdings. Greek 2 yr note traded 40.46% (7/20) and 10 yr Greek bond traded 18.38% (7/19). The notionally voluntary scheme triggers a temporary Greek sovereign selective default rating. Greece, Ireland's and Portugal's interest rate is reduced to about 3.5% and their repayment schedules lengthened from 7.5 years to 15-30 years. The €440bn EFSF (European Financial Stability Facility) bail-out fund can now help countries not currently getting bail-outs, including precautionary lines of credit, the ability to recapitalize any struggling bank in the Eurozone, and buy bonds on secondary markets in "exceptional" circumstances (subject to the approval of the European Central Bank). ISDA (International Swaps & Derivatives Association) cites plan "should not trigger credit-default swaps" on the nation because it's "expressly voluntary". A credit event can be caused by a reduction in principal or interest, postponement or deferral of payments or a change in the ranking or currency of obligations.
Earnings season for 2Q11 for the S&P 500 index was positive 12%.
Month of June 2011
Dow month: -1.02%, 6 mo: 7.46%, ytd: 7.46%
S&P 500: 1,320
S&P 500 month: -1.86%, 6 mo: 4.96%, ytd: 4.96%
NASDAQ month: -2.19%, 6 mo: 4.53%, ytd: 4.53%
FOMC neutral stance (Jun 22) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%. The Fed "will maintain its existing policy of reinvesting principal payments from its securities holdings" - System Open Market Account at about $2.654 trillion, about $300 billion of purchases over the next 12 months.
U.S. unemployment rises to 9.1%, adding 20,000 jobs.
U.S. Department of Energy (6/23) and International Energy Agency (28 member nations) each will release 30 million barrels of oil from Strategic Petroleum Reserves over next 30 days. Emergency stockpiles were released after Hurricane Katrina (2005) and the 1991 Persian Gulf War, since 1974. Saudis may increase production by 1 million barrels/day after OPEC failed to increase production on June 8, oil traded $114.83 (May 2).
Greek Parliament approves budget to receive €12 billion ($17 billion) rescue tranche. Austerity program imposes a personal income tax of 1-5%, taxes on incomes starting at €8,000 (from €12,000) and a €300 tax on the self-employed with the lowest rate 10%, exempted people under 30 years old, pensioners over 65 and the disabled. Greek 2 yr note traded 30.32% (6/16) and 10 yr Greek bond traded 18.35% (6/17). EU banks hold $147 billion of Greek sovereign bonds and $115 billion of Portuguese and Irish debt - 5% of annual European Union gdp.
Fiat buys 6.6% (6/3) equity stake in Chrysler for $560 million from U.S. Treasury, raising Fiat's holding to 52%.
Bank of America will pay $8.5 billion to 22 investors (PIMCO, BlackRock, MetLife, the Federal Reserve Bank of New York, etc.) holding $56 billion (530 mortgage trusts with an original loan balance of $424 billion) in private-label mortgage-backed securities acquired through its Countrywide Financial deal.
Month of May 2011
Dow month: -1.88, ytd: 8.56%, 6 mo: 14.20%
S&P 500: 1,345
S&P 500 month: -1.32%, ytd: 6.95%, 6 mo: 13.98%
NASDAQ month: -1.32, ytd: 6.87%, 6 mo: 13.49%
U.S. unemployment rises to 9.1%, adding 53,000 jobs.
Portugal gets €78 billion bailout package (€12 billion for banks) cutting deficit to 3% of gdp by 2013. Portugal's public debt totals €160.4 billion (93% of gdp). European Union, European Central Bank and International Monetary Fund each contribute €26 billion (average rate 5-5.25%).
AIG repays (5/24) Treasury in $8.7 billion stock offering (300 million shares at $29, above its $28.72 breakeven). AIG has sold 33 businesses and raised more than $57 billion in cash and securities since 2008 bailout. Treasury's AIG holdings fall to 77% from 92.1%.
Chrysler (operated by Fiat) repays (5/24) U.S. government $5.9 billion and Canadian and Ontario provincial government $1.7 billion - U.S. government now owns 6.6%, Canadian government 1.7% and Chrysler retiree health-care trust (UAW) 46%.
Mississippi River exceeds some damages caused by the Great Mississippi Flood of 1927 from Indiana to Louisiana. National Flood Insurance Program covers 5.6 million policies and provides $1.2 trillion in coverage, currently $18 billion in debt - because of 2005 claims caused by Hurricanes Katrina and Rita.
Joplin, Missouri (5/22) deadliest US tornado 134 deaths (116 killed in Flint, Michigan, 1953), destroying 8,000 buildings. 2011 deadliest year for tornadoes since 1950, with 523 deaths. (Tri-State Tornado of 1925 - Missouri, Illinois and Indiana on the ground for 219 miles over a 3.5 hour period responsible for 695 deaths.)
Month of April 2011
Dow month: 3.98%, ytd: 10.65%, 6 mo: 15.22%
S&P 500: 1,363
S&P 500 month: 2.79%, ytd: 8.38%, 6 mo: 15.22%
NASDAQ month: 3.31%, ytd: 8.30%, 6 mo: 14.60%
FOMC neutral stance (Apr 27) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%. Federal Reserve will complete $600 billion of purchases and continue to reinvest maturing securities (both Treasuries and MBS) maintaining their current balance sheet.
U.S. unemployment rises to 9.0%, adding 232,000 jobs.
ECB raises rates to 1.25% from 1% (May 2009).
Silver trades at an all-time high of $49.82 (Apr 25), surpassing $49.45 during the silver Hunt brothers scandal, Jan 18, 1980. Corrects to $32.50 (5/12, 34.3%).
Tornadoes April 25-28, 2011 - towns across Alabama, Mississippi, Tennessee, Arkansas, Georgia, Virginia and Louisiana. Some 301-426 tornadoes (3 level 5s over 200mph and up to a mile wide) 10,000 buildings destroyed killing over 350 people.
Earnings season for 1Q11 for the S&P 500 index was positive 19%.
Month of March 2011
Dow month: 0.77%, ytd: 6.41%, 6 mo: 14.20%
S&P 500: 1,326
S&P 500 month: -0.08%, ytd: 5.44%, 6 mo: 16.21%
NASDAQ month: -0.04%, ytd: 4.83%, 6 mo: 17.44%
U.S. unemployment falls to 8.8%, adding 221,000 jobs.
FOMC neutral stance (Mar 15) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%.
Japanese yen rallies to all-time high of ¥76.25 on 3/16 (¥79.75 in April 1995) as BOJ injects emergency funds of ¥43.6 trillion ($539 billion, rallying to ¥85.53 on April 6). G7 intervenes to sell Japanese yen (first intervention since September 2000 when G7 bought Euros). Speculator's expectations of fund repatriation by Japanese insurers, unwinding of the yen-carry trade and loss-cut sales of foreign currencies in margin trading - following Japan's earthquake.
Cotton trades at an all-time high of $2.197 (Mar 7) following global supply disruptions - up 200% from a $0.60 average. CRB trades at a new all-time high of 688.3 (Mar 7).
Libyan revolution - U.N. Security Council authorize no-fly zone (3/18), first major attack (3/19) by coalition forces "Odyssey Dawn" strikes surface-to-air missiles, early warning sites and key communication centers to stop Moammar Gadhafi's from attacks on his own people (ruled since military coup in 1969, 41 years) as Gadhafi's troops advanced on rebel pro-democracy movement in Benghazi.
Japan Sendai 9.0 Earthquake (Mar 11, 232 miles north of Tokyo), 23-50 foot tsunami and 7.0, 7.4 and 7.2 aftershocks follow within 45 minutes killing near 19,000. Crescent City waves surge 8.1 feet destroying harbor and Santa Cruz waves cause $25 million of harbor damage, in California. Oshika Peninsula shifts over 17 feet and drops by over 4 feet. Fukushima nuclear plant's 3 of 4 nuclear reactors melted down and leak radiation.
Month of February 2011
Dow month: 2.82%, ytd: 5.60%, 6 mo: 22.08%
S&P 500: 1,327
S&P 500 month: 3.19%, ytd: 5.52%, 6 mo: 26.50%
NASDAQ month: 3.04%, ytd: 4.87%, 6 mo: 31.60%
U.S. unemployment falls to 8.9%, adding 194,000 jobs.
Copper trade at an all-time high of $4.6495 lb (Feb 15).
Deutsche Boerse (Eurex / Frankfurt Stock Exchange / International Securities Exchange) offers to buy New York Stock Exchange (NYSE / Euronext / Amex Options / NYSE Arca Options) for $9.53 billion creating the world's largest equities and derivatives market.
Egypt (Feb 11) - President Hosni Mubarak steps down as president and hands power to the military following 18 days of protests in Tahrir Square that began January 25, after Tunisia's President Zine El Abidine Ben Ali stepped down on January 14.
Month of January 2011
Dow month: 2.71%, ytd: 2.71%, 6 mo: 13.62%
S&P 500: 1,286
S&P 500 month: 2.26%, ytd: 2.26%, 6 mo: 16.70%
NASDAQ month: 1.78%, ytd: 1.78%, 6 mo: 19.73%
U.S. unemployment falls to 9.0%, adding 63,000 jobs.
FOMC neutral stance (Jan 26) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%.
Earnings season for 4Q10 for the S&P 500 index was positive 37%.
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.