Newsletter of Economic and Market Events
Year of 2013 Best Investments in 2013
2013 complete News (click)
Month of December 2013
Dow: 16,576.66
Dow 2013: 13,104.14 to 16,576.66
Dow return for 2013: 26.5%
S&P 500 2013: 1,426.19 to 1,848.36
S&P 500 return for 2013: 29.6%
NASDAQ 2013: 3,019.51 to 4,176.59
NASDAQ return for 2013: 38.3%
10 year Treasury: 3.026% yield up 72%, prices down
World Equity Market: $62.54 trillion up 20%
MSCI Europe Index up 17.4%
MSCI Asia Pacific Index up 10.3%
S&P Latin America 40 down -16%
MSCI BRIC down -10.2%
S&P Middle East & Africa down -7.7%
* U.S. Total stock market returned 32% in 2013, Stocks had above average gains, Bonds had below average gains and inflation was below average 1.5%. Only U.S. corrections in June and August the rest of the year had gains.
* Of the 5 largest sectors in the U.S. Economy: Healthcare 42%, Financials 36%, Technology 27%, Natural Resources 19% and Real Estate 5%. By size: Large Cap returned 29%, Mid Cap 32%, Small Cap 39.6% and Micro Cap 35% all had above average gains. Gold down -28% while oil rose 7% with commodity prices (CRB) down -5%.
* Global markets rose by 20% of the World's largest economic regions: Europe 17.4%, Asia 10.3%, while Emerging Markets down -2.7% and Latin America down -16%. Of the World's largest Developed non-U.S. Economies: Japan 56.7%, Germany 25.5%, France 18.0%, Britain 14.4% and Canada 9.6%. In the Emerging markets India 9.0% while Brazil -15.5%, Russia -5.6%, and China -5.2%. Hedge funds 8% and Private Equity 30.4% outperformed market indexes.
* Those who diversified with MPT did best, a trend which should accelerate indicative are the returns in U.S sectors.
* Separate yourself and your performance from retail investors by using Modern Portfolio Theory (MPT) and Tactical Portfolio Optimization. Institutional investors have for decades spread their investments across many asset classes seeking higher returns. Underperformance is caused by confining your investments to a few similar asset classes and neglecting risk management.
Months 2009-13 (click)
U.S. unemployment at 6.7% to 7.9% remained a major concern. 2013 gdp 2.6% with 2.19 million jobs added.
FOMC neutral stance (Dec 13) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%.
Federal Reserve's QE4 in January reduced (to $75b/mo from $85b/mo) 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.
- 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 Reserve returned $79.5 billion to the Treasury in 2013 down from $88.4 billion in 2012.
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.
Treasuries lost -3.2% in 2013, 2.2% in 2012, 9.6% in 2011, 5.9% in 2010. U.S. Aggregate Bond index down -1.92% first loss since 1999 and worst loss since 1994.
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 down -5% for the year, trades 272.36 (11/19) down -18% from 321.36 (9/14/12) all-time high of 370.72 (May 2, 2011).
FDIC selling (9/11) $2.42 billion of Citigroup bonds exiting U.S. government holdings linked to financial crisis.
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%.
Obama signs American Taxpayer Relief Act of 2012 (1/2, $4 trillion over 10 years) in tax relief.
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.
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.
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.
Japan restarts (4/4) monetary easing program "QE", $1.43tn in 24 months targeting 2% inflation. 10 year yields fell to all time low of 0.315% on 4/5 (0.446% in 6/03). Japanese yen depreciates 39.8% to 105.3 (12/31) all-time high of 75.31 (10/31/11).
Cyprus (3/25) becomes the 5th EU nation to receive a bailout (from EU, ECB and IMF) a 10 billion euro rescue plan.
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.
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.
J.P. Morgan Chase settles (11/19) $13 billion for residential mortgage-backed securities. JPMC settles (11/15) $4.5 billion for 330 mortgage bond trusts. JPMorgan Chase settles (10/25) $5.1 billion with FHFA over mortgage bonds. JPMorgan Chase settles (10/15) $100 million with CFTC related to "London whale" trades and settles (9/19) $920 million for $6.2 billion loss on derivatives bets. JP Morgan Chase also settles (9/19) $389 million for debt-collection lawsuits. J.P. Morgan Chase (7/30) settles $410 million to Federal Energy Regulatory Commission (FERC) for manipulating electricity markets. 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.
- Bank of America settles $11.6 billion (1/7) with Fannie Mae, Countrywide Financial subsidiary loans. Bank of America settles (12/7) $500 million with investors for Countrywide's securities offerings, and settles (12/2) $404 million with Freddie Mac and settled (5/8) $315 million with investors for Merrill Lynch's securities offerings. Bank of America (Merrill Lynch) settles (12/12) $131.8 million for deceptive disclosures of CDOs sold to investors.
- Citigroup settles (7/1) $968 million to Fannie Mae and settles (9/25) $395 million to Freddie Mac. Citigroup (3/18) settles $730 million to investor's in the sale of Citigroup's debt and preferred stock. Citigroup (May '13) and General Electric (Jan '13) settled with FHFA for undisclosed amounts.
- Wells Fargo settles (9/27) $869 million to Freddie Mac and (11/6) settles $335 million with FHFA for security offerings.
- SunTrust Bank settles (10/10) $968 million and settles (10/10) $228 million with Fannie Mae. SunTrust Bank settled (9/30/12) $65 million with Freddie Mac.
- HSBC (Household International) must pay investors (10/17) $2.46 billion for securities fraud.
- 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.
- Residential Capital LLC (Ally Financial subsidiary) settles (11/29) $1.2 billion with FHFA for subprime mortgages.
- Rabobank settles (10/29) $1.07 billion for LIBOR violations.
- UBS settles (7/25) $885 million with FHFA for misrepresenting mortgage-backed bonds.
- Royal Bank of Scotland (2/6) settles $612 million for LIBOR manipulation and (11/7) settles $153.7 million for security offerings.
- Ally Financial settles (12/20 ) $98 million with U.S. Justice Depart. for discriminatory lending practices to 235,000 minority borrowers, since 2011.
-Barclays settles (FERC, 7/16) record $487.9 million for manipulation of the California energy markets.
Johnson & Johnson (11/4) settles $2.2 billion for violations in marketing drugs and (11/19) settles $2.475 billion for hip replacements.
- Transocean agrees (1/3) to $1.4 billion settlement with Justice Dept. for the BP Gulf of Mexico oil spill.
- Microsoft (3/6) fined $730 million by EU for monopoly practices regarding browsers.
SAC Capital (Steven Cohen) pleads guilty (11/4) to 4 counts of securities fraud and 1 count of wire fraud; a total settlement amount of $1.8 billion and ends its investment advisory business. 87 people charged with insider trading and 75 convictions and guilty pleas, since 2010.
- Fabrice Tourre found guilty (8/1) of fraud in misleading buyers of Goldman's 2007 $1 billion CDO shorted by John Paulson.
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: 4176.59
NASDAQ month: 2.87%, 6 mo: 22.73%, ytd: 38.32%
U.S. unemployment falls to 6.7%, adding 84,000 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: 16,086
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: 4,060
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: 15,546
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: 3,920
NASDAQ month: 3.95%, 6 mo: 17.75%, ytd: 29.82%
U.S. unemployment rises to 7.3%, adding 237,000 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: 15,130
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: 3,771
NASDAQ month: 5.04%, 6 mo: 15.39%, ytd: 24.89%
U.S. unemployment falls to 7.2%, adding 164,000 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: 14,810
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: 3,590
NASDAQ month: -0.99%, 6 mo: 13.61%, ytd: 18.89%
U.S. unemployment falls to 7.3%, adding 202,000 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: 15,500
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: 3,626
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: 14,910
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: 3,403
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: 15,116
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: 3,456
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: 14,840
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: 3,329
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 ¥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: 14,579
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: 3,268
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 �10 billion rescue plan (�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 �126 billion 7.5 times the size of the economy. The bailout will protect 361,000 depositors under �100,000. Of the �68 billion in bank deposits approximately 10,000 uninsured depositors (�38 billion) have more than �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 �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: 14,054
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: 3,160
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: 13,861
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: 3,142
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%.
Year of 2012 Best Investments in 2012
2012 complete News (click)
Dow 2012: 12,217.56 to 13,104.14
Dow return for 2012: 7.26%
S&P 500 2012: 1,257.6 to 1,426.19
S&P 500 return for 2012: 13.41%
NASDAQ 2012: 2,605.15 to 3,019.51
NASDAQ return for 2012: 15.91%
10 year Treasury: 1.76% yield down -5.9%, prices up
World Equity Market: $52.12 trillion up 11%
MSCI Europe Index 829.52 up 15.65%
MSCI Asia Pacific Index 129.36 up 14.66%
S&P Latin America 40 4,257.23 up 2.94%
MSCI BRIC 297.29 up 11%
S&P Middle East & Africa 312.11 up 17.72%
U.S. Total stock market returned 14% in 2012, Stocks had above average gains, Bonds had below average gains and inflation was average 2.5%. Big corrections in May (around Greek elections) and late October through early November (around U.S. elections), most of the rest of the year had gains.
Of the 5 largest sectors in the U.S. Economy: Financials 28.4%, Healthcare 17.5%, Technology 15.7% and Real Estate 13.2% outperformed while Natural Resources returned 5.2%. By size: Large Cap returned 13.4%, Mid Cap 16.1%, Small Cap 14.8% and Micro Cap 17% all had above average gains. Gold up 7% while oil fell -6.3% with commodity prices (CRB) down -1.5%.
Global markets rose by 13.5% of the World's largest economic regions: Europe 15.6%, Asia 14.7% and Emerging Markets 11% while Latin America only up 2.9%. Of the World's largest Developed non-U.S. Economies: Germany 29%, Japan 22.9% and France 15.2% while Britain 5.8% and Canada 4%. In the Emerging markets India 25.7% and Russia 10.9% while Brazil 7.4% and China 2.4%. Hedge funds 4% and Private Equity both underperformed market indexes.
Those who diversified with MPT did best, a trend which should accelerate – indicative are the returns in U.S and across the globe.
Separate yourself and your performance from retail investors by using Modern Portfolio Theory (MPT) and Tactical Portfolio Optimization. Institutional investors have for decades spread their investments across many asset classes seeking higher returns. Underperformance is caused by confining your investments to a few similar asset classes and neglecting risk management.
Months 2009-12 (click)
U.S. unemployment at 7.7% to 8.3% remained a major concern. 2012 gdp 2.5% with 1.65 million jobs added.
FOMC neutral stance (Dec 13) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%.
Federal Reserve extends QE2 (6/20, 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 (9/30, 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".
- Federal Reserve (12/12, 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".
- Federal Reserve extends (12/13) dollar liquidity swaps to foreign central banks through February 2014.
Treasuries returned 5% in 2012, 9.6% in 2011, 5.9% in 2010, up from -3.7% in 2009 and 14% in 2008. 30-year fixed mortgages fall to all time low 3.31% (11/21).
2yr Treasuries trade 0.1933% (7/23). 10 yr U.S. Treasuries trade 1.379% (7/25, April 1946 1.54%) and 30 yr U.S. Treasuries trade 2.4454%.
CRB trades 502.7 (6/4) down 26.2% from the all-time high of 688.3 (Mar 7, 2011).
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).
Obama signs 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.
- 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.
- Obama signs Welfare Integrity and Data Improvement Act (2/22) - $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.
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.
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).
- 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.
- 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
ESM launched Oct. 8, €500 billion, contributions: Germany 27.15% France 20.39% Italy 17.91% Spain 11.9%.
Greece (2/21) secures €130 billion second bailout through 2014. Greece (7/21) receives a €110 billion ($157 billion) restructured EU/ECB/IMF aid package - Greek Parliament approves budget to receive aid.
- 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. Greek 10-year Bond yields 44.212% (3/9) falling to 18.45% (3/12).
- 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.
- Portugal gets €78 billion bailout package (5/14, €12 billion for banks).
- EU banks hold $147 billion of Greek sovereign bonds and $115 billion of Portuguese and Irish debt - 5% of annual European Union gdp.
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 12,295.76 (7/25) 0.3% below its 3/9/09 low of 12,332.00. Spain's 10-year Bond yields 7.751% (7.25).
Mergers and acquisitions $2.19 trillion in 2012 down from $2.26 trillion in 2011 and the same $2.19 trillion as 2010. Venture capital of $28 billion in 2012 similar to $28 billion in 2011 and $23 billion in 2010.
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.
- 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).
PBOC (7/5) lowers its 1 year lending rates to 6.00% and deposit rates to 3.00% and lowered its RRR (required reserve ratio, effective 5/17) to 20.5%.
$25 billion historic 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 for multiple mortgage violations.
- 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.
- 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.
- Bank of America settles $2.43 billion lawsuit with investors who suffered losses during its acquisition of Merrill Lynch.
- 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.
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.
- 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.
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.
- 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.
BP (3/2) offers $7.8 billion settlement for 120,000 claims - already $8 billion paid to individuals and $14 billion paid for cleanup.
- 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.
- GlaxoSmithKline settles (7/2) U.S. criminal and civil fraud charges, a $3 billion fine for fraudulently marketing its drugs.
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.
- 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).
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).