Newsletter of Economic and Market Events
-- RECENT FACTS -
RECORDS: DJIA all-time historic record 26,951.81 October 3, 2018 [14279.96, Oct 11 '07]. S&P 500 2,940.91 September 21, 2018 [1,576.09, Oct 11 '07]; NASDAQ 8,133.30 August 30, 2018 [5,132.52, Mar 10, 2000]; DJ Transportation 9,412.83 November 28, 2014 [5,627.85, July 7, '11]; DJ Utilities 723.83 July 6, 2016 [557.69, Jan 8, '08]; S&P Mid Cap 400 1,566.91 August 8, 2016 [1,018.65, May 2, '11]; S&P Small Cap 600 748.82 August 8, 2016 [445.82, Jul 17 '07]. Global Markets hit $62.6 trillion [10/31/07]: MSCI Europe Index 1,388 [Jul 13 '07]; MSCI Pacific Index 173 [Nov 1 '07]; S&P Latin America 40 5,862 [May 20 '08]; MSCI BRIC 466 [Oct 31, 2007] and S&P Middle East & Africa 337.77, Dec 30, 2010 [307, Nov 7, 2007].
FOMC raises rates 25bps (12/19) Fed Funds rate 2.25%-2.5% and the Discount rate of 3%.
UBS to pay (12/21) $68M for manipulating the Libor benchmark interest rate.
Earnings season for 4Q18 according to a consensus of Wall St. analysts the blended YOY growth rate for the S&P 500 index for 3Q18 is expected to be 20%.
Month of November 2018
Dow: 25,538
Dow month: 1.68%, 6 mo: 4.60%, ytd: 3.31%
S&P 500: 2,760
S&P 500 month: 1.77%, 6 mo: 2.03%, ytd: 3.23%
NASDAQ: 7,331
NASDAQ month: 0.34%, 6 mo: -1.49%, ytd: 6.19%
U.S. unemployment unchanged at 3.7%, adding 155,000 jobs.
FOMC unchanged (11/8) Fed Funds rate 2%-2.25% and the Discount rate of 2.75%.
$2.31B Foreign Exchange benchmark rate antitrust settlement for institutional investors and pension funds: Bank of Tokyo Mitsubishi $10.5M, Bank of America $187.5M, Barclays $384M, BNP Paribas $115M, Citigroup $402M, Deutsche Bank $190M, Goldman Sachs $135M, HSBC $285M, JPMorgan $104.5M, Morgan Stanley $50M, RBC $15.5M, RBS $255M, Soc Gen $18M, Standard Chartered $17.2M, UBS $141.1M.
Camp Fire (11/8, 95% of Paradise CA former population 27,000 lost) the deadliest and most destructive wildfire in California history: 86 deaths, damaged and destroyed structures 19,090, 153,336 acres, missing 3.
Month of October 2018
Dow: 25,116
Dow month: -5.07%, 6 mo: 3.94%, ytd: 1.61%
S&P 500: 2,712
S&P 500 month: -6.93%, 6 mo: 2.42%, ytd: 1.44%
NASDAQ: 7,306
NASDAQ month: -9.20%, 6 mo: 3.40%, ytd: 5.83%
US 10yr Treasury trades 3.26% (10/6) highest since November 2008.
U.S. unemployment unchanged at 3.7%, adding 250,000 jobs.
Shanghai Index falls 32% to 2,449.2 (10/18, 3,587.03 on 1/29/18) and Shenzhen Index falls 41% to 1,212.23 (10/18, 2,046.67 on 11/13/17).
People's Bank of China lowers (10/15) RRR for large commercial lenders by 1% to 14.5% and 12.5% for smaller banks - making an additional $175B available for lending.
Trump signs (10/5) Better Utilization of Investment Leading to Development Act (BUILD Act) a new US development finance corp. for Direct Foreign Investment with a $60B spending cap.
US-Mexico-Canada Agreement (10/1, terms agreed) an updated NAFTA Agreement - including 'Macroeconomic Policies And Exchange Rate Matters' for dealing with countries artificially devaluing their currencies to make their exports cheaper and gain trade advantages.
Nomura to pay (10/16) $480M for misleading investors in sale of more than $13 billion worth of RMBS, 2006-07 - Wells Fargo $2B & RBS $4.9B.
Volkswagen's Audi to pay (10/16) $926M - total "dieselgate scandal" $32.7B.
Earnings season for 3Q18 YOY growth for the S&P 500 index was 28%
Month of September 2018
Dow: 26,458
Dow month: 1.90%, 6 mo: 9.77%, ytd: 7.03%
S&P 500: 2,914
S&P 500 month: 0.41%, 6 mo: 10.34%, ytd: 8.99%
NASDAQ: 8,046
NASDAQ month: -0.79%, 6 mo: 13.92%, ytd: 16.55%
U.S. imposes (9/24) 10% tariffs rising to 25% (1/1/19) on an additional $200B of Chinese goods, targeting 5,700+ Chinese product lines - China to reciprocate with $60B.
FOMC raises rates 25bps (9/26) Fed Funds rate 2%-2.25% and the Discount rate of 2.75%.
U.S. unemployment falls to 3.7%, adding 118,000 jobs - lowest rate since December 1969.
Petrobras to pay (9/27) $853.2M to U.S. and Brazilian authorities.
Month of August 2018
Dow: 25,965
Dow month: 2.16%, 6 mo: 3.74%, ytd: 5.04%
S&P 500: 2,902
S&P 500 month: 3.05%, 6 mo: 6.93%, ytd: 8.54%
NASDAQ: 8,110
NASDAQ month: 5.71%, 6 mo: 11.51%, ytd: 17.48%
U.S. imposes (8/23) 25% tariffs on an additional $16B of Chinese goods (China reciprocates), targeting 279 Chinese product lines.
U.S. unemployment unchanged at 3.9%, adding 286,000 jobs.
FOMC neutral stance (8/1) Fed Funds rate 1.5%-1.75% and the Discount rate of 2.25%.
Chinese RMB depreciates from 6.2431 (3/26) to 6.9376 (8/15, 12/16/16 6.96).
Bank of England raises rates (8/2) from 0.5% to 0.75%.
Greece receives (8/6) final €15B bailout payment, the European Stability Mechanism authorized €9.5B as a cash buffer and €5.5B to pay debts.
Basler Kantonalbank to pay (8/28) $60.4M in a "deferred prosecution agreement" with the U.S. Justice Dept. - for conspiring to commit U.S. tax evasion for U.S. customers ($813.2M), from 2002-12.
BNP Paribas to pay (8/29) $90M for rate-rigging the ISDAfix benchmark.
HSBC to pay (8/5) $765M for mis-selling RMBS, from 2007-08.
Wells Fargo to pay (8/1) $2.09B for the sale of RMBS losses, from 2005-08.
RBS to pay (8/14) $4.9B for the sale of RMBS losses, from 2005-08.
Month of July 2018
Dow: 25,415
Dow month: 4.71%, 6 mo: -2.81%, ytd: 2.81%
S&P 500: 2,816
S&P 500 month: 3.61%, 6 mo: -0.28%, ytd: 5.33%
NASDAQ: 7,672
NASDAQ month: 2.16%, 6 mo: 3.52%, ytd: 11.13%
U.S. and China begin (7/6) $34B of tarrifs on each other's imports. USDA announces (7/24) $12B of Farm aid to those insured by retaliation.
U.S. unemployment rises to 3.9%, adding 165,000 jobs.
PricewaterhouseCoopers to pay the FDIC (7/2) $625.3M for failing to uncover fraud between Colonial Bank and mortgage lender Taylor, Bean & Whitaker - both failed in August of 2009.
EU fines Google (7/18) $5B for antitrust abuses in its dominant Android mobile operating system and ordered Google to put an end to illegal conduct within 90 days.
Malaysia's former prime minister Najib Razak arrested in more than $4.5B fraud from 1MDB (1Malaysia Development Berhad) about $700M in Najib's personal bank accounts - 1MDB a Ponzi scheme: Swiss AG Michael Lauber.
Earnings season for 2Q18 YOY growth for the S&P 500 index was 25%
Month of June 2018
Dow: 24,271
Dow month: -0.59%, 6 mo: -1.81%, ytd: -1.81%
S&P 500: 2,718
S&P 500 month: 0.48%, 6 mo: 1.66%, ytd: 1.66%
NASDAQ: 7,510
NASDAQ month: 0.91%, 6 mo: 8.79%, ytd: 8.79%
U.S. tariffs begin (6/1) on imports on steel of 25% and 10% on aluminum. EU responds (6/22) imposing tariffs on $3B of U.S. products (180 types).
FOMC raises rates 25bps (6/13) Fed Funds rate 1.75%-2% and the Discount rate of 2.5%.
U.S. unemployment rises to 4.0%, adding 208,000 jobs.
China's PBOC cuts RRR (effective July 5, for 3rd time this year) injecting $108B in "debt for equity swaps" between banks and lenders (reducing defaults) to 15.5% for large banks (13.5% for smaller banks).
Bank of America Merrill Lynch to pay (6/19) $42M for misleading its brokerage customers about which firms processed their trades.
Deutsche Bank to pay (6/20) $205M for misleading customers, sharing confidential customer information and rigging prices, from 2007-13.
JPMorgan Chase to pay (6/18, CFTC) $65M for manipulating ISDAfix, from 2007-12.
Citigroup to pay (6/15) $100M to 42 U.S. states for fraudulent LIBOR interest-rate manipulation.
ZTE to pay $1B fine (plus another $400M in escrow) and replace its board and executive team (at or above the Sr VP level) within 30 days and accept U.S. embedded compliance officials - for selling to Iran and North Korea.
Societe Generale to pay (6/4) $1.63B ($860M US Dept of Justice, $475M CFTC & $295M France) for criminal and civil charges of bribing (Libyan officials $90M, 2004-09) and manipulating the Libor interest rate benchmark.
U.S. Justice Dept. charges (6/28) 601 people (incl. 76 doctors, 23 pharmacists, 19 nurses, and other medical personnel) in over $2B of healthcare insurance frauds.
Month of May 2018
Dow: 24,416
Dow month: 1.05%, ytd: -1.23%, 6 mo: 0.59%
S&P 500: 2,705
S&P 500 month: 2.15%, ytd: 1.17%, 6 mo: 2.15%
NASDAQ: 7,442
NASDAQ month: 5.32%, ytd: 7.80%, 6 mo: 8.26%
U.S. unemployment falls to 3.8%, adding 268,000 jobs - lowest rate since April 2000.
FOMC neutral stance (5/2) Fed Funds rate 1.5%-1.75% and the Discount rate of 2.25%.
10yr U.S. bond rates rise from 2.01 (9/7/17) to 3.13 (5/17) up 56% in 8 months.
Goldman Sachs to pay (5/1) $109.5M for violations in foreign-exchange markets.
Wells Fargo to pay (5/4) $480 million for securities fraud, misstatements and omissions in disclosures related to its sales practices.
RBS to pay (5/9) $4.9B to resolve claims over RMBS sold from 2005 to 2008.
FCC fines (5/11, largest ever) Adrian Abramovich $120M for having placed at least 96.8 million (between 10/1/16 and 12/31/16 averaged over a million calls a day) fraudulent robocalls for vacation deals.
Month of April 2018
Dow: 24,163
Dow month: 0.25%, ytd: -2.25%, 6 mo: 3.36%
S&P 500: 2,648
S&P 500 month: 0.27%, ytd: -0.96%, 6 mo: 2.83%
NASDAQ: 7,066
NASDAQ month: 0.04%, ytd: 2.36%, 6 mo: 5.02%
U.S. unemployment falls to 3.9%, adding 175,000 jobs.
IRS has collected (4/1) $11.1B since 2009 under OVDP (Offshore Voluntary Disclosure Program - Foreign Account Tax Compliance Act, FATCA) from over 56,000 taxpayers and over 1,545 criminal indictments - ending 9/28/2018.
Apple to pay £13B in back taxes to the Irish government to be held in an Dublin escrow account while appealed in EU courts.
Wells Fargo to pay (4/20) $1B for abusing customers in its auto and mortgage businesses.
Earnings season for 1Q18 YOY growth for the S&P 500 index was 26.5%.
Month of March 2018
Dow: 24,103
Dow month: -3.70%, ytd: -2.49%, 6 mo: 7.58%
S&P 500: 2,641
S&P 500 month: -2.69%, ytd: -1.22%, 6 mo: 4.84%
NASDAQ: 7,063
NASDAQ month: -2.89%, ytd: 2.31%, 6 mo: 8.73%
U.S. unemployment unchanged at 4.1%, adding 155,000 jobs.
FOMC raises rates 25bps (3/21) Fed Funds rate 1.5%-1.75% and the Discount rate of 2.25%.
Trump signs (3/22) memorandum on intellectual property tariffs on high-tech goods from China:
- First, China uses foreign ownership restrictions, including joint venture requirements, equity limitations, and other investment restrictions, to require or pressure technology transfer from U.S. companies to Chinese entities. China also uses administrative review and licensing procedures to require or pressure technology transfer, which, inter alia, undermines the value of U.S. investments and technology and weakens the global competitiveness of U.S. firms.
- Second, China imposes substantial restrictions on, and intervenes in, U.S. firms' investments and activities, including through restrictions on technology licensing terms. These restrictions deprive U.S. technology owners of the ability to bargain and set market-based terms for technology transfer. As a result, U.S. companies seeking to license technologies must do so on terms that unfairly favor Chinese recipients.
- Third, China directs and facilitates the systematic investment in, and acquisition of, U.S. companies and assets by Chinese companies to obtain cutting-edge technologies and intellectual property and to generate large-scale technology transfer in industries deemed important by Chinese government industrial plans.
- Fourth, China conducts and supports unauthorized intrusions into, and theft from, the computer networks of U.S. companies. These actions provide the Chinese government with unauthorized access to intellectual property, trade secrets, or confidential business information, including technical data, negotiating positions, and sensitive and proprietary internal business communications, and they also support China's strategic development goals, including its science and technology advancement, military modernization, and economic development.
Bank of America to pay (3/23) $42M for fraudulently routing clients' stock trades to outside firms, including Bernard Madoff Securities, Citadel Securities, D.E. Shaw, Knight Capital and Two Sigma Securities, from 3/2008-5/2013.
HSBC to pay (3/29) $100M to OTC investors for manipulating Libor - Barclays settled $120M, Citigroup $130M and Deutsche Bank $240M.
Theranos (3/14, CEO Elizabeth Holmes and Ramesh Balwani) charged with $700M fraud in making false statements about the company's technology, business, and financial performance - Holmes accessed $500k penalty, barred from serving as an officer or director of a public company for 10yrs, and ordered to return 18.9M shares amassed in fraud.
Barclays to pay (3/29) $2B to investors who bought toxic mortgage-backed securities up to 2008.
Month of February 2018
Dow: 25,029
Dow month: -4.28%, ytd: 1.25%, 6 mo: 14.04%
S&P 500: 2,714
S&P 500 month: -3.90%, ytd: 1.51%, 6 mo: 9.79%
NASDAQ: 7,273
NASDAQ month: -1.86%, ytd: 5.35%, 6 mo: 13.13%
U.S. unemployment unchanged at 4.1%, adding 324,000 jobs.
Euro apreciates to 1.2659 (2/16) from 1.0398 (12/15/16) up 22% in 14 months.
Trump signs (2/9) stopgap Continuing Resolution until 3/23 and 2 year budget deal increasing the sequestration budget caps for fiscal years 2018 and 2019 by a total of $296B about $165B to the Pentagon and $131B to domestic programs ($90B to help recovery efforts for the hurricanes and wildfires, $10B to infrastructure, $2.9B for child care and $3B to combat opioid and substance abuse) hiking the federal spending about $400 billion through September 2019.
Uber agrees to pay Waymo $245 million in equity over self-driving car technology.
Deutsche Bank to pay (2/1) $70M for attempted manipulation of U.S. Dollar ISDAFIX Benchmark Swap Rates.
U.S. Bancorp (2/15) anti-money laundering program, and reached a $613M settlement.
Patrice Lescaudron former Credit Suisse found guilty (2/9) of scheme diverting cash from client accounts to cover bad trades that resulted in damages of 143 million Swiss francs ($152 million).
Month of January 2018
Dow: 26,149
Dow month: 5.78%, ytd: 5.78%, 6 mo: 19.45%
S&P 500: 2,824
S&P 500 month: 5.62%, ytd: 5.62%, 6 mo: 14.33%
NASDAQ: 7,411
NASDAQ month: 7.35%, ytd: 7.35%, 6 mo: 16.75%
U.S. unemployment unchanged at 4.1%, adding 176,000 jobs.
FOMC neutral stance (Jan 31) Fed Funds rate 1.25%-1.5% and the Discount rate of 2%.
EU's MiFID II regulatory laws effective (1/3, updating 2007 MiFID) to avoid conflicts of interest: investment banks must charge separately for research and brokerage services; increased transparency: only 8% of the volume in any stock can trade on "dark pools" and new reporting to increase surveillance for traders.
Apple to pay (1/17) $38B in tax payments to repatriate overseas cash ($252.3B), announced plans for second U.S. campus and $30B 5yr U.S. investment plan with estimated 20,000 new created jobs in Apple's eco-system.
CFTC criminal and civil enforcement actions (1/29) against Deutsche Bank ($30M), HSBC ($15M) & UBS ($1.6M) and 6 individuals involved in commodities fraud and spoofing schemes.
HSBC to pay (1/18) $101.5M for rigging currency transactions and Mark Johnson guilty (10/23, former Head of HSBC's global FX cash trading desk) of front-running fraud.
14 banks fined total of $1.1B (1/12, by the Federal Reserve) for mortgage servicing shortcomings between 2007-2009.
Qualcomm fined €997M (1/24, $1.23B) by EU antitrust regulators for paying Apple to use only its chips.
PetroBras to pay (1/3) $2.95B in a U.S. class action corruption lawsuit, the largest by a foreign entity.
Scott Tucker sentenced (1/5) 16yrs for running a $3.5B internet Payday-lending scheme, from 1997-2013.
Mudslides in Santa Barbara County (1/12) killed 21 people and caused more than $421M of insured losses.
Earnings season for 4Q17 YOY growth for the S&P 500 index was 15%.
Year of 2017 Best Investments in 2017
2017 complete News (click)
Month of December 2017
Dow: 24,719
Dow 2017: 19,763 to 24,719
Dow return for 2017: 25.08%
S&P 500 2017: 2,239 to 2,674
S&P 500 return for 2017: 19.42%
NASDAQ 2017: 5,383% to 6,903
NASDAQ return for 2017: 28.24%
10 year Treasury: 2.40% yield down 1.6%, prices up
World Equity Market: $85.4 trillion up 22%
MSCI Europe Index up 8%
MSCI Asia Pacific Index up 28%
S&P Latin America 40 up 23%
MSCI BRIC up 43%
S&P Middle East & Africa up 33%
* U.S. Total stock market returned 21% in 2017, Stocks had above average gains, Bonds average returns and inflation was below average 1.6%.
* Of the 5 largest sectors in the U.S. Economy: Technology 32%, Financials 20%, Healthcare 20% and Real Estate 2% while Natural Resources -4%. By size: Large Cap 22%, Mid Cap 14%, Small Cap 12% and Micro Cap 12% all had gains. Gold up 13%, oil up 12% with commodity prices (CRB) up 1%.
* Global markets rose by 22% of the World's largest economic regions: Emerging Markets 33%, Asia 28%, Latin America 23% and Europe 8%. Of the World's largest Developed non-U.S. Economies: Japan 19%, Germany 12%, Canada 6%, France 9% and Britain 7%. In the Emerging markets India 28%, Brazil 26% and while Russia 1% and mixed China Shanghai/Shenzen 6/-4%. Hedge funds underperformed 8% and Private Equity 12% underperformed market indexes.
* Those who diversified with MPT did best, a trend which should accelerate indicative are the returns in a global portfolio.
* 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. Most Global markets performed well only underperforming large markets were Russia and China.
Months 2015-17 (click)
U.S. unemployment falls to 4.1 from 4.8%, adding 2 million jobs, and a year ending labor force participation rate of 62.7%.
- U.S. monthly job gains in 2016: 1/17 216,000, 2/17 232,000, 3/17 50,000, 4/17 207,000, 5/17 145,000, 6/17 210,000, 7/17 138,000, 8/17 208,000, 9/17 38,000, 10/17 211,000, 11/17 216,000, 12/17 175,000.
FOMC raised Fed Funds and the Discount rate 75 bps. QE ends October of '17 the Fed begins reducing its $4.5T reserve balance sheet by $10B/mo, increasing by $10B every 3 months up to $50B/mo - 60% Treasury bonds and 40% mortgage-backed securities.
- Federal Reserve remitted $80.2B in profits to the Treasury Department in 2017.
- U.S. merger and acquisition deals 3.3 T 2017 3.9T down from the record breaking 2015 of $5T.
- VC deals for 2017: $71.9B invested in U.S. companies in 5,052 deals, $164.4B globally.
U.S. 10yr Treasuries ends year at 2.40% a low of 2.01% down from 2.63% (3/13) and U.S. 30yr ends year at 2.74% a low of 2.63% down from 3.21% (3/13).
- U.S. Dollar (26 Broad Currencies) Trade Weighted Index ends year at 119.5, trades 128.4 (1/1) 116.74 (9/8) depreciating 7%.
- U.S. Dollar (7 Major Currencies, Euro, Canada, Japan, United Kingdom, Switzerland, Australia, and Sweden) Trade Weighted Index ends year at 87.4, trades 96.0 (1/1) 86.01 (9/8) depreciating 9%.
WTI oil ends year at high $60.42 up 38% from low 6/21; Brent ends year at high $66.87 up 43% from low 6/23.
- Gold ends year at $1,309 down from $1,365 on 9/8.
- Sliver ends year at $17.14 down from $18.88 on 4/17.
- Copper ends year at $3.30/lb at high.
- Euro ends the year at $1.20 up 15% from $1.04 at beginning of year.
- Bitcoin derivatives futures contract to launch December 10 and trade on Chicago Board Options Futures Exchange (CBOE) and December 18 on Chicago Mercantile Exchange (CME) and allows the Cantor Exchange to offer Bitcoin swaps, only LedgerX a US options exchange had traded Bitcoin.
Trump signs Tax Cuts and Jobs Act of 2017 (12/22). Individuals (temporary expiring 12/31/25 exempting CPI indexing and 1/1/19 repeal of Healthcare mandate): Tax brackets (10%, 15% to 12%, 25% to 22%, 28% to 24%, 33% to 32%, 35%, 39.6% to 37%); Standard deductions ($12k S, $18k HOH, and $24k MFJ) and eliminates exemptions; Mortgage interest deduction on $750k; State and local tax deduction combined limit of $10k; Child tax credit of $2k and first $1.4k refundable; Raises AMT exemption and phaseout. Business (territorial system with base erosion rules): Lowers tax rate permanently to 21%; Enacts repatriation of currently deferred foreign profits at 15.5% for cash and cash-equivalent profits and 8% for reinvested foreign earnings; Eliminates the corporate AMT; Establishes a 20% deduction of qualified business income from certain pass-through businesses expire 12/31/25; Allows full and immediate expensing of short-lived capital investments for 5 years and increases section 179 expensing to $1 million; Limits the deductibility of net interest expense to 30% of EBITDA for 4 years, and 30% of EBIT thereafter; Eliminates NOL carrybacks and limits carryforwards to 80% of taxable income; Eliminates the domestic production activities deduction, section 199. Estate: $5.6M to $11.2M expires 12/31/25.
Trump declares (10/26) a nationwide public health emergency (commission led by Governor Chris Christie) for U.S. opioid crisis - 64,000 overdose deaths in the US in 2016.
Puerto Rico files (5/3) for bankruptcy protection under under Title III of the PROMESA law, the biggest bankruptcy in the history of the U.S. municipal debt market, $70 billion in bonds.
IRS has collected (5/31) $10B since 2009, Foreign Account Tax Compliance Act (FATCA) compliance: 110 countries and 288,000 foreign firms have registered, 55,800 U.S. taxpayers have settled with 100 potential criminal cases outstanding and another 14,000 potential civil cases.
CFPB (Consumer Financial Protection Bureau) returns (5/31) over $29B to over 12 million consumers victimized by deceptive marketing, discriminatory lending or other financial wrongdoing - today 5,031 commercial banks down from 14,400 in 1984.
ECB to reduce QE monthly purchases in half to €30B in January and extend until September 2018.
- Bank of England raises interest rates (11/2, first increase in more than 10yrs) to 0.50% from 0.25% reversing the 8/4/16 emergency cut after UK's Brexit vote.
Spain's PM Mariano Rajoy declares (10/27) its central government ministries would take over the Catalan administration dissolving Catalonia's parliament (which passed a unilateral declaration of independence) and removed its president Carles Puigdemont (and other regional officers) - Catalonia's grievances go back to the 1939-1975 Franco oppressive dictatorship.
Italy uses (6/25) its national insolvency procedures to save Banca Popolare di Vicenza and Veneto Banca with €5.2B injection and additional guarantees up to €12B protecting senior debtholders from losses.
Norway's Government Pension Funds (Norway & Global) reaches $1T joining sovereign wealth funds: Japan's Government Pension Investment Fund $1.3T, Abu Dhabi Investment Authority ~$1T and China Investment Corporation ~$.8T of China's ~$3T foreign-exchange reserves.
- Softbank's chairman Japanese billionaire Masayoshi Son approaches (5/20) target of $100B (Softbank, Saudi Arabia's Public Investment Fund, Abu Dhabi's Mubadala Investment, and large Technology companies) for largest private equity fund to invest in technology sectors: artificial intelligence and robotics, mobile computing, communications infrastructure, computational biology, consumer internet businesses and financial technology, etc.
- Blackstone receives commitment (5/20) from Saudi Arabia's Public Investment Fund of $20B for a leveraged infrastructure investments fund with $100 billion in purchasing power to invest in infrastructure projects, mainly in the United States.
President Xi Jinping increased (5/13) China's Belt and Road Initiative (65 member countries and international organizations) to $124B for projects to build ports, railways and other facilities. India's PM Narendra Modi's ASEAN 'Act East policy' ('Look East policy' initiated in 1991) continued economic liberalisation, strategic & security cooperation and cultural & ideological synergies.
Wells Fargo to pay (7/8) $108M for charging military veterans hidden fees to refinance their mortgages - other similiar settlments in 2012 for a combined $161.7M against: Bank of America, Citigroup, First Tennessee, JPMorgan Chase, PNC Financial Services and SunTrust Banks. In 2011 Wells Fargo paid $10M in a separate class action lawsuit to 60,000 veterans for imposing excessive closing costs on refinancing loans. Wells Fargo to pay (7/8) $142M to its customers whose credit scores were harmed by Wells Fargo employees creating fake accounts. Wells Fargo to pay (7/27) $80M to 570,000 auto loan borrowers for selling unneeded collateral production insurance. Wells Fargo, RBS & Deutsche Bank to pay (3/15) $165M in class-action settlement for underwriting $7.55B of NovaStar Mortgage's RMBS (bankruptcy Jul 22, 2016, mortgage-backed securities), in 2006-7. Wells Fargo settles (3/28) $110M with customers for fraudulently opening more than 2.1 million (3.5M as of 8/31/2017) deposit and credit-card accounts without their customers' permission.
Deutsche Bank to pay (10/25) $220M for defrauding government and nonprofit entities by manipulating Libor and other benchmark interest rates from 2005-09. Deutsche Bank to pay (9/29) $190M for conspiring to manipulate key currency benchmark rates in $5.1T/day foreign exchange market - the 15th of 16 banks to settle with the Federal Reserve (total global payouts of over $10B), $402M from Citigroup, $384M from Barclays, $285M from HSBC, $255M from RBS, and etc., Credit Suisse has not settled. Deutsche Bank to pay (8/17) $48.5M and Bank of America to pay $17M for collusions from 2005-15 of unfair pricing in the U.S. government agency bond market. Deutsche Bank to pay (6/1) the state of Maryland $95M for misleading investors in its securitization and sale of residential mortgage-backed securities and collateralized debt obligations from 2006-07. Deutsche Bank to pay (7/21) $77M; and JPMorgan Chase to pay (7/21) $71M for manipulating the yen Libor and Euroyen Tibor benchmark interest rates. Deutsche Bank to pay (4/20) $156.6M for violating foreign exchange rules under the Volcker Rule which prohibits proprietary trading. Deutsche Bank pay (1/30) $425M to NY banking regulator for "mirror trading" scheme (that moved $10B out of Russia between 2011-15) and $204M (£163M) to Britain's Financial Conduct Authority. Deutsche Bank to pay (1/24) Good Hill Fund $110M for breach of contract for 2 of its hedge funds, based on Deutsche Bank's failure to return assigned collateral.
RBS to pay (10/26) $44M and sign a criminal non-prosecution agreement over its 8 traders charged of defrauding customers in bond price trading from 2008-13. RBS to pay (7/12) $5.5B to FHFA for mis-selling $32B of mortgage-backed securities, last of 18 settled lawsuits (by FHFA as conservator of Fannie Mae and Freddie Mac) recovering $23.37B, including $5.83B from Bank of America and $4B from JPMorgan Chase - outstanding Nomura's trial appeal of $806M. RBS setttles (5/30) £200M with shareholders (9,000 private investors and 20 financial institutions) for 2008 cash call under allegedly misleading terms (compensation of 82p for every share purchased). RBS to pay (2/3) $85M penalty for manipulating ISDAFIX benchmark from 2007-12 - CFTC's total imposed penalties of $570M for ISDAFIX benchmark rigging, to date.
HSBC fined (9/29) $175M for front-running client's foreign-exchange orders, sharing confidential customer details with dealers at other firms and attempting to rig currency benchmarks. HSBC and UBS each to pay (7/11) $14M for rigging ISDAfix benchmark (used to price swaps transactions, commercial real estate mortgages and structured debt securities) from 2009-12 in the $483 trillion derivatives market, recovery from 10 of 14 settling banks $408.5M - outstanding BNP Paribas, Morgan Stanley, Nomura and Wells Fargo.
Citigroup to pay (1/12) more than $22.5M for overcharging more than 47,000 customers in their managed investment accounts. Citigroup to pay (1/19) $25M for civil CFTC "spoofing charges", entering U.S. Treasury futures market orders with the intent of canceling them. Citigroup fined (1/23) $28.8M for failing to disclose options to avoid foreclosure to 41,000 mortgage customers.
- BNP Paribas to pay (7/17) $246M for "unsafe and unsound" practices in foreign exchange (FX) markets.
- American Express to pay (8/23) $96M to credit card customers (Puerto Rico and other U.S. territories) for charging higher interest rates and engaging in other discriminatory practices.
- State Street to pay $64.6M for defrauding (deferred prosecution agreement) 6 clients through secret commissions on billions of dollars of trades.
- JPMorgan Chase to pay (1/18) $55M for racial discrimination in home loans through mortgage brokers effecting 53,000 black and Hispanic borrowers from 2006-09.
- Barclays to pay (5/1) $16.5M for undisclosed fee violations on RMBS transactions. Barclays to pay $97M (5/10) to SEC for overcharging thousands of investors over a 6-year period for services it never actually provided.
- Morgan Stanley Smith Barney to pay (1/13) a $13M penalty for overbilling 149,000 investment advisory clients.
Bank of America Merrill broker-dealer unit to pay $5M penalty (9/22) to CFTC U.S. and Justice Department for record-keeping violations and failing to supervise its traders engaged in front-running its customers orders before 2010.
Moody's to pay $863.8M ($437.5M to U.S. Justice Department and $426.3M to 21 states and the District of Columbia) for providing inaccurate credit ratings for Residential Mortgage-Backed Securities (RMBS) and Collateralized Debt Obligations (CDO).
- Western Union to pay (1/19) $586M for failing to stop money laundering and wire fraud, from 2004-12.
- Oppenheimer Funds to pay (7/12) $51M to investors (in it's California municipal bond fund) in addition to $90M settlement for investing in junk bonds and risky derivatives despite claiming to focus on investment-grade municipal bonds.
- Financial Freedom (former unit of OneWest Bank) to pay (5/16) $89M for receiving ineligible FDIC insurance payments from 2011-16 under US Dept. of Housing & HUD's reverse mortgage program, non-compliant property appraisals, claims submissions and foreclosure proceedings.
- Citadel Securities to pay (1/13) $22.6M for misleading retail customers about how their orders were priced and traded.
- Investment Technology Group to pay (1/12) more than $24.4M to SEC for issuing ADRs without possessing the underlying foreign shares.
GM to pay (10/19) $120M for defective ignition switches with State AGs from 49 states and Washington D.C. (Arizona not included), GM's previous violations of consumer protection law penalties and settlements of $2.5B, including $900M (9/17/15) - tied to 124 deaths, over 275 injuries and 2.6 million recalled vehicles; GM to separately pay (10/29) $13.9M with Orange County, CA over nearly 400 deaths and injuries.
- Apple to pay (7/25) $506M for patent infringement to the University of Wisconsin Alumni Research Foundation.
- Corinthian Colleges (bankruptcy filed 5/4/2015) student loans purchased by Aequitas Capital (SEC sued 3/10/2016 for defrauding investors in a $350M Ponzi scheme) will repay (8/17) $192M of student debt in U.S. Consumer Financial Protection Bureau settlement. Corinthian Colleges (and Heald, Wyotech) misrepresented that their programs could be transfered to the Cal State system and ordered restitution (10/23/2016) of $820M for students and civil penalties of $350M.
- Dish Network to pay (6/5) $280M for robocalling consumers on the do-not-call lists.
- Anthem (Blue Cross/Shield) settles (6/23) $115M for 2015 data breach that exposed 79 million subscriber's personal information.
- Google fined (6/27) €?2.4B by EU for anti-competitive practices in Google shopping searches.
- Rolls-Royce to pay (1/16, largest UK fine in history) £671M for bribery and corruption cases (China, Indonesia and other markets) - €497M+ to the UK's Serious Fraud Office (SFO), €141M ($170M) to the US Justice Dept., and €21.5M ($26M) to Brazilian regulators.
- Takata to plead guilty (1/13) to criminal wrongdoing and pay $1B for air bag ruptures affecting 42M U.S. vehicles (70 million Takata air bag inflators) linked to 16 deaths. Takata paid (11/3/15) $70M to U.S. auto safety regulators.
- VW sentenced (4/21) to 3 years of "organization probation" to be overseen by monitor former Deputy U.S. Attorney General Larry Thompson.
- Volkswagen to pay (1/11) $4.3B for diesel emissions fraud ($2.8B criminal fine, $1.5B in civil penalties and 7 VW employees charged, including one who pleaded guilty) and plead guilty to a criminal misconduct settlement.
Medicare Fraud Strike Force (HHS) charges 412 (including 120 doctors, nurses and other licensed medical professionals) for $1.3B in false health care billings fraud - in 2016 over $2.5B in judgements and settlements were collected.
- "Paradise Papers" 13.4 million secret documents (leaked by Bermuda-based Appleby) - tax-evasion linked to over 120 politicians from nearly 50 countries.
- Iraq's war reparations resumed (0.5% of its oil proceeds in 2018 increasing gradually until the end of 2021) to the UN Compensation Commission (UNCC) for losses and damages suffered as a direct result of Iraq's unlawful invasion and occupation of Kuwait in 1990-91, 2.7 million claims amounting to $352.5B (€300B), temporarily halted payments in October 2014, Kuwait to receive the remaining $47.8B.
Robert Shapiro of real estate Woodbridge Group charged with operating a $1.2B Ponzi scheme defrauding 8,400 investors.
- NYPD surgeon Dr. Robert Vaccarino (and Dr. Hamid Alam, Dr. Kevin Custis amd Dr. Jeffrey Chess), ringleader Kristina Mirbabayeva, 15 others and 14 corporations charged in defrauding Medicare and Medicaid of $146M.
- John Kapoor (billionaire founder) of Insys Therapeutics arrested (10/26) for nationwide conspiracies to commit racketeering, mail and wire fraud in illegally predatory sales & distribution of addictive fentanyl-based cancer pain drug spray.
- Jorge Arzuaga (former Julius Baer banker) pleaded guilty (6/15) to money laundering charge for funneling kickbacks and bribe payments of more than $200M in FIFA soccer conspiracy - more than 40 people and entities charged in the U.S.
- Francisco Illarramendi Highview Point Partners hedge fund manager to pay (4/14, sentenced 1/29/15 to 13 years in prison) $27M for his role in a Ponzi scheme.
Two dozen wildfires ravage the L.A. area (starting on 12/4) forcing over 220,000 evacuations, over 450 sq miles and over 1,700 structures lost or damaged. The largest Thomas Fire (282,000 acres near exceeding San Diego 273,246 acres Cedar Fire of 2003) burning in Ventura and Santa Barbara Counties aided by over 8,500 firefighters.
- California's deadliest fire started 10/8 in N. California's Napa & Sonoma counties: 14 fires burning more than 340 sq/mi, 100,000 people evacuated, 44 deaths and 8,900 homes and businesses with $4B of insurable claims.
- Hurricane Irma strikes Florida (9/9, Category 4) 6.3 million people ordered to evacuate in Florida and 540,000 along Georgia's coast, 8.5 million Florida homes and commercial properties at risk, 15 million lost electricity - Hurricane Irma & Maria (9/19-20 responsible for 1,400-3,000 deaths in Puerto Rico and costing over $90B) ravaged through the Caribbean (Barbuda, Antigua, St Barthelemy, St Martin, Virgin Islands, Puerto Rico, Dominican Republic, Haiti, Turks & Caicos, Cuba's northern coast and Bahamas) both were Category 5. Florida's orange crop lowest since WWII.
- Hurricane Harvey (8/26, Category 4) strikes the Houston (4th largest US city) area with rainfall exceeding 4 feet is some areas between Corpus Christi and the Louisiana border disrupting more than 2 million people's lives with 1 million uninsured properties and 3,800 square miles flooded - Hurricane Harvey may equal or exceed the damage of Hurricane Katrina (2005, around $120B).
Dow month: 1.84%, 6 mo: 15.78%, ytd: 25.08%
S&P 500: 2,674
S&P 500 month: 0.97%, 6 mo: 10.34%, ytd: 19.42%
NASDAQ: 6,903
NASDAQ month: 0.43%, 6 mo: 12.43%, ytd: 28.24%
U.S. unemployment unchanged at 4.1%, adding 175,000 jobs.
FOMC raises rates 25bps (Dec 13) Fed Funds rate 1.25%-1.5% and the Discount rate of 2%.
Tax Cuts and Jobs Act of 2017 (12/22). Individuals (temporary expiring 12/31/25 exempting CPI indexing and 1/1/19 repeal of Healthcare mandate): Tax brackets (10%, 15% to 12%, 25% to 22%, 28% to 24%, 33% to 32%, 35%, 39.6% to 37%); Standard deductions ($12k S, $18k HOH, and $24k MFJ) and eliminates exemptions; Mortgage interest deduction on $750k; State and local tax deduction combined limit of $10k; Child tax credit of $2k and first $1.4k refundable; Raises AMT exemption and phaseout.
Business (territorial system with base erosion rules): Lowers tax rate permanently to 21%; Enacts repatriation of currently deferred foreign profits at 15.5% for cash and cash-equivalent profits and 8% for reinvested foreign earnings; Eliminates the corporate AMT; Establishes a 20% deduction of qualified business income from certain pass-through businesses expire 12/31/25; Allows full and immediate expensing of short-lived capital investments for 5 years and increases section 179 expensing to $1 million; Limits the deductibility of net interest expense to 30% of EBITDA for 4 years, and 30% of EBIT thereafter; Eliminates NOL carrybacks and limits carryforwards to 80% of taxable income; Eliminates the domestic production activities deduction, section 199.
Estate: $5.6M to $11.2M expires 12/31/25.
Bitcoin derivatives futures contract to launch December 10 and trade on Chicago Board Options Futures Exchange (CBOE) and December 18 on Chicago Mercantile Exchange (CME) and allows the Cantor Exchange to offer Bitcoin swaps, only LedgerX a US options exchange had traded Bitcoin.
Citigroup to pay (12/28) $11.5M for wrong research ratings on more than 1,800 stocks.
Robert Shapiro of real estate Woodbridge Group charged with operating a $1.2B Ponzi scheme defrauding 8,400 investors.
NYPD surgeon Dr. Robert Vaccarino (and Dr. Hamid Alam, Dr. Kevin Custis amd Dr. Jeffrey Chess), ringleader Kristina Mirbabayeva, 15 others and 14 corporations charged in defrauding Medicare and Medicaid of $146M.
Two dozen wildfires ravage the L.A. area (starting on 12/4) forcing over 220,000 evacuations, over 450 sq miles and over 1,700 structures lost or damaged. The largest Thomas Fire (282,000 acres, San Diego 273,246 acres Cedar Fire of 2003) burning in Ventura and Santa Barbara Counties aided by over 8,500 firefighters.
Month of November 2017
Dow: 24,272
Dow month: 3.83%, 6 mo: 15.53%, ytd: 22.82%
S&P 500: 2,648
S&P 500 month: 2.83%, 6 mo: 9.78%, ytd: 18.28%
NASDAQ: 6,874
NASDAQ month: 2.17%, 6 mo: 10.89%, ytd: 27.70%
U.S. unemployment unchanged at 4.1%, adding 216,000 jobs.
FOMC neutral stance (Nov 1) Fed Funds rate 1.0%-1.25% and the Discount rate of 1.75%.
Bank of England raises interest rates (11/2, first increase in more than 10yrs) to 0.50% from 0.25% reversing the 8/4/16 emergency cut after UK's Brexit vote.
"Paradise Papers" 13.4 million secret documents (leaked by Bermuda-based Appleby) - tax-evasion linked to over 120 politicians from nearly 50 countries.
Iraq's war reparations resumed (0.5% of its oil proceeds in 2018 increasing gradually until the end of 2021) to the UN Compensation Commission (UNCC) for losses and damages suffered as a direct result of Iraq's unlawful invasion and occupation of Kuwait in 1990-91, 2.7 million claims amounting to $352.5B (€300B), temporarily halted payments in October 2014, Kuwait to receive the remaining $47.8B.
Month of October 2017
Dow: 23,377
Dow month: 4.34%, 6 mo: 11.63%, ytd: 18.29%
S&P 500: 2,575
S&P 500 month: 2.22%, 6 mo: 8.01%, ytd: 15.02%
NASDAQ: 6,728
NASDAQ month: 3.57%, 6 mo: 11.24%, ytd: 24.98%
U.S. unemployment falls to 4.1%, adding 211,000 jobs.
ECB to reduce QE monthly purchases in half to €30B in January and extend until September 2018.
Spain's PM Mariano Rajoy declares (10/27) its central government ministries would take over the Catalan administration dissolving Catalonia's parliament (which passed a unilateral declaration of independence) and removed its president Carles Puigdemont (and other regional officers) - Catalonia's grievances go back to the 1939-1975 Franco oppressive dictatorship.
Trump declares (10/26) a nationwide public health emergency (commission led by Governor Chris Christie) for U.S. opioid crisis - 64,000 overdose deaths in the US in 2016.
John Kapoor (billionaire founder) of Insys Therapeutics arrested (10/26) for nationwide conspiracies to commit racketeering, mail and wire fraud in illegally predatory sales & distribution of addictive fentanyl-based cancer pain drug spray.
RBS to pay (10/26) $44M and sign a criminal non-prosecution agreement over its 8 traders charged of defrauding customers in bond price trading from 2008-13.
Deutsche Bank to pay (10/25) $220M for defrauding government and nonprofit entities by manipulating Libor and other benchmark interest rates from 2005-09.
GM to pay (10/19) $120M for defective ignition switches with State AGs from 49 states and Washington D.C. (Arizona not included), GM's previous violations of consumer protection law penalties and settlements of $2.5B, including $900M (9/17/15) - tied to 124 deaths, over 275 injuries and 2.6 million recalled vehicles; GM to separately pay (10/29) $13.9M with Orange County, CA over nearly 400 deaths and injuries.
California's deadliest fire started 10/8 in N. California's Napa & Sonoma counties: 14 fires burning more than 340 sq/mi, 100,000 people evacuated, 44 deaths and 8,900 homes and businesses with $4B of insurable claims.
Earnings season for 3Q17 YOY growth for the S&P 500 index was 8.5%.
Month of September 2017
Dow: 22,405
Dow month: 2.08%, 6 mo: 8.59%, ytd: 13.37%
S&P 500: 2,519
S&P 500 month: 1.90%, 6 mo: 6.65%, ytd: 12.51%
NASDAQ: 6,496
NASDAQ month: 1.04%, 6 mo: 9.88%, ytd: 20.67%
U.S. unemployment falls to 4.2%, adding 38,000 jobs.
FOMC neutral stance (Sept 20) Fed Funds rate 1.0%-1.25% and the Discount rate of 1.75%. QE ends - starting in October the Fed begins reducing its $4.5T reserve balance sheet by $10B/mo, increasing by $10B every 3 months up to $50B/mo - 60% Treasury bonds and 40% mortgage-backed securities.
Norway's Government Pension Funds (Norway & Global) reaches $1T joining sovereign wealth funds: Japan's Government Pension Investment Fund $1.3T, Abu Dhabi Investment Authority ~$1T and China Investment Corporation ~$.8T of China's ~$3T foreign-exchange reserves.
Bank of America Merrill broker-dealer unit to pay $5M penalty (9/22) to CFTC U.S. and Justice Department for record-keeping violations and failing to supervise its traders engaged in front-running its customers orders before 2010.
HSBC fined (9/29) $175M for front-running client's foreign-exchange orders, sharing confidential customer details with dealers at other firms and attempting to rig currency benchmarks.
Deutsche Bank to pay (9/29) $190M for conspiring to manipulate key currency benchmark rates in $5.1T/day foreign exchange market - the 15th of 16 banks to settle with the Federal Reserve (total global payouts of over $10B), $402M from Citigroup, $384M from Barclays, $285M from HSBC, $255M from RBS, and etc., Credit Suisse has not settled.
Hurricane Irma strikes Florida (9/9, Category 4) 6.3 million people ordered to evacuate in Florida and 540,000 along Georgia's coast, 8.5 million Florida homes and commercial properties at risk, 15 million lost electricity - Hurricane Irma ravaged through the Caribbean (Barbuda, Antigua, St Barthelemy, St Martin, Virgin Islands, Puerto Rico, Dominican Republic, Haiti, Turks & Caicos, Cuba's northern coast and Bahamas) as a Category 5. Florida's orange crop lowest since WWII.
Month of August 2017
Dow: 21,948
Dow month: 0.26%, 6 mo: 5.46%, ytd: 11.06%
S&P 500: 2,472
S&P 500 month: 0.08%, 6 mo: 4.79%, ytd: 10.41%
NASDAQ: 6,429
NASDAQ month: 1.28%, 6 mo: 10.52%, ytd: 19.43%
U.S. unemployment rises to 4.4%, adding 208,000 jobs.
Deutsche Bank to pay (8/17) $48.5M and Bank of America to pay $17M for collusions from 2005-15 of unfair pricing in the U.S. government agency bond market.
American Express to pay (8/23) $96M to credit card customers (Puerto Rico and other U.S. territories) for charging higher interest rates and engaging in other discriminatory practices.
Wells Fargo to pay (7/8) $108M for charging military veterans hidden fees to refinance their mortgages - other similiar settlments in 2012 for a combined $161.7M against: Bank of America, Citigroup, First Tennessee, JPMorgan Chase, PNC Financial Services and SunTrust Banks. In 2011 Wells Fargo paid $10M in a separate class action lawsuit to 60,000 veterans for imposing excessive closing costs on refinancing loans.
Corinthian Colleges (bankruptcy filed 5/4/2015) student loans purchased by Aequitas Capital (SEC sued 3/10/2016 for defrauding investors in a $350M Ponzi scheme) will repay (8/17) $192M of student debt in U.S. Consumer Financial Protection Bureau settlement. Corinthian Colleges (and Heald, Wyotech) misrepresented that their programs could be transfered to the Cal State system and ordered restitution (10/23/2016) of $820M for students and civil penalties of $350M.
Hurricane Harvey (8/26, Category 4) strikes the Houston (4th largest US city) area with rainfall exceeding 4 feet is some areas between Corpus Christi and the Louisiana border disrupting more than 2 million people's lives with 1 million uninsured properties and 3,800 square miles flooded - Hurricane Harvey may equal or exceed the damage of Hurricane Katrina (2005, around $120B).
Month of July 2017
Dow: 21,891
Dow month: 2.53%, 6 mo: 10.20%, ytd: 10.77%
S&P 500: 2,470
S&P 500 month: 1.94%, 6 mo: 8.38%, ytd: 10.33%
NASDAQ: 6,348
NASDAQ month: 3.39%, 6 mo: 13.05%, ytd: 17.92%
U.S. unemployment falls to 4.3%, adding 138,000 jobs.
FOMC neutral stance (July 16) Fed Funds rate 1.0%-1.25% and the Discount rate of 1.75%.
HSBC and UBS each to pay (7/11) $14M for rigging ISDAfix benchmark (used to price swaps transactions, commercial real estate mortgages and structured debt securities) from 2009-12 in the $483 trillion derivatives market, recovery from 10 of 14 settling banks $408.5M - outstanding BNP Paribas, Morgan Stanley, Nomura and Wells Fargo.
Oppenheimer Funds to pay (7/12) $51M to investors (in it's California municipal bond fund) in addition to $90M settlement for investing in junk bonds and risky derivatives despite claiming to focus on investment-grade municipal bonds.
Deutsche Bank to pay (7/21) $77M; and JPMorgan Chase to pay (7/21) $71M for manipulating the yen Libor and Euroyen Tibor benchmark interest rates.
Wells Fargo to pay (7/8) $142M to its customers whose credit scores were harmed by Wells Fargo employees creating fake accounts. Wells Fargo to pay (7/27) $80M to 570,000 auto loan borrowers for selling unneeded collateral production insurance.
BNP Paribas to pay (7/17) $246M for "unsafe and unsound" practices in foreign exchange (FX) markets.
Apple to pay (7/25) $506M for patent infringement to the University of Wisconsin Alumni Research Foundation.
RBS to pay (7/12) $5.5B to FHFA for mis-selling $32B of mortgage-backed securities, last of 18 settled lawsuits (by FHFA as conservator of Fannie Mae and Freddie Mac) recovering $23.37B, including $5.83B from Bank of America and $4B from JPMorgan Chase - outstanding Nomura's trial appeal of $806M.
Medicare Fraud Strike Force (HHS) charges 412 (including 120 doctors, nurses and other licensed medical professionals) for $1.3B in false health care billings fraud - in 2016 over $2.5B in judgements and settlements were collected.
Earnings season for 2Q17 YOY growth for the S&P 500 index was 12.5%.
Month of June 2017
Dow: 21,351
Dow month: 1.63%, 6 mo: 8.04%, ytd: 8.04%
S&P 500: 2,423
S&P 500 month: 0.46%, 6 mo: 8.23%, ytd: 8.23%
NASDAQ: 6,140
NASDAQ month: -0.95%, 6 mo: 14.06%, ytd: 14.06%
U.S. unemployment rises to 4.4%, adding 210,000 jobs.
FOMC raises rates 25bps (Jun 14) Fed Funds rate 1.0%-1.25% and the Discount rate of 1.75%. Fed outlines its plan to reduce its $4.516T (1/14/15) portfolio of Treasury bonds and mortgage-backed securities in its reserve balance sheet initially by $10B, increasing by $10B every 3 months up to $50B/mo.
Italy uses (6/25) its national insolvency procedures to save Banca Popolare di Vicenza and Veneto Banca with €5.2B injection and additional guarantees up to €12B protecting senior debtholders from losses.
Deutsche Bank to pay (6/1) the state of Maryland $95M for misleading investors in its securitization and sale of residential mortgage-backed securities and collateralized debt obligations from 2006-07.
Dish Network to pay (6/5) $280M for robocalling consumers on the do-not-call lists.
Anthem (Blue Cross/Shield) settles (6/23) $115M for 2015 data breach that exposed 79 million subscriber's personal information.
Google fined (6/27) €2.4B by EU for anti-competitive practices in Google shopping searches.
Jorge Arzuaga (former Julius Baer banker) pleaded guilty (6/15) to money laundering charge for funneling kickbacks and bribe payments of more than $200M in FIFA soccer conspiracy - more than 40 people and entities charged in the U.S.
Month of May 2017
Dow: 21,009
Dow month: 0.32%, ytd: 6.31%, 6 mo: 9.86%
S&P 500: 2,412
S&P 500 month: 1.17%, ytd: 7.73%, 6 mo: 9.69%
NASDAQ: 6,199
NASDAQ month: 2.50%, ytd: 15.16%, 6 mo: 16.44%
U.S. unemployment falls to 4.3%, adding 145,000 jobs.
FOMC neutral stance (May 3) Fed Funds rate 0.75%-1.0% and the Discount rate of 1.5%.
Softbank's chairman Japanese billionaire Masayoshi Son approaches (5/20) target of $100B (Softbank, Saudi Arabia's Public Investment Fund, Abu Dhabi's Mubadala Investment, and large Technology companies) for largest private equity fund to invest in technology sectors: artificial intelligence and robotics, mobile computing, communications infrastructure, computational biology, consumer internet businesses and financial technology, etc.
Blackstone receives commitment (5/20) from Saudi Arabia's Public Investment Fund of $20B for a leveraged infrastructure investments fund with $100 billion in purchasing power to invest in infrastructure projects, mainly in the United States.
President Xi Jinping increased (5/13) China's Belt and Road Initiative (65 member countries and international organizations) to $124B for projects to build ports, railways and other facilities. India's PM Narendra Modi's ASEAN 'Act East policy' ('Look East policy' initiated in 1991) continued economic liberalisation, strategic & security cooperation and cultural & ideological synergies.
Barclays to pay (5/1) $16.5M for undisclosed fee violations on RMBS transactions. Barclays to pay $97M (5/10) to SEC for overcharging thousands of investors over a 6-year period for services it never actually provided.
Financial Freedom (former unit of OneWest Bank) to pay (5/16) $89M for receiving ineligible FDIC insurance payments from 2011-16 under US Dept. of Housing & HUD's reverse mortgage program, non-compliant property appraisals, claims submissions and foreclosure proceedings.
RBS setttles (5/30) £200M with shareholders (9,000 private investors and 20 financial institutions) for 2008 cash call under allegedly misleading terms (compensation of 82p for every share purchased).
CFPB (Consumer Financial Protection Bureau) returns (5/31) over $29B to over 12 million consumers victimized by deceptive marketing, discriminatory lending or other financial wrongdoing - today 5,031 commercial banks down from 14,400 in 1984.
IRS has collected (5/31) $10B since 2009, Foreign Account Tax Compliance Act (FATCA) compliance: 110 countries and 288,000 foreign firms have registered, 55,800 U.S. taxpayers have settled with 100 potential criminal cases outstanding and another 14,000 potential civil cases.
Puerto Rico files (5/3) for bankruptcy protection under under Title III of the PROMESA law, the biggest bankruptcy in the history of the U.S. municipal debt market, $70 billion in bonds.
Month of April 2017
Dow: 20,941
Dow month: 1.49%, ytd: 5.96%, 6 mo: 15.43%
S&P 500: 2,384
S&P 500 month: 0.93%, ytd: 6.48%, 6 mo: 12.14%
NASDAQ: 6,048
NASDAQ month: 2.30%, ytd: 12.35%, 6 mo: 16.55%
U.S. unemployment falls to 4.4%, adding 207,000 jobs.
Deutsche Bank to pay (4/20) $156.6M for violating foreign exchange rules under the Volcker Rule which prohibits proprietary trading.
VW sentenced (4/21) to 3 years of "organization probation" to be overseen by monitor former Deputy U.S. Attorney General Larry Thompson.
Francisco Illarramendi Highview Point Partners hedge fund manager to pay (4/14, sentenced 1/29/15 to 13 years in prison) $27M for his role in a Ponzi scheme.
Earnings season for 1Q17 YOY growth for the S&P 500 index was 15.5%.
Month of March 2017
Dow: 20,633
Dow month: -0.86%, ytd: 4.40%, 6 mo: 12.70%
S&P 500: 2,362
S&P 500 month: 0.13%, ytd: 5.50%, 6 mo: 8.95%
NASDAQ: 5,912
NASDAQ month: 1.63%, ytd: 9.82%, 6 mo: 11.30%
U.S. unemployment falls to 4.5%, adding 50,000 jobs.
FOMC raises rates 25bps (Mar 15) Fed Funds rate 0.75%-1.0% and the Discount rate of 1.5%.
Wells Fargo, RBS & Deutsche Bank to pay (3/15) $165M in class-action settlement for underwriting $7.55B of NovaStar Mortgage's RMBS (bankruptcy Jul 22, 2016, mortgage-backed securities), in 2006-7.
Wells Fargo settles (3/28) $110M with customers for fraudulently opening more than 2.1 million (3.5M as of 8/31/2017) deposit and credit-card accounts without their customers' permission.
Month of February 2017
Dow: 20,812
Dow month: 4.77%, ytd: 5.31%, 6 mo: 13.10%
S&P 500: 2,359
S&P 500 month: 3.51%, ytd: 5.37%, 6 mo: 8.66%
NASDAQ: 5,817
NASDAQ month: 3.60%, ytd: 8.06%, 6 mo: 11.59%
U.S. unemployment falls to 4.7%, adding 232,000 jobs.
FOMC neutral stance (Feb 1) Fed Funds rate 0.50%-0.75% and the Discount rate of 1.25%.
Fannie Mae ($5.5B) and Freddie Mac ($4.5B) to pay dividends to the U.S. Dept of Treasury - Fannie and Freddie have paid $265.8B since the government's conservatorship.
RBS to pay (2/3) $85M penalty for manipulating ISDAFIX benchmark from 2007-12 - CFTC's total imposed penalties of $570M for ISDAFIX benchmark rigging, to date.
Month of January 2017
Dow: 19,864
Dow month: 0.51%, ytd: 0.51%, 6 mo: 7.77%
S&P 500: 2,279
S&P 500 month: 1.79%, ytd: 1.79%, 6 mo: 4.83%
NASDAQ: 5,615
NASDAQ month: 4.31%, ytd: 4.31%, 6 mo: 8.78%
U.S. unemployment rose to 4.8%, adding 216,000 jobs.
Rolls-Royce to pay (1/16, largest UK fine in history) £671M for bribery and corruption cases (China, Indonesia and other markets) - £497M+ to the UK's Serious Fraud Office (SFO), £141M ($170M) to the US Justice Dept., and £21.5M ($26M) to Brazilian regulators.
Morgan Stanley Smith Barney to pay (1/13) a $13M penalty for overbilling 149,000 investment advisory clients.
Citadel Securities to pay (1/13) $22.6M for misleading retail customers about how their orders were priced and traded.
Investment Technology Group to pay (1/12) more than $24.4M to SEC for issuing ADRs without possessing the underlying foreign shares.
Citigroup to pay (1/12) more than $22.5M for overcharging more than 47,000 customers in their managed investment accounts.
Citigroup to pay (1/19) $25M for civil CFTC "spoofing charges", entering U.S. Treasury futures market orders with the intent of canceling them.
Citigroup fined (1/23) $28.8M for failing to disclose options to avoid foreclosure to 41,000 mortgage customers.
State Street to pay $64.6M for defrauding (deferred prosecution agreement) 6 clients through secret commissions on billions of dollars of trades.
JPMorgan Chase to pay (1/18) $55M for racial discrimination in home loans through mortgage brokers effecting 53,000 black and Hispanic borrowers from 2006-09.
Deutsche Bank pay (1/30) $425M to NY banking regulator for "mirror trading" scheme (that moved $10B out of Russia between 2011-15) and $204M (£163M) to Britain's Financial Conduct Authority. Deutsche Bank to pay (1/24) Good Hill Fund $110M for breach of contract for 2 of its hedge funds, based on Deutsche Bank's failure to return assigned collateral.
Western Union to pay (1/19) $586M for failing to stop money laundering and wire fraud, from 2004-12 .
Moody's to pay $863.8M ($437.5M to U.S. Justice Department and $426.3M to 21 states and the District of Columbia) for providing inaccurate credit ratings for Residential Mortgage-Backed Securities (RMBS) and Collateralized Debt Obligations (CDO).
Takata to plead guilty (1/13) to criminal wrongdoing and pay $1B for air bag ruptures affecting 42M U.S. vehicles (70 million Takata air bag inflators) linked to 16 deaths. Takata paid (11/3/15) $70M to U.S. auto safety regulators.
Volkswagen to pay (1/11) $4.3B for diesel emissions fraud ($2.8B criminal fine, $1.5B in civil penalties and 7 VW employees charged, including one who pleaded guilty) and plead guilty to a criminal misconduct settlement.
Earnings season for 4Q16 YOY growth for the S&P 500 index was 8%.
Year of 2016 Best Investments in 2016
2016 complete News (click)
Month of December 2016
Dow: 19,763
Dow 2016: 17425.03 to 19,763
Dow return for 2016: 13.42%
S&P 500 2016: 2043.94 to 2,239
S&P 500 return for 2016: 9.54%
NASDAQ 2016: 5007.41 to 5,383%
NASDAQ return for 2016: 7.50%
10 year Treasury: 2.44% yield up 7.5%, prices down
World Equity Market: $70 trillion up 5.7%
MSCI Europe Index down -1.7%
MSCI Asia Pacific Index down -1.2%
S&P Latin America 40 up 29%
MSCI BRIC up 8.9%
S&P Middle East & Africa up 3.7%
* U.S. Total stock market returned 8.2% in 2016, Stocks had below average gains, Bonds had below average returns and inflation was below average 1.6%.
* Of the 5 largest sectors in the U.S. Economy: Natural Resources 20.7%, Technology 10.9%, while Real Estate -2.8%, Financials -4.3% and Healthcare -5.6%. By size: Small Cap returned 24.7%, Micro Cap 19%, Mid Cap 18.7% and Large Cap 9.5% all had gains. Gold up 8.6%, oil up 45.3% with commodity prices (CRB) up 9.2%.
* Global markets rose by 5.7% of the World's largest economic regions: Latin America 29% and Emerging Markets 8.9% while Europe -1.7% and Asia -1.2%. Of the World's largest Developed non-U.S. Economies: Canada 17.5%, Britain 14.4%, Germany 6.8, France 4.8% and Japan 0.4%. In the Emerging markets Russia 51%, Brazil 39% and India 2% while China Shanghai/Shenzen down -12/-15%. Hedge funds underperformed 3% and Private Equity 4% underperformed market indexes.
* Those who diversified with MPT did best, a trend which should accelerate indicative are the returns in China and 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. U.S. Small cap, Mid cap, Technology & Energy commodities with foreign Russia, Brazil and Latin America bouncing back after underperforming years.
Months 2015-16 (click)
U.S. unemployment falls to 4.6-5.0, adding 2.2 million jobs - participation rate falls to 62.6% in May and record 94,708,000 Americans were neither employed nor made an effort to find employment, 16 million jobs added since the recession of 2007-9.
- U.S. monthly job gains in 2016: 1/16 126,000, 2/16 237,000, 3/16 225,000, 4/16 153,000, 5/16 43,000, 6/16 297,000, 7/16 291,000, 8/16 176,000, 9/16 249,000, 10/16 124,000, 11/16 164,000, 12/16 155,000.
FOMC raises rates 25bps (Dec 14, 2nd time in 10yrs) Fed Funds rate 0.50%-0.75% and the Discount rate of 1.25% - St. Louis Fed president James Bullard (Jun 15) departs from majority in Fed's projected "dot plot" of future interest rate's curve citing deflationary data dependency.
- Federal Reserve remitted $91.5B in profits to the Treasury Department in 2016.
Donald Trump elected 45th President of U.S. - 304 electoral votes to Hilary Clinton's 227. 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".
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).
- Global debt exceeds $152T, 2.25x the global GDP - 2/3 of the debt is private sector and 1/3 sovereign debt.
- 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).
- U.S. merger and acquisition deals 3.9T down from the record breaking 2015 of $5T.
- 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).
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.
WTI oil trades $26.05 (2/11) WTI down 71% from $113.97 on 4/28/11; Brent down 72% from $127.02 on 4/11/11.
- 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.
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.
- 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.
- 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.
- 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.
- Euro depreciates to 1.0398 (12/15) down 25% from €1.399 (5/6/15) against the dollar, lowest since 12/27/02.
- German 10yr bond trades negative -0.205% (7/6) yield falling from 2.087% (9/11/13).
- Swiss's 10yr bond trades at a negative rate (7/11) -0.64%.
- Russian ruble trades ₽85.957 (1/21) depreciates 46% from ₽48.14 on 5/18/15.
- 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.
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.
- British PM Theresa May assumes office July 13, 2016.
- 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 - lowest since 6/20/85 depreciating 38.4% from £2.1104 on 11/8/2007.
- 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).
China invests $225.4B in mergers & acquisitions to acquire non-Chinese companies more than twice that spent in 2015.
- China's PBOC cuts (3/2) Reserve requirement ratio (RRR, for commercial banks) by 50bps to 17%.
- China's foreign reserves fall below $3T year ending 12/31.
- Chinese yuan trades CN¥6.9649 (12/16, lowest since 5/23/08) depreciating 14% from CN¥6.0393 on 1/14/2014.
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.
- 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%.
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%.
- Japan's 10yr bond trades at a negative rate (7/27) -0.295%.
- Japanese yen trades ¥98.72 (6/24) appreciating 21.6% from ¥125.86 (6/5/15).
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.
- Goldman Sachs to pay (4/11) $5.06B for misleading residential mortgage-backed securities investors from 2005-07. 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. Goldman Sachs to pay (8/3) $36.3M and ban for Joseph Jiampietro's leaking confidential information from the Federal Reserve.
- 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.
Credit Suisse to pay (10/6) $90M for misclassify client's assets in its wealth management business in 2012. Credit Suisse ($84.3M) and Barclays ($70M) to pay (1/31) for misrepresentation of information in their trading dark pools.
- Morgan Stanley to pay (2/11) $3.2B for misleading investors in securitizing residential mortgage-backed securities between 2006-07.
- 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 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. 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.
- 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. Barclays settles (8/8) $100M with 44 states for manipulating Libor and Euribor interest rate benchmarks from 8/2005-5/2008. Barclays to settle (2/17) $50M for rigging its foreign exchange trading with investors led by Axiom Investment Advisors LLC.
- Wells Fargo settles (4/8) $1.2B for falsely certifing home loans for FHA insurance from 2001-08. 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. Wells Fargo: Clawbacks (9/27): WF CEO John Stumpf forfeits $41+M and former retail banking WF VP Carrie Tolstedt to forfeit $19+M.
- Bank of America's 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. 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.
- 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. HSBC to pay (2/5) $470M for abusive mortgage servicing, foreclosures, and loan origination practices between 2008-12. HSBC $35M and Citibank $23M to pay (11/14) investors for manipulating Libor.
- State Street to pay (7/26) $530M: $155M to Justice Dept., $167.4M to SEC, $147.6M to settle private class action lawsuits by bank customers and $60M to ERISA plan clients under DOL for not pricing FX transactions at prevailing interbank market rates.
- Citibank to pay (5/25) $425M - $250M to CFTC for manipulating ICE Swap rate and $175M for rigging the Yen Libor and Euroyen Tibor.
- BB&T to pay (9/29) $83M for violating the False Claims Act by originating and underwriting mortgage loans insured by HUD and FHA.
- BBVA to pay (12/21) $27M for exceeding limits on BSI's securities underwriting and dealing activities.
- Apollo Global Management to pay (8/23) $52.7M for misleading fund investors about fees and a loan agreement.
- Och-Ziff Capital Management to pay (9/29) $413M for violations of Foreign Corrupt Practices Act to SEC and DOJ in a 3yr deferred prosecution agreement - Siemens payed $800M in 2008, Alstom payed $772M in 2014 and KBR/Halliburton payed $579M in 2009.
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).
- 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.
- 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.
- 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).
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.
- Steven Cohen's SAC Capital to pay $135M to Elan Corp. investors related to $1.8B insider-trading settlement (2014), civil and criminal penalties.
- 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.
- 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).
- 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.
Vimpelcom (Russian wireless carrier and subsidiary Unitel) to pay (2/18) $795M for bribes and corruption in Uzbekistan from 2006-12.
- 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.
- Mega Financial (Taiwanese bank) to pay (8/19) $180M for money laundering connected to Mossack Fonseca, the "Panama Papers" law firm.
Volkswagen settles (6/28) $15.3B and will buyback 475k registered (of U.S. 499k sold) diesel 2.0 liter vehicles, fix them, or cancel outstanding leases, 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. VW to pay (12/20) $1B for 83,000 3.0 liter Audi, Porsche and VW vehicles. VW to pay (9/30) $1.21B to 652 U.S. VW dealers.
- 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. Belgium (1/11/16) found to have advantaged at least 35 multinationals, €700M in total.
- 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.
- Mylan to pay (10/7) $465M for overcharging Medicaid for EpiPens.
- Pfizer (and Flynn Pharma) fined (12/7) $107M by UK's CMA (Competition and Markets Authority) for unfair prices for Epilepsy drug phenytoin sodium.
- Herbalife to pay (7/15) $200M with FTC, forcing changes to avoid being classified as a pyramid scheme.
- DeVry University to pay (12/15) $100M for FTC violations of misleading potential students with ads promoting job and salary success for graduates.
- 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.
"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).
- "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.
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.
- 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.
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.
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.
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.
Chicago Cubs win 112th World Series after 108 yrs (1908) rallying from 1-3, to a game 7 10th inning victory.
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.
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: 5,383
NASDAQ month: 1.11%, 6 mo: 11.15%, ytd: 7.50%
U.S. unemployment rose to 4.7%, adding 155,000 jobs.
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: 19,124
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: 5,324
NASDAQ month: 2.60%, 6 mo: 7.60%, ytd: 6.32%
U.S. unemployment falls to 4.6%, adding 164,000 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. - 304 electoral votes to Hilary Clinton's 227. 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: 18,142
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: 5,189
NASDAQ month: -2.32%, 6 mo: 9.45%, ytd: 3.63%
U.S. unemployment falls to 4.9%, adding 124,000 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: 18,308
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: 5,312
NASDAQ month: 1.90%, 6 mo: 9.08%, ytd: 6.08%
U.S. unemployment rises to 5.0%, adding 249,000 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.
Och-Ziff Capital Management to pay (9/29) $413M for violations of Foreign Corrupt Practices Act to SEC and DOJ in a 3yr deferred prosecution agreement - Siemens payed $800M in 2008, Alstom payed $772M in 2014 and KBR/Halliburton payed $579M in 2009.
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: 18,401
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: 5,213
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: 18,432
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: 5,162
NASDAQ month: 6.59%, 6 mo: 11.88%, ytd: 3.09%
U.S. unemployment unchanged at 4.9%, adding 291,000 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.
State Street to pay (7/26) $530M: $155M to Justice Dept., $167.4M to SEC, $147.6M to settle private class action lawsuits by bank customers and $60M to ERISA plan clients under DOL for not pricing FX transactions at prevailing interbank market rates.
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: 17,930
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: 4,843
NASDAQ month: -2.12%, ytd: -3.28%, 6 mo: -3.28%
U.S. unemployment rises to 4.9%, adding 297,000 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: 17,787
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: 4,948
NASDAQ month: 4.37%, ytd: -1.19%, 6 mo: -3.15%
U.S. unemployment fell to 4.7%, adding 43,000 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: 17,831
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: 4,741
NASDAQ month: -2.65%, ytd: -5.32%, 6 mo: -6.19%
U.S. unemployment unchanged at 5%, adding 153,000 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: 17,685
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: 4,870
NASDAQ month: 6.85%, ytd: -2.74%, 6 mo: 5.41%
U.S. unemployment rose to 5%, adding 225,000 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: 16,517
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: 4,558
NASDAQ month: -1.21%, ytd: -8.97%, 6 mo: -4.58%
U.S. unemployment unchanged at 4.9%, adding 237,000 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: 16,466
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: 4,614
NASDAQ month: -7.86%, ytd: -7.86%, 6 mo: -10.02%
U.S. unemployment fell to 4.9%, adding 126,000 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%.
Year of 2015 Best Investments in 2015
2015 complete News (click)
Year of 2014 Best Investments in 2014
2014 complete News (click)
Year of 2013 Best Investments in 2013
2013 complete News (click)
Year of 2012 Best Investments in 2012
2012 complete News (click)
Year of 2011 Best Investments in 2011
2011 complete News (click)
Year of 2010 Best Investments in 2010
2010 complete News (click)
Year of 2009 Best Investments in 2009
2009 complete News (click)
Year of 2008 Best Investments in 2008
2008 complete News (click)
Year of 2007 Best Investments in 2007
2007 complete News (click)
Year of 2006 Best Investments in 2006
2006 complete complete News (click)
Year of 2005 Best Investments in 2005
2005 complete News (click)
Year of 2004 Best Investments in 2004 News in 2004
Dow 2015: 17,823.07 to 17425.03
Dow return for 2015: -2.23%
S&P 500 2015: 2,058.90 to 2043.94
S&P 500 return for 2015: -0.73%
NASDAQ 2015: 4,736.05 to 5007.41
NASDAQ return for 2015: 5.73%
10 year Treasury: 2.27% yield up 4.6%, prices down
World Equity Market: $66.09 trillion down -5%
MSCI Europe Index down -1%
MSCI Asia Pacific Index down -10%
S&P Latin America 40 down -33%
MSCI BRIC down -15%
S&P Middle East & Africa down -25%
* U.S. Total stock market returned -2% in 2015, Stocks had below average gains, Bonds had below average gains and inflation was below average 1.2%.
* Of the 5 largest sectors in the U.S. Economy: Healthcare 5.4, Technology 3.6%, Real Estate 2.8%, while Financials -3.3% and Natural Resources -23%. By size: Large Cap returned -1%, Mid Cap -3.6%, Small Cap -3.3% and Micro Cap -6.3% all had losses. Gold down -12% and oil fell -29% with commodity prices (CRB) down -23%.
* Global markets fell by -5% of the World's largest economic regions: Europe -1%, while Asia -10%, Emerging Markets -15% and Latin America -33%. Of the World's largest Developed non-U.S. Economies: Germany 8%, France 8%, Japan 7%, while Britain -5% and Canada -11%. In the Emerging markets China Shanghai/Shenzen up 9/63%, while India -5%, Russia -9%, and Brazil -13%. Hedge funds underperformed -3% and Private Equity 3% outperformed market indexes.
* Those who diversified with MPT did best, a trend which should accelerate indicative are the returns in China and U.S sectors.
Months 2010-15 (click)
U.S. unemployment at 5.7% to 5.0%. 2015 gdp 2.4% with 2.5 million jobs added, 14 million jobs added since the recession of 2007-9.
- U.S. monthly job gains in 2015: 1/15 234,000, 2/15 238,000, 3/15 85,000, 4/15 262,000, 5/15 344,000, 6/15 206,000, 7/15 254,000, 8/15 157,000, 9/15 100,000, 10/15 321,000, 11/15 272,000, 12/15 239,000.
2015 GDP 2.6%, quarterly growth for 2015 1Q 2.0%, 2Q 2.6%, 3Q 2.0%, 4Q 0.9%.
- U.S. employment participation rate falls to 62.4% in September (94,610,000 Americans not in the American labor force) lowest since October 1977 (peaked 67.2% 12/1997).
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.
- Federal Reserve remitted a record $97.7B in profits to the Treasury Department in 2015 ($96.9B in 2014), and on 12/28/15 sent $19.3B to the Treasury under the Federal Highway bill of 2015 from the bank's surplus capital account.
U.S. Dollar (7 Major Currencies, Euro, Canada, Japan, United Kingdom, Switzerland, Australia, and Sweden) Trade Weighted Index trades 95.2142 (12/17) appreciating 37% from 67.9944 low (5/2/11) highest since 4/2003 (113.0988 1/28/02, high 148.1244 2/25/85).
- U.S. Dollar (26 Broad Currencies) Trade Weighted Index trades 123.4997 (12/17) appreciating 27% from 93.86 (5/2/11, low 89.03 5/8/95) highest since 5/2003 (high 130.20 1/28/02).
U.S. 30yr Treasuries trade (1/30) 2.219%, U.S. 10yr Treasuries trade 1.6357% (1/30).
- 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).
U.S. merger and acquisition deals $5T breaking the 2007 record of $4.6T, 2Q15 of $631.2B exceed 2Q98 of $557.04B.
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).
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).
- 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) down 25% (10 months) from €1.399 (5/6) against the dollar, lowest since January 2003.
- 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).
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.
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%).
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.
- 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.
- 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.
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.
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.
- 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%.
- 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) - first Chinese devaluation since 1/1/1994 when yuan depreciated 50% from 元5.82 to 元8.72, yuan had appreciated 31% from 1/1/1994 to a high 元6.0393 on 1/14/2014.
- China Securities Regulatory Commission (CSRC) bans (7/8) major shareholders, corporate executives and directors from selling shares in listed companies for 6 months.
- China's $485B support of their currency and stock market in June and July (China's foreign exchange reserves, $3.65T as of July 31)
- 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.
- China accelerates (1/5) 300 infrastructure projects, 元7T yuan ($1.1T) to support growth.
Japanese yen depreciates to ¥125.86 (6/5) down 65% from ¥75.31 (10/31/11). Japan 10yr bond trades 0.198% (1/20).
Greece's receives (8/20) 3rd bailout €86B ($96B, total bailout €320B), 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).
- Greek banks reopen (7/20) with capital controls intact after 23 days. Greek 10yr bond trades 10.95% (7/20) down 44% from 19.58% (7/8).
- 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).
- Greek 10yr bond trades 19.58% (7/8) yield up 255% (10 months) from 5.52% (9/8/14).
- ECB has provided €130B of funding on €120B of Greek deposits.
- Greek capital controls imposed (6/28, €60 daily ATM withdrawal and bank transfers/payments abroad banned). 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.
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.
Russian ruble trades ₽74.35 (12/31) depreciates 46% from ₽48.14 (5/18). Russian central bank international reserves fall to $350B in April, from an all-time high $600B (8/2008).
- 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.
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.
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.
- 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.
- Puerto Rico announces its partial default on (1/1/2016) paying $328.7M in GO debt and skipping $37.3M.
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.
- 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).
- 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.
- JPMorgan Chase settles (7/17) $388M with investors misled about $10B of sold residential mortgage-backed securities. JP Morgan Chase to pay (12/18) $307M for failing to disclose conflicts of interest with its wealth management clients. JPMorgan Chase settles (7/8) $166M for improper collection and sales of credit-card debt. JP Morgan Chase to pay (12/21) $150M to investors for hiding $6.2B in losses from London Whale trades of 2012. JPMorgan Chase pays (1/30) $99.5 million for antitrust rigging of foreign exchange market prices in $5.3T/day market.
- Morgan Stanley to pay (2/25) $2.6B to settle claims from its sale of residential mortgage-backed securities.
- Bank of New York Mellon to pay (3/19) $714M for overcharging clients on foreign currency transactions.
- Citigroup settles (7/21) $770M for illegal credit card practices ($700M consumer relief for 7 million and $70M in civil penalties).
- Goldman Sachs settles (8/13) $272M with investors about sales of $6B of residential mortgage-backed securities in 2007-08. 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.
- 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. Barclays to pay (5/20) $115M for rigging ISDAfix (an interest rate benchmark) used to price swaps transactions, commercial real estate mortgages and structured debt securities 2007 to 2012.
- Commerzbank settles (3/12) deferred prosecution for $1.45 billion for dealings with Iran, Sudan, Cuba and Myanmar and violations of money laundering controls.
- Deutsche Bank settles (4/23) $2.5B for manipulation of LIBOR.
- Julius Baer to pay (12/30) $547M for aiding Americans evade taxes.
- Credit Suisse ordered (9/4) to pay $287.5M to Highland Capital Management for fraudulent real-estate transaction.
- 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. 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.
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 $62B.
- 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).
- GM to pay (9/17) $900M deferred-prosecution agreement for ignition-switch defect responsible for 124 deaths, recalling 2.6 million vehicles, and a victim's compensation fund of $625M.
- 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. 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.
- 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.
- Verizon and Sprint to pay (5/12) $158M for violations in billing customers, cramming charges.
- Novartis Pharmaceuticals to pay (11/20) $390M for paying specialty pharmacies illegal kickbacks for inducing patients to refill certain medications.
- 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.
- 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.
- 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.
GAO estimates (3/4) Federal improper payments totalled $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).
- Medicare fraud criminal charges (6/17) against 243 doctors, nurses, and medical professionals - $712M in false billing, FBI currently has 2,700 open investigations.
- 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.
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.
- Ukraine secures (2/12) up to $40 billion IMF international bailout package over 4yrs.
Dow 2014: 16,576.66 to 17,823.07
Dow return for 2014: 7.52%
S&P 500 2014: 1,848.36 to 2,058.90
S&P 500 return for 2014: 11.39%
NASDAQ 2014: 4,176.59 to 4,736.05
NASDAQ return for 2014: 13.40%
10 year Treasury: 2.17% yield down 28%, prices up
World Equity Market: $69.42 trillion up 11%
MSCI Europe Index down -2.8%
MSCI Asia Pacific Index up 10.7%
S&P Latin America 40 down -13.7%
MSCI BRIC down -6.8%
S&P Middle East & Africa up 2.3%
* U.S. Total stock market returned 11% in 2014, Stocks had average gains, Bonds had above average gains and inflation was below average 1.5%.
* Of the 5 largest sectors in the U.S. Economy: Real Estate 29.3%, Healthcare 23.5%, Technology 16.2%, Financials 13.5% while Natural Resources -10.3%. By size: Large Cap returned 10%, Mid Cap 9%, Small Cap 5% and Micro Cap 3% all had losses. Gold down -2% while oil fell -45% with commodity prices (CRB) down -18%.
* Global markets rose by 11% of the World's largest economic regions: Asia 11%, Europe -3%, while Emerging Markets down -7% and Latin America down -14%. Of the World's largest Developed non-U.S. Economies: Japan 7%, Canada 7%, Germany 3%, France -1%, Britain -2%. In the Emerging markets China Shanghai/Shenzen 54/35%, India 30% while Brazil -3% and Russia -45%. Hedge funds underperformed 4% and Private Equity 11% outperformed market indexes.
* Those who diversified with MPT did best, a trend which should accelerate indicative are the returns in U.S sectors, China and India.
Months 2010-15 (click)
U.S. unemployment at 6.7% to 5.6% remained a major concern. 2014 gdp 2.4% with 3 million jobs added.
- U.S. monthly job gains in 2014: 1/14 190,000, 2/14 151,000, 3/14 272,000, 4/14 329,000, 5/14 246,000, 6/14 304,000, 7/14 202,000, 8/14 230,000, 9/14 280,000, 10/14 227,000, 11/14 312,000, 12/14 255,000.
2014 GDP 2.4%, quarterly growth for 2014 1Q -1.2% (largest loss since 1Q09), 2Q 4.0%, 3Q 5.0% (largest gain since 3Q03), 4Q 2.3%.
FOMC neutral stance Fed Funds rate 0%-0.25% and the Discount rate of 0.75%. QE3/QE4 ended, FMOC (Oct 29) "decided to conclude its asset purchase program [will maintain] its existing policy of reinvesting principal payments from its holdings" Federal Reserve's balance sheet stands at $4.48T.
- 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.
- Federal Reserve's balance sheet exceeds $4.4T.
- Federal Reserve returned to the federal government a record $98.7 billion in 2014.
- Federal Reserve new chairwoman Janet Yellen confirmed (1/6) first woman ever to head bank.
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.
Consumerfinance.gov
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. TARP ownership positions end in: AIG, Citigroup, Bank of America, Fannie Mae, Freddie Mac, General Motors, Chrysler, GMAC, and Ally Financial. AIG - total $182.3B ($67.8B disbursed), profit $5.1B. Banks: total 245.1B, profit $29.7B. Auto: total $79.7B, lost $9.35B. Credit: total $19.1B, profit $4.5B. Housing: total $14.6B, lost $14.6B.
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).
Global debt rose to $199T (286% of global GDP) up from $142T (269% of GDP) in 2007.
Treasuries gained 6.1% in 2014, -3.4% in 2013, 2.2% in 2012, 9.8% in 2011, 5.9% in 2010. U.S. Aggregate Bond index up 5% .
Mergers and acquisitions $3.4T in 2014, up from $2.63T in 2013, $2.19T in 2012 and $2.26T in 2011. Venture capital $40B in 4,195 deals in 2014.
WTI/Brent oil trades $52.44/55.82 (12/31) falls 53/51% (16 months) from $112.24/117.29 (8/26/13). Gold trades $1130.4 (11/7) down 41% from $1,923.70 (9/6/11), 5-year low. Silver falls to $14.10 (12/1) down 72% from $49.82 (4/25/11). CRB index falls to 228.99 (12/31) down 38% from 370.72 (5/2/11).
U.S. participation rate falls to 62.7% lowest since February 1978, 92,898,000 not in labor force - 156,129,000 of 249,027,000 civilian noninstitutional population (16yrs and older, not Armed Forces, health/mental facilities, or incarcerated).
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.
ECB cuts (9/4) 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%.
- German 10yr trades 0.535% (12/30) yield falls 74% (16 months) from 2.087% (9/11/13).
- Euro trades €1.2151 (12/26) down 13% (7 months) from €1.399 (5/6).
- 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.
- 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.
- 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%.
- 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).
Greece issues (4/10) $4.14B (€3B) of 5yr bonds yielding 4.95%, unlocking €8.3B of bailout funds - 6 years of recession, €246B in rescue loans from EU, ECB and IMF, current debt 175.6% of GDP 12/31/13.
- Greek 10yr trades 9.85% (12/26) yield up 78% (3 months) from 5.52% (9/8).
- 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).
- 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.
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.
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%.
- Japan approves 12/27 ¥3.5T ($29 billion) fiscal stimulus package to boost economy.
- Japanese 10yr yield fell to all time low of 0.31% (12/24).
- Yen trades ¥121.85 (12/8) down 62% (2 years) from ¥75.31 (10/31/11).
China's 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).
- 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.
- China's foreign reserves touches $4T 6/2014 - $3T, 4/2011, China holds $1.27T of U.S. Treasury market (10.6% of the U.S.'s $12T).
- Chinese yuan apreciates to 元6.0393 (1/14) up 13% from 6.83 (6/17/10).
- BRICs (7/15) Brazil, Russia, India, China and South Africa establish $100B development bank.
- 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.
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).
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).
U.S. Government settlements against 6 largest U.S. bank totals $128B (2010-14).
- Banks (11/12) settle $4.25B for rigging foreign exchange benchmarks: Citigroup $1.02B, JPMorgan Chase $1.01B, UBS $799M, RBS $634M, HSBC $618M, and Bank of America $250M to U.S's CFTC & OCC, the U.K.'s FCA, and the Swiss FMSA.
- Bank of America settles (8/21) $16.65B for selling mortgage-backed securities to investors. Bank of America (Countrywide and Merrill Lynch) to pay Federal Housing Finance Agency (FHFA, 3/26) $9.5B for selling Fannie Mae and Freddie Mac falsely represented residential mortgage-backed securities (RMBS) from 2005-07. Bank of America settles (7/30) $1.27B for defective mortgages sold by Countrywide. Bank of America settles (7/16) $650M payment to AIG for mortgage-backed securities sold. Bank of America settles (4/9) $783M for deceiving customers in sales of credit-card debt cancellation and theft-protection insurance. Bank of America (3/26) settles with FHFA $9.5B for mortgages sold to Fannie Mae and Freddie Mac. 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) - Private RMBS totaled $2.2T (2008), with losses 2006-2012 of $449B (exceeding total losses on $9T of non-private mortgage debt).
- Citigroup settles (7/14) $7B for fraud related to mortgage-backed securities. Citigroup to pay (6/9) SEC $285M to settle fraud for CDO sold. Citigroup settles (4/7) $1.13B with investors for sold RMBS.
- Goldman Sachs to repurchase (8/22) $3.15B of FHFA mortgage-backed securities.
- Morgan Stanley settles (2/4) $1.25B for selling mortgage-backed securities to Fannie Mae and Freddie Mac. Morgan Stanley settles (7/24) $275M with SEC for misleading investors about mortgage-backed securities.
- 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.
-Wells Fargo settles (5/29) $62.5M to institutional investors for improper advertising.
- SunTrust Banks settles (6/17) $968M for mortgages to Fannie Mae and Freddie Mac. SunTrust Banks to pay (7/3) up to $320M to resolve a criminal probe in administering HAMP from 3/2009-12/2010.
- Fannie Mae (10/24) settles $170M for misleading shareholders about its finances.
- AIG settles (8/4) $960M to investors for not disclosing its financials accurately.
- U.S. Bancorp, settles (6/30) $200M for mortgages sold to Fannie Mae and Freddie Mac.
- GE Capital settles (6/14) $169M for credit card lending discrimination.
- MF Global (12/24) fined $100M penalty ($1.2B of client funds ordered returned) for misuse of customers funds.
- Credit Suisse pleads guilty (5/19) $2.615B to helping Americans evade taxes. 106 Swiss banking institutions have agreed with IRS tax evasion disclosure initiatives. Credit Suisse (3/21) settles $885M with FHFA for mortgages sold to Fannie Mae and Freddie Mac between 2005 and 2007. Credit Suisse (2/21) settles $196.5M with SEC for avoiding paying U.S. taxes.
- BNP Paribas settles (6/30) for $8.97B and pleads guilty to criminal charges of filing false business records and conspiracy 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.
- HSBC settles (9/12) $550M for failing to disclose the risks on mortgage bonds it sold to Fannie Mae and Freddie Mac.
- Standard Chartered settles (8/19) $300M and indefinitely suspends some dollar clearing for money laundering compliance failures required in their 12/10/12 settlement.
- Lloyds' settles (7/28) for $370M for LIBOR rate rigging.
- Pricewaterhouse Coopers fined (8/18) $25M for sanitizing reports to regulators on sanctions and money-laundering controls for Bank of Tokyo-Mitsubishi.
- Bank Leumi Le-Israel settles (12/22) deferred-prosecution agreement for $400 million admitting to helping American clients evade taxes.
- Four former Countrywide executives will receive over $200M of whistleblower payments as part of $16.65B settlement against Bank of America.
45,000 America tax evaders have accepted IRS offshore accounts amnesty program and paid more than $6.5B in back taxes, interest and penalties. 145,000 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.
Anadarko Petroleum (4/3) settles $5.15B of environmental liabilities for Kerr-McGee acquisition in 2006.
- 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.
- Alstom guilty of violating Foreign Corrupt Practices Act settles (12/22) $772M for bribery to win power-plant contracts.
- Apple settles (11/21) $450M for harming consumers by colluding in raising e-book prices.
- Hewlett-Packard fined (9/13) $108M for paying bribes through its subsidiaries in Russia, Poland and Mexico.
- T-Mobile to pay (12/19) $90M for violations in billing customers, cramming charges.
- AT&T to pay (10/8) $105M for violations in billing customers, cramming charges.
- Toyota (3/19) settles $1.2B for cars unintended vehicle acceleration between 2009 and 2010, recalling more than 10 million U.S. vehicles.
- General Motors recalls over 30 million cars, repairs and fund to compensate victims killed/injured in accidents expected to cost $2.5B.
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 March 2007 1,900 charged and $19.2B recovered of estimated $60B/yr of fraudulent billings.
- 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, guilty 2 counts securities fraud and 1 count conspiracy.
Ukraine's emergency rescue package IMF approved (4/30) $17.5B and unlocks an additional $15B in international financing. 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. Kyiv parliament's renunciation (12/23) of Ukraine's neutral status a move towards joining NATO.
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.
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.
Months 2010-15 (click)
U.S. unemployment at 6.7% to 7.9% remained a major concern. 2013 gdp 1.7% with 2.3 million jobs added.
- U.S. monthly job gains in 2013: 1/13 211,000, 2/13 286,000, 3/13 130,000, 4/13 197,000, 5/13 226,000, 6/13 162,000, 7/13 122,000, 8/13 261,000, 9/13 190,000, 10/13 212,000, 11/13 258,000, 12/13 47,000.
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 $4T ($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 $79.5B to the Treasury in 2013 (balance sheet of $4.023T) down from $88.4B in 2012.
- Financial Stability Oversight Council (FSOC, 6/4/13) adds AIG, Prudential Financial, General Electric as SIFIs (Systemically Important Financial Institution).
2013 GDP 1.7%, quarterly growth for 2013 1Q 1.7%, 2Q 0.8%, 3Q 3.1%, 4Q 4.0%.
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 $50B must report 7 quantitative measurements to Supervision: OCC, CFTC and the SEC.
Treasuries lost -3.4% in 2013, 2.2% in 2012, 9.8% 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).
Mergers and acquisitions $2.63T in 2013, up from $2.19T in 2012 and $2.26T in 2011. Venture capital $29.4B in 3,995 deals in 2013.
FDIC selling (9/11) $2.42B of Citigroup bonds exiting U.S. government holdings linked to financial crisis.
GM, U.S. Treasury completes divestiture (12/9) losing $11.2B on its GM investment of $49.5B, 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, $4T 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 92M Americas are not counted as part of the labor force.
Nearly 20% of U.S. homeowners mortgages "underwater" (12/31, 10M households, peak of 31.4% 3/31/2012) and next 10M households have 20% or less equity in their homes.
Since 2009, 1.4M have modified their mortgages through Treasury's Home Affordable Modification Program (HAMP) and 3M under Home Affordable Refinance Program (HARP).
Food-stamp (SNAP, Supplemental Nutrition Assistance Program) benefits rose to 47.8 million Americans and a record $82.5B (2013) - 26 million Americans and about $30B, in 2007.
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 ($69.2B), New Hampshire $13.9B ($19.7B), Hawaii $27B ($39.2B), Louisiana $74.9B ($108.5B), North Dakota $7.3B ($10B).
Detroit files Chapter 9 bankruptcy (7/18) largest U.S. municipal bankruptcy with total liabilities of $18.8B. 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", $1.43T 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 €10B rescue plan.
European Union settles (12/5) €1.71B ($2.3B) record antitrust Libor interest rates rigging: Deutsche Bank €725M, Societe Generale €446M, RBS €391M, J.P. Morgan €80M, Citigroup €70M, RP Martin Holdings Ltd. €247k.
China's holdings of U.S. Treasury securities reach $1.317T in November 2013.
13 banks settle $9.3B (Bank of America $2.9B, JPMorgan Chase $2B, Wells Fargo $2B, 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) $13B for residential mortgage-backed securities ($2B Justice Department, $4B in consumer relief, $4B FHFA and $3B to state authorities). JPMC settles (11/15) $4.5B for 330 mortgage bond trusts. JPMorgan Chase settles (10/25) $5.1B with FHFA over mortgage bonds. JPMorgan Chase settles (10/15) $100M with CFTC related to "London whale" trades and settles (9/19) $920M for $6.2B loss on derivatives bets. JP Morgan Chase also settles (9/19) $389M for debt-collection lawsuits. J.P. Morgan Chase (7/30) settles $410M to Federal Energy Regulatory Commission (FERC) for manipulating electricity markets. JPMorgan Chase settles 2 years bank probation (12/31, deferred prosecution) and $2.2B to resolve complicity in Madoff Ponzi scheme - $1.7B to Justice Dept., $350M to OCC and $543M to trustee (Irving Picard) of victims fund.
- Bank of America settles $11.6B (1/7) with Fannie Mae, Countrywide Financial subsidiary loans. Bank of America settles (12/7) $500M with investors for Countrywide's securities offerings, and settles (12/2) $404M with Freddie Mac and settled (5/8) $315M with investors for Merrill Lynch's securities offerings. Bank of America (Merrill Lynch) settles (12/12) $131.8M for deceptive disclosures of CDOs sold to investors.
- Citigroup settles (7/1) $968M to Fannie Mae and settles (9/25) $395M to Freddie Mac. Citigroup (3/18) settles $730M 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) $869M to Freddie Mac and (11/6) settles $335M with FHFA for security offerings.
- SunTrust Bank settles (10/10) $968M and settles (10/10) $228M with Fannie Mae. SunTrust Bank settled (9/30/12) $6M with Freddie Mac.
- HSBC (Household International) must pay investors (10/17) $2.46B for securities fraud.
- Deutsche Bank settles (12/20) €1.4B ($1.9B) for mortgage-backed securities sold to Fannie Mae and Freddie Mac, from 2005 to 2007.
- Residential Capital LLC (Ally Financial subsidiary) settles (11/29) $1.2B with FHFA for subprime mortgages.
- Rabobank settles (10/29) $1.07B for LIBOR violations.
- UBS settles (7/25) $885M with FHFA for misrepresenting mortgage-backed bonds.
- Royal Bank of Scotland (2/6) settles $612M for LIBOR manipulation and (11/7) settles $153.7M for security offerings.
- Ally Financial settles (12/20 ) $98M with U.S. Justice Depart. for discriminatory lending practices to 235,000 minority borrowers, since 2011.
- Barclays settles (FERC, 7/16) record $487.9M for manipulation of the California energy markets.
Johnson & Johnson (11/4) settles $2.2B for violations in marketing drugs and (11/19) settles $2.475B for hip replacements.
- Transocean agrees (1/3) to $1.4B settlement with Justice Dept. for the BP Gulf of Mexico oil spill.
- Microsoft (3/6) fined $730M by EU for monopoly practices regarding browsers.
- ExxonMobil to pay $236M (4/9) to the State of New Hampshire for toxic MTBE contamination of groundwater.
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 $1.8B 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 $1B CDO shorted by John Paulson.
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 1.7%. 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 6% 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.
Months 2010-15 (click)
U.S. unemployment at 7.7% to 8.3% remained a major concern. 2012 gdp 2.2% with 2.2 million jobs added.
- U.S. monthly job gains in 2012: 1/12 360,000, 2/12 226,000, 3/12 243,000, 4/12 96,000, 5/12 110,000, 6/12 88,000, 7/12 160,000, 8/12 150,000, 9/12 161,000, 10/12 225,000, 11/12 203,000, 12/12 214,000.
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 $267B 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 $40B 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 $85B 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 $40B 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 $45B per month".
- Federal Reserve extends (12/13) dollar liquidity swaps to foreign central banks through February 2014.
- Federal Reserve returned $88.4B to the Treasury in 2012 on its $2.94T balance sheet, $75.4B in 2011, $79.3B in 2010 and $47.4B in 2009.
2012 GDP 2.2%, quarterly growth for 2012 1Q 2.3%, 2Q 1.6%, 3Q 2.5%, 4Q 0.1%.
Treasuries returned 2.2% 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%.
Mergers and acquisitions $2.19T in 2012 down from $2.26T in 2011 and the same $2.19T as 2010. Venture capital of $28.3B 3267 deals in 2012 down from $30.6B in 2011, $23.7B in 2010, and $20.8B in 2009.
Jefferies CRB trades 266.78 (6/22) down 28% from the all-time high of 370.72 (May 2, 2011), trades 321.36 (9/14) - old CRB trades 502.28 (6/1) down from 688.3 (3/7/2011).
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, $1M ceiling annually. General solicitation, permitted only for accredited investors in Reg D offerings. Private emerging growth companies (EGCs, up to $1B 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, $127B 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 $6B 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) - $89B, 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 ($50B, 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 £50B ($78B) of assets (adding to £325B of quantitative easing).
- ECB (3/2) offers €529.5B ($712.2B) for 1,092 days (LTRO2) to 800 of 2,267 eligible financial institutions. ECB's balance sheet rises to a record €3.02T ($3.96T).
- EU (3/30) establishes €500B European Stability Mechanism (ESM) and the European Financial Stability Facility (EFSF) €200B of Irish and Portuguese funding and €102B for Greece, lending total of €800B.
- 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 €209B of government bonds on its books
ESM launched Oct. 8, €500B, contributions: Germany 27.15% France 20.39% Italy 17.91% Spain 11.9%.
Greece (2/21) secures €130B second bailout through 2014. Greece (7/21) receives a €110B ($157B) 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 €199B of €205.5B in bonds regulated by Greek law. Credit default swaps insuring Greek debt will payout about $0.785 to 4,369 outstanding contracts $2.89B ($3.18B net) 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 €31.8B receiving €11.2b (average price $0.338), Greece's 5 biggest banks participated in buyback.
- Greece to receive €43.7B in 3 installments through Q1 2013, to pay €34.3B 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 (€11.2B) to private-sector Greek government bond-holders.
- Portugal gets €78B bailout package (5/14, €12B for banks).
- EU banks hold $147B of Greek sovereign bonds and $115B 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). German 10yr bond yield (7/23) trades 1.126%.
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 1T, 70 EU banks required to increase core capital levels to 9% and recapitalize (by June 2012) raising €106B 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).
People's Bank of China (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%.
$25B historic U.S. settlement (2/10) - Bank of America $11.82B, Wells Fargo $5.35B, JP Morgan $5.29B, Citigroup $2.2B and Ally $310M for multiple mortgage violations.
- Barclays settles (6/27) £290M ($452.3M) fraud to U.S. and U.K. for manipulating Libor (benchmark rate for $360T) 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 $275M 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 $7B Ponzi scheme. $330M of Stanford funds in 29 foreign bank accounts, almost $3.5B in claims.
- Visa, MasterCard and their issuers (7/13) agreed to a $7.25B in the largest antitrust settlement with 7 million merchants over credit and debit card fees.
- JPMorgan Chase ($296.9M) and Credit Suisse ($120M) settle (11/16) with SEC for sales of troubled mortgage securities to investors.
Wells Fargo to pay (7/12) $175M for racial discrimination in home loans through mortgage brokers effecting 34,000 black and Hispanic borrowers from 2004-09.
- Deutsche Bank (MortgageIT) settles (5/10) $202.3M for violations relating to mortgage fraud.
- Citigroup settles (8/29) $590M with shareholders over hidden "toxic assets" (2/26/07-4/18/08), Citigroup shares fell 55%.
- Bank of America settles $2.43B lawsuit with investors who suffered losses during its acquisition of Merrill Lynch.
- Bank of America settles (2/9) $1B for violations of the False Claims Act relating to mortgage fraud. CitiMortgage settles (2/15) $158.3M. Flagstar Bank settles (2/24) $132.8M.
- Capital One settles (7/18) $210M and Discover Financial Services settles (9/24) $214M for selling unnecessary credit-card services.
- Standard Chartered (12/10) settles $32M with U.S. authorities (transactions 2001-07) with Iran, Burma, Libya and Sudan.
- UBS settles (12/19) $1.5B (incl. record CFTC $700M) fine, rigging LIBOR and U.S. criminal charges against 2 former traders.
- HSBC record $1.92B settlement (12/11, $1.256B to Justice Dept. and $665M 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, $182.3B bailout) for $7.6B ($22.7B profit), leaving Treasury only holding AIG warrants.
- AIG settles (10/22) $300M, in 2012: MetLife settles (4/23) $500M 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) $104M to convicted UBS employee Bradley Birkenfeld (conspiracy, June 19, 2008 40 months). $96M (October 26, 2010) Justice Department award to Cheryl Eckard, GlaxoSmithKline employee helped $750M settlement for manufacturing deficiencies.
- IRS (6/26) collects over $5B in back taxes, interest and penalties from 33,000 taxpayers hiding in offshore accounts under two amnesty programs.
BP (3/2) offers $7.8B settlement for 120,000 claims - already $8B paid to individuals and $14B paid for cleanup.
- BP's $4B Government settlement (incl. largest criminal penalty $1.256B) and $525M to the SEC and pleads guilty to 11 manslaughter felony counts related to 11 deaths.
- Pfizer paid $2.3B settlement (incl. $1.195B criminal) 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 $3B 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 $14B (60% over farmers' 2012 insurance premiums. 85% of farmers have crop insurance, in 1988 25% were covered in the last worst drought. $68.7B paid out from 1989 to 2009. In 2011 (with a drought in Texas) a record $10.8B paid ($4.5B 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 $60B (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).
Dow 2011: 11,577.51 to 12,217.56
Dow return for 2011: 5.53%
S&P 500 2011: 1,257.64 to 1,257.6
S&P 500 return for 2011: 0.0%
NASDAQ 2011: 2,652.87 to 2,605.15
NASDAQ return for 2011: -1.8%
10 year Treasury: 1.87% yield down -43.33% prices up
World Equity Market: $45.912 trillion down -11.69%
MSCI Europe Index 717.28 down -16.49%
MSCI Asia Pacific Index 112.82 down -18.07%
S&P Latin America 40 4,135.66 down -21.16%
MSCI BRIC 267.83 down -24.85%
S&P Middle East & Africa 265.14 down -20.67%
* U.S. Total stock market returned 0.9% in 2011, Stocks had below average gains, Bonds had above average gains and inflation was average 2.9%. August and September had large losses while October had large gains.
* Of the 5 largest sectors in the U.S. Economy: Healthcare 12.3% and Real Estate 9.1% outperformed, Natural Resources 2.8%, Technology 2.6% while Financials -17.1% underperformed. By size: Large Cap returned 0%, Small Cap -0.2%, Mid Cap -3.1% while Micro Cap lost -10.9%. Both gold 10.2% and oil 7.2% rose while commodity prices (CRB) fell -10.2%.
* Global markets fell by -11.7% of the World's largest economic regions: Europe -16.5%, Asia -18.1%, Latin America -21.2% and Emerging Markets -24.9% all underperformed. Of the World's largest Developed non-U.S. Economies: Britain -5.6%, Canada -11.1%, Germany -14.7%, France -16.9% while Japan lost -17.3%. In the Emerging markets Brazil -18.1%, China -21.7%, Russia -22.1% and India -24.6%. Hedge funds -5% 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 Treasuries, Healthcare, Real Estate and the commodities gold and oil.
Months 2010-15 (click)
U.S. unemployment at 8.5% to 9.1% remained a major concern. 2011 gdp 1.7% with 2.08 million jobs added.
- U.S. monthly job gains in 2011: 1/11 70,000, 2/11 168,000, 3/11 212,000, 4/11 322,000, 5/11 102,000, 6/11 217,000, 7/11 106,000, 8/11 122,000, 9/11 221,000, 10/11 183,000, 11/11 164,000, 12/11 196,000.
FOMC neutral stance (Dec 13) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%.
Federal Reserve (QE2) to "purchase, by the end of June 2012, $400B 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".
- Federal Reserve "will maintain its existing policy of reinvesting principal payments from its securities holdings" - System Open Market Account at about $2.654T, about $300B of purchases over the next 12 months.
- 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.
- Federal Reserve believes challenges facing the U.S. economy "are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013."
- Federal Reserve returns $75.4B to the U.S. Treasury. Fed's balance sheet rose to a record $2.928T on Dec. 28.
GDP quarterly growth for 2011 1Q -1.5%, 2Q 2.9%, 3Q 0.8%, 4Q 4.6%.
Treasuries returned 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 3.91% (12/21).
2yr Treasuries trade 0.1431% (9/20) and 10yr trade 1.6714 (9/23). U.S. 1 month Treasuries trade at a negative yield : 6/27-30, 7/6-7,13-20, 8/4-8, 9/8-30, 10-31, 10/4-7 and 11-12 and U.S. 3 month Treasuries negative: 7/5,7,13-14, 8/4-8,19-30 9/12,14-19,22-26 and 10/3-7.
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.
U.S. Dollar (7 Major Currencies) depreciates 40% trades 67.9944 low (5/2) from 113.0988 1/28/02 (Euro, Canada, Japan, United Kingdom, Switzerland, Australia, and Sweden) Trade Weighted Index - high 148.1244 2/25/85, down 54%.
- U.S. Dollar (Broad) depreciates 28% trades 93.8627 (5/2) from 130.2037 1/28/02 (26 Currencies) Trade Weighted Index - low 89.0259 5/8/95.
Gold trades at an all-time high of $1,923.70 (Sep 6). 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.
- Silver trades at an all-time high of $49.82 (Apr 25), surpassing $49.45 during the silver Hunt brothers scandal, Jan 18, 1980. Copper trade at an all-time high of $4.6495/lb (Feb 15).
- WTI oil trades $113.93 high (4/29); Brent oil trades $127.02 high (4/11).
- CRB trade at a new all-time high of 688.3 (Mar 7), Jefferies CRB 370.72 (May 2).
Obama signs Budget Control Act of 2011 (8/2): $917B deficit reduction and budget caps on spending through 2021.
- Obama signs Temporary Payroll Tax Cut Continuation Act of 2011 ($33B) a 2 month stopgap.
ECB raises rates from 1% to 1.25% (May) and to 1.5% (July). ECB lowers rate (Nov 3) to 1.25% as Mario Draghi succeeds Jean-Claude Trichet (11/1) and starts 1 year bond purchase of unlimited size. ECB lowers interest rate (12/8) to 1% while Euro-area governments must rollover €1.1T of long and short-term debt in 2012 while European banks have about $665B of debt coming due in the first 6 months of 2012.
- European Central Bank (12/21) lends €489B ($638B, Long Term Refinancing Operation) to 523 banks under a (restarted) 3 year lending facility. ECB's balance sheet rose to a record €2.73T ($3.55T) 12/28.
- Greek 10-year Bond yields 36.142% 12/21/11. Portugal 10-year Bond yields 14.328% 12/1/11. Ireland 10-year Bond yields 14.219% 7/15/11. Italy 10-year Bond yields 7.483% 11/9/11. Spain 10-year Bond yields 6.729% 11/25/11.
Mergers and acquisitions rose to $2.26T up from $2.19T in 2010 and $1.77T 2009, $2.5T 2008 and 2007's record $4.04T. Venture capital rises to $28B in 2011 up 22% from $23B 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 €1T, 70 EU banks required to increase core capital levels to 9% and recapitalize (by June 2012)
raising €106B 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). The ESM (2012) is expected to have 500B in lending capacity.
Greece (7/21) receives a €110B ($157B) restructured EU/ECB/IMF aid package - Greek Parliament approves budget to receive aid.
- Portugal gets €78B bailout package (€12B for banks).
- EU banks hold $147B of Greek sovereign bonds and $115B of Portuguese and Irish debt - 5% of annual European Union gdp.
Swiss Central bank (Sep 6) intervenes imposing a Euro-Swiss franc "minimum rate of €1.20".
Japanese yen rallies to all-time high of ¥75.31 on 10/31.
China's rural population falls from 81% (1979) to below 50% (2011) - the number of people living in towns and cities increased to 690.79 million. China's foreign-exchange reserves exceed $3T in March 2011.
FHFA (Federal Housing Finance Agency, conservator for Fannie Mae and Freddie Mac) files lawsuits against 17 financial institutions (and 131 individuals) alleging over $196B of violations in the sale of residential private-label mortgage-backed securities. UBS first sued (7/27/11) for $4.5B of mortgage-backed securities sold between 9/28/05-8/30/07.
- Jefferson County, Alabama (11/9) files largest U.S. municipal bankruptcy of $4.23B of debt ($3.14B relating to sewer work). Orange County, CA filed bankruptcy (12/6/94) with a loss of $1.64B in its Orange County Investment Pool of $7.6B and borrowings of $13.6B. Municipal bond bankruptcies: 362 filings from 1937-1994 total debt of about $217M
- MF Global Holdings files bankruptcy (10/31) with debts of $39.7B and assets of $41B, 8 largest U.S. bankruptcy. $1.6B of customer money missing - $700M from MF Global's U.K. subsidiary, $680M from JPMorgan and other financial institutions and $220M inadvertently transferred from securities customers to commodities customers.
- Bank of America, JPMorgan Chase, UBS, Wells Fargo and General Electric settle (12/23) for $743M bid-rigging between 1999 and 2004 defrauding states, local governments and non-profits in $3.7T Muni market.
- Bank of America settles (1/3) $2.8B ($1.3B to Freddie Mac and $1.5B to Fannie Mae) for mortgages sold. Bank of America settles (12/21) $335M compensating Countrywide borrowers discriminated against for home loans based on race and national origin.
- JPMorgan settles with SEC (12/21) $153.6M for aiding Goldman Sachs ($550M settlement, 7/15/10) in CDO construction.
- UBS, Kweku Adoboli (9/16) charged with $2.3B fraud by abuse of position and false accounting.
- Raj Rajaratnam, founder of Galleon hedge fund (managed $7B), sentenced to 11 years and fined for criminal and civil penalties of over $150M. Perfect Hedge: 62 found guilty of insider trading.
- Lee Bentley Farkas sentenced (4/19/11, former Chairman of Taylor, Bean & Whitaker) for 30yrs for $2.9B fraud and bankrupcy of TBW (8/24/09, 3rd largest direct FHA mortgage lender) that also contributed to bankrupcy (8/26/09) of Colonial Bank.
Japan Sendai 9.0 Earthquake and nuclear accident, near 19,000 deaths, Tohoku fault displaced 165 feet.
- 2011 deadliest year for tornadoes 549 deaths (157 fatalities in Joplin, Mo.), causing $28B of damage.
- Mississippi River exceeds some damages caused by the Great Mississippi Flood of 1927, causing $4B of damage.
- 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 $8B of damage - over 7 million US homes and businesses lost power across 13 states.
Arab spring - Overthrew governments in Tunisia. Then Egypt (Feb 11, Hosni Mubarak). Libyan revolution and civil war (Aug 23, Muammar Gaddafi). Syria suspended from the Arab League (Nov 12).
Dow 2010: 10,428.05 to 11,577.51
Dow return for 2010: 11.02%
S&P 500 2010: 1,115.10 to 1,257.64
S&P 500 return for 2010: 12.78%
NASDAQ 2010: 2,269.15 to 2,652.87
NASDAQ return for 2010: 16.91%
10 year Treasury: 3.30% yield down -13.39% prices up
World Equity Market: $51,998 trillion up 13.13%
MSCI Europe Index 858.94 down -2,25%
MSCI Asia Pacific Index 137.70 up 14.32%
S&P Latin America 40 5,245.92 up 14.05%
MSCI BRIC 356.40 up 7.26%
S&P Middle East & Africa 334.21 up 25.95%
* U.S. Total stock market returned 15.6% in 2010, Stocks had above average gains, Bonds had above average gains and inflation was below average 1.5%. Only January, May, June and August had large losses in all 3 major U.S. indexes.
* Of the 5 largest sectors in the U.S. Economy: Real Estate 21.8%, Natural Resources 21.1%, Financials 11.6% and Technology 10.9% over-performed, while Healthcare 2.9% underperformed. By size: Mid Cap, Small Cap and Micro Cap returned 25-27% while Large Cap returned 12.8%. Both gold 28.6% and oil 15.7% rose with commodity prices (CRB) which rose a historic 122.5%.
* Global markets rose 13.1% of the World's largest economic regions: Asia 14.3%, Latin America 14.1% and Emerging Markets 7.3% while Europe -2.2% underperformed. Of the World's largest Developed non-U.S. Economies: Germany 16.1%, Canada 14.5%, Britain 9.0% while Japan -3.0% and France -3.3% lost. In the Emerging markets Russia 22.7% and India 17.4% while Brazil 1.1% and China -14.3% lost. Hedge funds 8% (in 2009, 20%) and Private Equity both overperformed market indexes.
* Those who diversified with MPT did best, a trend which should accelerate indicative are the returns in Real Estate, Mid Cap, Small Cap, Micro Cap and commodity markets.
Months 2005-10 (click)
2007-09 PANIC facts (click)
U.S. unemployment at 9.4% to 9.9% remained a major concern. 2010 gdp 3%, after shrinking -2.6% in 2009. 8.75 million jobs lost during recession, in 2010 1,058,000 jobs added.
- U.S. unemployment monthly job losses continue in 2010: 1/10 +18,000, 2/10 -50,000, 3/10 +156,000, 4/10 +251,000, 5/10 +516,000, 6/10 -122,000, 7/10 -61,000, 8/10 -42,000, 9/10 -57,000, 10/10 +241,000, 11/10 +137,000, 12/10 +71,000.
Gold trade at a new all-time high of $1,432.50 (Dec 7). Silver traded $30.93 (Dec 30), highest since March 1980. Copper trade at an all-time high of $4.372/lb (Dec 30). CRB trade at a new all-time high of 630.5 (Dec 30).
Treasuries returned 5.9% in 2010, up from -3.72% in 2009 and 14% in 2008 - treasuries have averaged a 8.15% return since 1978. Corporate bonds yields fell to 3.36% (Oct. 11) down from 7.41% (March 17, 2009), returning 7.12% compared with 16.3% in 2009. 30-year Treasuries yield rises to 4.8559% (4/7/10) from 2.505% a record low (December, 18 2008).
Federal Reserve continues to reinvest principal payments from agency debt and agency mortgage-backed securities into longer-term Treasury securities: $250-300B plus $600B of new purchases of longer-term Treasury securities through the end of the 2nd quarter of 2011 (about $110B per month with an average duration of between 5 and 6 years).
- Fed extends U.S. Dollar Liquidity Swaps extended (12/17/10) following troubles in Ireland (through August 1, 2011).
- Fed 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 $10-25B/ month.
- Fed extends U.S. Dollar Liquidity Swaps extended (5/9/10) following the May 6, 2010 DJIA interday 998 pt fall (through January 2011).
- FOMC 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).
GDP quarterly growth for 2010 1Q 1.7%, 2Q 3.9%, 3Q 2.7%, 4Q 2.5%.
Dec 17 - Middle Class Tax Relief Act of 2010 ($858B bill for 2011-12). Extended Income tax rates, Extended Alternative Minimum Tax,Social Security tax reduction, Expanded Child tax credit, Estate tax, Unemployed, Extended Capital Gains rates, Marriage penalty relief, Expanded College credit and Individual tax break extensions.
July 21 - Dodd-Frank Wall Street Reform and Consumer Protection Act signed. Requiring 243 new rules to be writen by 11 different federal agencies. Creates a Financial Stability Oversight Council, a Consumer Financial Protection Bureau, a Federal Insurance Office, OTC derivatives clearing, stricter Bank Capital standards (including restricted Propriety trading), Credit-rating business oversight, new authorities for the SEC and required registration for Hedge funds and Private Equity funds - phasing in through 2022.
Obama signs $940B (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 Small Business Jobs and Credit Act of 2010 ($30B) $18B of federal funds for small bank small businesses loans and $12B in business tax breaks.
- $26.1B Education Jobs and Medicaid Assistance Act of 2010 providing $10B for state teacher's payrolls and $16.1B for state Medicaid funding.
- $34B Unemployment Compensation Extension Act of 2010 extending unemployment benefits.
- $18.2B Continuing Extension Act of 2010 extending unemployment benefits.
- $17.6B Hiring Incentives to Restore Employment (HIRE) Act including the
Foreign Account Tax Compliance Act (FATCA).
DJIA falls 998.5 points (May 6, a 1010.14 point swing, markets lose $862B in 20 minutes), the 9.2% plunge its biggest since the 1987 crash.
Mergers and acquisitions rose to $2.19T in 2010, up from $1.77T in 2009, $2.5T 2008 and 2007's record $4.04T.
SEC, June 11 - Exchanges 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).
- 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.
EU leaders (16 euro nations) agree to a €750B ($940B) stabilization facility fund for the Euro. Euro depreciates to $1.1874 (June 7, 2010) falling from $1.51 (12/1/09, over 21% in 6 months).
Basel III, 27 nations agree to raising minimum tier 1 capital requirement to 4% of risk-weighted assets, plus a conservation buffer of 2% and an optional "market-specific counter-cyclical buffer" up to 2-3% (BIS imposed) - phased in 2013-18.
China surpasses Japan to become the world's second largest economy. Japan was second since 1968, when it surpassed West Germany. 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.
Prime Minister Brian Cowen negotiates Ireland's rescue as government budget deficit reaches 32% of gdp, a bailout from the European Union and the International Monetary Fund.
Greece receives a €110B ($146B) rescue package, EU nations (led by Germany and France) €80B and the IMF €30B. Greek government receives EU-IMF aid backstop (€30B and up to €15B IMF, total $61B) at below-market interest rates.
GM goes public with an IPO with both overallotments the deal raises a total of $23.1B. General Motors sells Saab to Spyker for $74M in cash and $326M in preferred shares.
Goldman Sachs settles $550M SEC fraud (July 15), largest SEC penalty in Wall Street history.
- Angelo Mozilo settles $67.5M civil fraud case (Oct 15, 2010, Countrywide paying $20M). Countrywide was worth $26.8B in early 2007, bought by Bank of America for $2.5B in 2008.
- Ally Financial (formerly GMAC) settles (12/27) $461.5M over mortgages sold to Fannie Mae.
Tom Petters (4/8) sentenced to 50 years for conspiracy, wire and mail fraud. Petters Group Worldwide, a diversified holding company, $3.65B Ponzi scheme.
British Petroleum's Deepwater Horizon oil rig explodes (April 20), 50 miles southeast of Louisiana in the Gulf of Mexico, 11 crewmen dead. British Petroleum stops leaking Macondo well July 15 (3.2 million barrels).
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.
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.
Dow 2009: 8,776.39 to 10,428.05
Dow return for 2009: 18.82%
S&P 500 2009: 903.25 to 1,115.10
S&P 500 return for 2009: 23.45%
NASDAQ 2009: 1,577.03 to 2,269.15
NASDAQ return for 2009: 43.89%
10 year Treasury: 3.81% yield up 72.40% prices down
World Equity Market: $45.958 trillion up 43.03%
MSCI Europe Index 878.70 up 22.40%
MSCI Asia Pacific Index 120.45 up 34.64%
S&P Latin America 40 4,599.67 up 94.66%
MSCI BRIC 332.29 up 89.25%
S&P Middle East & Africa 265.35 up 48.94%
From panic lows to year-end:
Global Markets rises from $25.5 [Mar 9 '09] to $45.958 trillion
gaining $20.5 trillion or 80.2%:
DJIA rises 61.2% from 6,469.95 [Mar 6 '09] to 10,428.05
S&P 500 rises 67.2% from 666.79 [Mar 6 '09] to 1,115.10
NASDAQ rises 79.3% from 1,265.52 [Mar 9 '09] to 2,269.15.
MSCI Europe Index rises 66.1% from 529 [Mar 9 '09] to 878.70
MSCI Pacific Index rises 71.8% from 70.13 [Mar 10 '09] to 120.45
S&P Latin America 40 rises 146.9% from 1,862.84 [Nov 20, 2008] to 4,599.67
S&P Emerging Middle East & Africa rises 81.4% from 146.30 [Mar 9, 2009] to 265.35
S&P BRIC rises 145.7% from 135.25 [Oct 27, 2008] to 332.29.
Japan's NIKKEI Index 6,994.90 [Oct 28, 2008] to 10,546.44 - up 50.8%
Germany's DAX Index 3,588.89 [Mar 9 '09] to 5,957.43 - up 66.0%
Britain's FTSE Index 3,460.71 [Mar 9 '09] to 5,412.88 - up 56.4%
France's CAC Index 2,465.46 [Mar 9 '09] to 3,936.33 - up 59.7%
Canada's TSX Index 7,479.96 [Mar 6 '09] to 11,746.11 - up 57.0%.
Brazil's BOVESPA Index 29,435 [Oct 27, 2008] to 68,588.41 - up 133.0%
Russia's RTS Index 492.59 [Jan 23 '09] to 1,444.61 - up 193.3%
India's Bombay SENSEX Index 7,697.39 [Oct 27, 2008] to 17,464.81 - up 126.9%
China's Shanghai Composite 1,664 [Oct 28, 2008] to 3,277.14 - up 96.9%
data
* U.S. Total stock market returned 26% in 2009, Stocks had historic gains, Bonds had historic losses of -3.5% and inflation was 2.7%. Only January and February had losses in all 3 major U.S. Indexes.
* Of the 5 largest sectors in the U.S. Economy: Technology 50.8%, Natural Resources 21.5%, Healthcare 19.2%, Real Estate 19% and Financials 17%. By size: Mid Cap 35% while Small Cap, Large Cap and Micro Cap returned 23-25%. Both gold 27.8% and oil 88% rose with commodity prices (CRB) which rose 23.5%.
* Global markets rose 43.1% of the World's largest economic regions: Latin America 94.7% and Emerging Markets 89.3% (recovered from terrible selloffs), Asia 34.6% and Europe 22.4%. Of the World's largest Developed non-U.S. Economies: Canada 30.7%, Germany, Britain and France 22-24% and Japan 19%. In the Emerging markets Russia 128.6%, Brazil, India and China 80-83%. Hedge funds 20% (in 2008, -19%; bettering 2003, 19.5%; 31.3% in 1999) and Private Equity both underperformed market indexes.
* Those who diversified with MPT did best, a trend which should accelerate - indicative are the returns of non-U.S. markets just mentioned. U.S. returns in 2009 recovered from oversold panic levels in March - assets that fell the furthest generally recovered the most: Real Estate, Mid Cap, Small Cap, Micro Cap and commodity markets.
Months 2005-10 (click)
2007-09 PANIC facts (click)
Markets lost 13 years of value:
DJIA trades 6,469.95 (Mar 6) lowest since November 1996 - 54.6% lower than 14,279 (10/11/07).
S&P 500 trades 666.79 (Mar 6) lowest since May 1996 - 57.7% lower than 1,576 (10/11/07).
NASDAQ trades 1,265.52 (Mar 9) lowest since October 1996 - 55.7% lower than 2,861 (10/11/07).
MSCI Europe Index trades 529 (Mar 9) lowest since December 1996 - 61.8% lower than 1,388 (7/13/07).
MSCI Pacific Index trades 70 (Mar 10) lowest since June 2003 - 59.5% lower than 173 (11/1/07).
U.S. unemployment rate rose to 10.1%, 17.4% U-6 (Oct). 8.7 million jobs lost since December 2007. U.S. household wealth fell by about $16.4T from a 2Q/07 peak of $65.8T to $49.4T 1Q/09.
US economy contracts -2.4% (worst since 1946) in 2009. Following U.S. gdp of 3Q08 -1.9%, 4Q08 -8.2%, 1Q09 -5.4%, 2Q09 -0.5% (first time since the 1930's that the US has suffered 4 consecutive quarters of declining gdp) - loss of 8.73 million jobs.
- U.S. unemployment rate falls to 9.7%, 5.0 million jobs losts in 2009, most since 1945. Monthly jobs lost in 2009: 1/09 -798,000, 2/09 -701,000, 3/09 -826,000, 4/09 -684,000, 5/09 -354,000, 6/09 -467.000, 7/09 -327,000, 8/09 -216,000, 9/09 -227,000, 10/09 -198,000, 11/09 -6,000, 12/09 -283,000.
Federal Reserve left interest rates at 0%-0.25% and the Discount rate to 0.50%, historic lows - for all of 2009.
Government and Central banks provide over $11T of support for Financial institutions: $1.56T in capital injections, $5.21T for asset purchases and guarantees and $4.64T in debt guarantees.
GDP quarterly growth for 2009 1Q -5.4%, 2Q -0.5%, 3Q 1.3%, 4Q 3.9%.
10yr Treasury ends the year at 3.81%. Treasuries fell -3.5% this year, the worst annual performance since 1978. U.S. Treasuries posted their biggest 1 day rally (March 18, since 1962) rallying from 3.01% to 2.46% following the Fed's announcement to begin purchases of $300B of 2-10 year Treasuries. U.S. Treasury yield curve steepens to record as 2-10 year Treasury spread increases to 2.88%, Dec 22.
U.S. Dollar closed the year at $1.43 to the Euro - depreciating from $1.2326 (Oct 27 '08) to 1.5135 (Nov 25). U.S. dollar's share of global currency reserves rises to 65% the euro's share 25.9%, flight to quality.
Gold traded at a new all-time high $1226, Dec 2 - rising from $681 (Oct 23 '08) to $1,096 (Dec 31 '09) a 60.9% gain. Silver $9.09 (Oct 24 '08) to $16.84 a 85.3% gain. Platinum $752.10 (Oct 27 '08) to $1460 a 94.1% gain. Copper $1.25 (Dec 26 '08) to $3.32 a 165.6% gain. Oil $32.40 (Dec 19 '08) to $79.36 a 144.9% gain. CRB 327.50 (Dec 5 '08) to 485.75 a 48.3% gain. Wheat $4.71 (Dec 5 '08) to $5.41 a 14.9% gain. Corn $3.05 (Dec 5 '08) to $4.14 a 35.7% gain. Rice $11.19 (Mar 16 '09) to $14.56 a 30.1% gain. Soybeans $7.76 (Dec 5 '08) to $10.39 a 33.9% gain.
LIBOR trades below 0.25% (Dec 21) falling from 3.64% (Oct 10 '08). VIX trades below 20 (Dec 22) falling from 89.53 (Oct 24 '08). TED spread trades below 0.16% (Sep 10) falling from 4.64% (Oct 10 '08) and 3-Month LIBOR-OIS Spread trades below 0.07% (Dec 28) falling from 3.64% (Oct 10 '08).
Federal Reserve requires 10 of the 19 major U.S. banks to raise a total of $74.6B in capital.
- Fed returns $47.4B (total net income $53.4B, 2009) to the Treasury up from $27.5B (total net income $35.5B, 2008).
- Treasury Secretary Timothy Geithner announced the Public-Private Investment Program using $75-100B from TARP.
- Federal Reserve began Term Asset-Backed Securities Loan Facility (TALF), up to $1T.
- EESA/TARP invests second $350B (with new programs) in other financial institutions - more than 700 institutions participating.
U.S. Banks and securities firms (Citigroup, B of A, Wells Fargo, etc.) write off losses of $1.1T (banks writedown $885B). Worldwide reported losses over $1.78T of mortgage-related writedowns (and the securities on those loans totaled more than $1T). Asset-backed securities (losses from CDOs and other ABS derivatives $64.7B). Banks have raised over $1.5T of new capital.
S&P 500 earnings for 4Q09 is positive 65% - ending a record 9 quarters of negative growth.
140 banks fail at a cost of over $30B (2008, 25 banks failed, $17.6B) and 31 Credit Unions (2008, 15 failed).
Mergers and acquisitions fell to $1.75T from $2.5T 2008 and 2007's record $4.04T.
Real estate prices fell - S&P/Case-Shiller 20 cities high of 206.52 (July 2006) falls to 139.21 (April 2009) - down 37.4%.
Swedish Riksbank, August 7, 2009 (world's oldest central bank, 1668) is the first central bank to post a negative interest rates (their repo rate was cut to 0.25% and their deposit rate 50 bps lower at to -0.25%).
- European Central Bank cut interest rates to 1.00%, a record low.
- Bank of England (founded in 1694) cut interest rates 0.50%, lowest ever, founded in 1694.
- Reserve Bank of Australia (Oct 6) becomes first major central bank to raise its policy rate 25 bps. to 3.25% rate, following a 49-year low.
President Obama signs the American Recovery and Reinvestment Act of 2009, a $787.2B Stimulus bill.
- Obama announces a housing plan that may help 3-4 million homeowners, the $75B plan ($50B from TARP and $25B from Fannie Mae and Freddie Mac).
- Obama signs $24B Worker, Homeownership, and Business Assistance Act of 2009.
- President Barack Obama wins the 2009 Nobel Prize for Peace.
SEC rules 'Naked' Short-Selling ends requiring that brokers must promptly buy or borrow securities to deliver on a short sale.
FASB (Financial Accounting Standards Board) requires off-balance-sheet loans (qualifying special purpose entities) to be reported.
- FASB loosens fair value rules from mark-to-market to cash flows and other factors for distressed assets.
China's foreign-exchange reserves exceed $2.4T.
- China purchase more cars 13.6 million (up 46%, 2008) then the U.S. 10.4 million (down -21%, 2008) first time since 1908.
- China passes Germany as largest exporter $1.2T compared to $1.17T.
- China sells an inaugural 元6B yuan ($878.7M) of sovereign bonds in Hong Kong (issued Oct. 27) representing 0.013% of $7T of total foreign exchange reserves.
- ChiNext opens (Oct 31) China's newest exchange for small cap companies. All 28 ChiNext IPOs worth $10B (元68.6B yuan) double on the first day to $20.5B (元140B yuan).
- China approaches second largest economy, Japan's total GDP $5.085T while China's was $5.02T (元34T yuan). In 2009, China's economy expanded 9.1%, and in 2008, up 9.6%.
Group of 20 nations to replace G-8 (G-7 from 1975 until 1997) as primary organization coordinating global economic policy. IMF offers $250B of SDRs (Special Drawing Rights) on Aug. 28. and an additional $33B on September 9.
- Japan, China, South Korea, Thailand, Indonesia, Malaysia, Singapore, Philippines and 5 Southeast Asian nations agree to form a $120B pool of foreign-exchange reserves to defend their currencies.
- G20 agrees to provide the IMF with $1T of lending power by selling 403 tons of gold.
- European Union pledges $100B (€75bn) to the IMF and doubles funds for non-Eurozone countries to $68B (€50B).
BlackRock buys Barclays Global Investors for $13.5B and retains a 19.9% stake, the world's largest money manager, with over $2.7T (State Street $1.44T and Fidelity Investments, $1.25T) in assets under management.
- AIG receives up to $30B of new loans from TARP funds after reporting a $61.7B loss in 4Q08 (largest in corporate history), total authorized assistance of $182.3B.
- Citigroup converts $25B of preferred stock (debt from Treasury's TARP) into common shares, 33.6% of outstanding shares.
- FDIC sells IndyMac Bank to IMB Management Holdings LP for $13.9B - FDIC's bank insurance fund losses are expected to be approximately $9B.
- Morgan Stanley agrees to buy 51% of Citigroup's Smith Barney for $2.7B.
$27T (notional value/gross exposure) of credit-default swaps, ICE US Trust LLC, Intercontinental Exchange's entity, started clearing contracts (March 9, 2009) before the CME Group (NYSE Euronext), Eurex AG and LCH.Clearnet Group Limited.
- $458T (notional value/gross exposure) of interest rate derivatives, International Derivatives Clearing Group, LLC (IDCG), subsidiary of NASDAQ OMX Group, started clearing over-the-counter interest-rate swap contracts on December 29, 2008.
General Motors exits bankruptcy ($91B, 4th largest in U.S. history) in 40 days, closing 2,400 dealerships with $30B in exit financing from the US government. General Motors Co. is 60.8% owned by U.S. taxpayers.
- Chrysler Group exits bankruptcy ($39B, 7th largest bankruptcy in U.S. history) in 42 days, closing 8 factories and 789 dealerships, with $6.6B in exit financing from the US government. Chrysler is 23% owned by U.S. taxpayers.
CIT Group files Chapter 11 bankruptcy, $71B in assets and $64.9B in debt, one of the U.S.'s largest small-business lenders - the fifth-largest bankruptcy in U.S. history.
- Capmark Financial Group (formerly commercial lending at GMAC) filed for bankruptcy (Oct 25) debt of $21B and consolidated assets of $20.1B, a top servicer of U.S. commercial real estate loans and the largest servicer of loans in the rest of the world.
- Colonial BancGroup fails with assets of $25B, biggest U.S. bank failure in 2009, taken over by BB&T Corp.
- NCUA (National Credit Union Administration Board) placed U.S. Central Federal Credit Union ($34B) and Western Corporate unions ($23B) into conservatorship.
British government (Nov 3) bails out: RBS £25.5B (total £45.5B, U.K.'s government stake increases to 84.4% from 70%), the world's most expensive bank bailout. Lloyds Banking Group (acquired HBOS Plc on Jan 16) to receive £5.6B (government's rights to buy stock, in addition to earlier £17B) and plans to raise £21B (£13.5B in a rights offering and £7.5B in a bond exchange) denying the government majority control which owns 43.5%.
UBS paid (Feb. 18) $780M to avoid prosecution for helping wealthy Americans evade taxes, disclosing information on more than 250 secret accounts, the U.S. continues to seek the identities of 52,000 American account holders suspected of tax evasion on $20B in assets.
- UBS AG agrees to disclose details on 4,450 accounts to the Internal Revenue Service. Switzerland, Liechtenstein, Andorra and Monaco banking authorities all pledged to comply with OECD (Organization for Economic Cooperation and Development) standards for banking transparency and information exchange.
SIPC releases $534.25M to 1,558 Madoff's vicitms. Exceeding the $520M (from all 321 prior SIPC liquidations) since the program began in 1970.
SEC charges Robert A. Stanford for a fraudulent $7.2B CD / Ponzi scheme.
Dow 2008: 13,264.82 to 8,776.39
Dow return for 2008: -33.84%
S&P 500 2008: 1,468.36 to 903.25
S&P 500 return for 2008: -38.49%
NASDAQ 2008: 2,652.28 to 1,577.03
NASDAQ return for 2008: -40.54%
10 year Treasury: 2.21% yield down -45.02% prices up
World Equity Market: $32.132 trillion down -47.20%
MSCI Europe Index 717.9 down -45.84%
MSCI Asia Pacific Index 89.46 down -42.75%
S&P Latin America 40 2362.96 down -51.86%
MSCI BRIC 175.58 down -60.33%
S&P Middle East & Africa 178.16 down -39.15%
data
* U.S. Total stock market returned -38% in 2008, Stocks had historic losses, Bonds had historic gains of 14.9% and inflation was 0.1% (lowest since 1954). Only April and August had gains in all 3 major U.S. indexes - Dow lost -33.8% (worst year since 1931), S&P 500 lost -38.5% (worst year since 1937), while NASDAQ lost -40.5% (worst year since conceived in 1971).
* Of the 5 largest sectors in the U.S. Economy: Healthcare lost -23.6%, Natural Resources -39%, Technology -41.6%, Real Estate -41.9% and Financials lost -54%. By size: Small Cap lost -32%, Mid Cap -37.3%, Large Cap -38.5%, while Micro Cap lost -39.4%. Gold rose 3.3% and oil fell a historic -56.3% with commodity prices (CRB) -36%.
* Global markets fell a historic -47.2% of the World's largest economic regions: Asia fell -42.7%, Europe -45.8% and Latin America -51.8%. Of the World's largest Developed non-U.S. Economies: Britain fell -31.3%, Canada -35%, Germany -40.4%, Japan -42.1% and France -42.7%. In the Emerging markets which lost -60.3%: Brazil fell -41.2%, India -52.5%, China -65.4%, while Russia lost -72.4%. Hedge funds lost on average -19% (assets fell to $1.1T from an all-time high of $1.9T in June 2008).
* Those who diversified with MPT did best, a trend which should accelerate indicative are the returns of U.S. denominated assets which rose against all major currencies (except the Japanese Yen and Chinese Yuan). Government and sovereign bond returns muted one of the worst years for equities.
Months 2005-10 (click)
2007-09 PANIC facts (click)
The Dow and S&P 500 Index have worst year since 1931 and 1937 respectively, NASDAQ it's worst year ever.
VIX (volatility index, fear) hits new record high of 89.53 spiking 32% from 67.80 (Oct 24) - spiked 22% to 81.17 (Oct 16), spiked 19% to 76.94 (Oct 10) and spiked 29% to 58.24 (Oct 6). TED spread (3-month Treasuries to 3-month Eurodollars) trades at 4.64% and the Libor-OIS spread (3-month London interbank offered rate to Overnight indexed swap rates) trades at record 3.64% on October 10.
U.S. unemployment rate rises to 6.7% from 5%.
U.S. loses 3.6 million jobs in 2008, most since 1945. Jobs lost in 2008: 1/08 -15,000, 2/08 -86,000, 3/08 -80,000, 4/08 -214,000, 5/08 -182,000, 6/08 -172.000, 7/08 -210,000, 8/08 -259,000, 9/08 -452,000, 10/08 -471,000, 11/08 -765,000, 12/08 -697.000.
Federal Reserve loosening cycle - FOMC cut Fed Funds rate on December 16 to 0%-0.25% and the Discount rate to 0.50% easing started with the Emergency FOMC inter-meeting Fed Funds rate cut on Jan 22 of 0.75% to 3.5% from 4.25%.
GDP quarterly growth for 2008 1Q -2.7%, 2Q 2.0%, 3Q -1.9%, 4Q -8.2%.
10yr Treasury ends the year at 2.21% trades 2.035% (12/18) rallying from 4.32% (Jun 13) up 52.8% in 6 months - the lowest yield in its 46-year history. 30-year Treasuries trade a record low 2.505% (12/18). 3 month Treasuries traded below 0%, Dec. 9 - first time since the U.S. began selling them in 1929.
- U.S. Treasuries return 14.9% highest since 1995 (18.5%). 19.7% is a record spread on yields between high-yield, high-risk corporate bonds and Treasuries, Dec 2008.
U.S. Dollar trades an all-time low of $1.6038 (July 15) to the Euro - falling from $0.8228 (October 26, 2000) a 95% decline in little more than 7 years. U.S. dollar rallies to $1.23 (Oct 23) from $1.60 (Jul 15) - up 22% in 3 months.
U.S. home prices fell (S&P/Case-Shiller) falls from a high of 206.52 (7/06) to 150.66 (Dec '08) - down 27.0% - 3.2 million foreclosures in 2008.
Oil trades $32.40 (Dec 19) down from an all-time high of $147.27 (Jul 11, oil trades above $100 for the first time on Jan 3) - down 77.2% in 4 months. CRB futures trade $327.50 (Dec 5) down from an all-time high of $618 (July 2) - down 47.0% in 4 months. Gold trades $681 (Oct 27) down from an all-time high of $1033.90 (Mar 17) - down 34.1% in 7 months. Platinum trades $752.10 (Oct 27) down from an all-time high of $2308.80 (Mar 4) - down 67.4% in 7 months. Silver trades $9.09 (Oct 24) down from $21.44 (Mar 17) matching its highest level since December 1980 - down 57.6% in 7 months. Copper trades $4.26 lbs. (May 5) down 70.6% to $1.25 (Dec 26). Wheat trades $13.49 (Feb 17) down 65.0% to $4.71 (Dec 5). Corn trades $7.79 (Jun 27) down 60.8% to $3.05 (Dec 5). Soybeans trades $16.60 (Jun 27) down 53.2% to $7.76 (Oct '06). Rice trades $24.35 (Apr 18) down 47.5% to $12.77 (Dec 5)
U.S. corporations raised $4.54T issuing securities down from $5.14T in 2007. Global merger activity fell 39% to $2.5T from the record $4.1T in 2007. Takeovers fell 43% to $873B from the record $1.54T in 2007.
Banks and securities firms (Citigroup, UBS, Merrill, etc.) report over $1.012T of mortgage-related writedowns from subprime securities - while raising over $750B of new capital.
Earnings season for 2008 the blended growth rate for the S&P 500 index was negative for all 4 quarter - the worst quarterly performance since 1991.
NASDAQ OMX Group becomes the world's largest exchange - operations of over 60 exchanges in 50 countries. NYSE Euronext agrees to buy the American Stock Exchange. CME Group (Chicago Mercantile Exchange and Board of Trade, merged July 2007) buys Nymex (NY Mercantile Exchange) the world's largest physical commodity futures exchange.
VISA becomes the largest U.S. IPO ever at $17.86B - surpassing the $10.62B record held by AT&T in 2000.
World leaders summit (G20) in Washington DC (November 15) to issue guidance to financial markets and the global economy and agree on a common set of principles to reform global regulation of the markets.
G20 Declaration on Nov 15, 2008 (click)
ECB cuts rates from 4.25% to 2.5%. Bank of England cuts rates to 2% - lowest since 1951. The central banks of China, Japan, Switzerland, Sweden, Danmark and New Zealand all lowered their rates.
Oct. 8, 2008, U.K freezes Iceland's bank assets, Iceland's krona falls 58% in 2 months, Iceland's resolution committee seizes and liquidates failing Kaupthing Bank, Landsbanki Islands and Glitnir, in receivership creditor claim $107B, assets had risen to $209B, 11 times Iceland's gdp.
China becomes the third largest economy passing Germany - behind the U.S. and Japan.
Barack Obama defeats John McCain to become 44th President of the United States.
Federal Reserve increases its balance sheet to $2.3T from $924B (9/10) in 2 months. Federal Reserve increases currency swaps with foreign central banks to unlimited amounts and increased the Term Auction Facility, the Fed's emergency loan program, to $900B.
- Federal Reserve begins to purchase U.S. commercial paper from U.S. companies and Money market funds - a $1.8T market. Federal Reserve allows GSEs (government sponsored enterprises) Fannie Mae and Freddie Mac access to their discount window - they guarantee $5.4T of $12T of U.S. mortgages. Federal Reserve announces $200B of support for debt backed by consumer and small-business debt (credit-card, auto, student and SBA loans) and the Fed will purchase up to $100B of debt from Fannie Mae and the Federal Home Loan Banks and up to $500B of mortgage-backed securities backed by Freddie Mac, Fannie and Ginnie Mae.
- Federal Reserve's new regulations for mortgage lenders: banning repayment penalties, prohibiting lenders from issuing loans to borrowers that cannot repay while requiring the verification of their incomes and assets, and requiring escrow accounts for property taxes and homeowner's insurance, as well as: actual appraisal of a home's value and good faith lending practices. Federal Reserve, CFTC and SEC announce that a central clearinghouse for the $33T credit-default swap market will be running by December 31.
$168B Stimulus plan signed into law - Tax rebates (to over 130 million Americans), Business tax breaks and Housing provisions (Fannie Mae and Freddie Mac may temporarily purchase mortgages up to $793,000 up from $417,000 while the FHA can insure loans for up to $729,000).
Housing bill signed into law creating the FHFA (Federal Housing Finance Agency, GSE's regulator) for Fannie Mae and Freddie Mac - FHFA then places Fannie Mae and Freddie Mac into conservatorship and through senior preferred stock and warrants will own 79.9% of each agency. Fannie Mae and Freddie Mac (own or back 31 million U.S. mortgages) modify mortgages. FHFA orders Fannie Mae and Freddie Mac to purchase $40B a month of underperforming mortgage bonds.
President Bush and the Treasury intercede extending $13.4B in loans to GM and Chrysler (another $4B in February - Ford did not seeking government assistance) and the Federal Reserve approves GMAC's request to become a bank holding company.
FDIC guarantees $1.4-1.8T of bank-to-bank lending for more than 3 years (FDIC depositor insurance increases from $100k to $250k through Dec 31, 2013) as part of the EESA.
SEC issues an emergency rule (July 21 - August 12) to limit naked short selling in 19 major financial firms - the 'tick test rule' was repealed on July 6, 2007. SEC issues rules for short sales requiring delivery of securities by the settlement date, effective Sep 18. Short selling by Hedge funds of $100M must now report positions to the SEC.
- SEC halts short selling of Financial stocks (Sep 19, effective immediately) protecting 799 financial companies - through Oct 2. SEC extends short selling ban of Financial stocks protecting 950 financial companies - through Oct 8.
Paulson's Treasury Dept. administers the Troubled Asset Relief Program, or TARP (Emergency Economic Stabilization Act of 2008, EESA) a $700B rescue of financial institutions by investing $125B in 9 large banks: Citigroup, J.P. Morgan, Wells Fargo, Bank of America/Merrill Lynch, Goldman Sachs, Morgan Stanley, Bank of New York Mellon and State Street.
- EESA/TARP also invests $125B in: AIG, Federal Home Loan Mortgage, PNC, U.S. Bancorp, Capital One, SunTrust, Regions Financial, Fifth Third Bancorp, BB&T, KeyCorp, Comerica, Marshall & Ilsley, Northern Trust, Huntington Bancshares, Zions Bancorporation, Synovus Financial, Popular, First Horizon National, ETrade Financial, Colonial BancGroup, Associated Banc-Corp, Webster Financial, City National, Fulton Financial, TCF Financial, South Financial Group, Wilmington Trust, East West Bancorp, Sterling Financial, Whitney Holding, Susquehanna Bancshare, Valley National Bancorp, Citizens Republic Bancorp, UCBH Holdings, Cathay General Bancorp, Wintrust Financial, First Merit, SVB Financial Group, Trustmark, Umpqua Holdings, Washington Federal - and 88 banks borrowing less than $200M. EESA invests second $350B in other financial institutons: GMAC, American Express, CIT, Discover Financial Services, GM and M&T Bank.
Paulson's Treasury Dept. protects US money market mutual funds with insurance as some of the $3.6T of funds 'broke the buck'. Treasury announces the Credit Union Homeowner Affordability Relief Program a $41B lending facility where retail credit unions could borrow up to $2B at favorable rates - about 8,400 U.S. credit unions with $775B in assets.
15 leading European nations commit $2.3T and agree to a 14pt plan to aid troubled banks by adding capital through investment and by guaranteeing inter-bank lending. China announced a $586B (元4T yuan) economic stimulus package. Japan expands package to $385B - ¥10T of stimulatory spending to save job cuts and ¥13T to protect the banking system.
IMF provides loans to Hungary (approved $15.7B), Ukraine (approved $16.4B), Iceland (approved $2.1B), Latvia (approved $10.4B), Serbia (approved $516M), Pakistan (approved $7.6B), Belarus (approved $2.5B) both Turkey and Romania seek loans - Britain was the last European country to receive an IMF loan in 1976. Japan promises $100B in loans to IMF raising their funding capacity to $250B.
Countrywide Financial (January 11, 2008) is purchased by Bank of America for $4.1B.
- Bear Stearns fails, the 5th largest U.S. investment bank, March 17, 2008 is purchased by JP Morgan Chase for $10 (down from $172, 2007) the Fed intervenes (non-recourse loan of $29B) in the protection of investment banking for the first time since the 1930s.
- IndyMac Bancorp (July 11, 2008) is seized from imminent failure by the Office of Thrift Supervision and files for bankruptcy with $33B of assets (exceeding Continental Illinois, $9.5B in 1984) costing the FDIC $10.7B.
- FHFA (Federal Housing Finance Agency) places Fannie Mae and Freddie Mac into conservatorship.
- Lehman Brothers Holdings (September 15, 2008) files $639B, largest U.S. bankruptcy - passing WorldCom which filed for bankruptcy (7/21/02 at $103.9B). Lehman's bankrupcy sets their credit-default swap liability to counterparties at $0.91375 creating $270B in payments.
- Merrill Lynch fails, the 3rd largest U.S. investment bank, September 14, 2008, is purchased by Bank of America for $50B.
- Federal Reserve approves Goldman Sachs and Morgan Stanley to become bank holding companies - ending independent investment banks.
- AIG fails with $1.1T assets and 74 million clients in 130 countries subsequently receiving an $85B emergency U.S. Federal Reserve loan (total authorized assistance of $182.3B), September 16, 2008 - consequently relinquishes 79.9% percent ownership in the company.
- Washington Mutual (September 26, 2008) seized by Federal regulators filing a $327.9B, largest U.S. bank bankruptcy and sold to J.P. Morgan Chase for $1.9B - 2nd largest in U.S. history.
- Wachovia (October 12, 2008) purchased by Wells Fargo (as Citigroup exits) in an $11.7B all-stock offering.
- American Express (and AmEx Travel Related Services) becomes a bank-holding company.
- Citigroup receives $20B (in addition to the initial $25B) from TARP to protect $306B of troubled mortgages and assets - Citigroup assumes losses on the first $29B the Treasury will absorb 90% of the remaining losses and $27B of preferred with an 8% dividend.
- Bradford and Bingley nationalised (joins Northern Rock as U.K.'s 2nd mortgage lender) and rescues for European lenders Fortis (Benelux's banking and insurance group), Hypo Real Estate (Germany's real estate firm), Glitnir (Iceland's third-largest lender) and Dexia (Franco-Belgian's bank, world's biggest lender to global local governments).
Bank of America modifies (cuts interest rates and/or principal) 265,000 mortgages and 400,000 of acquired Countrywide's mortgages - the largest predatory lending settlement, $8.6B.
- J.P. Morgan Chase will modify 400,000 borrower's mortgages from their acquisition of Washington Mutual.
Citigroup will modify 500,000 borrower's mortgages.
UBS, Merrill Lynch, Wachovia, Citigroup, Morgan Stanley, Bank of America, JPMorgan Chase and Royal Bank of Canada agree to buy back failed auction-rate securities.
SEC charges Bernard L. Madoff with securities fraud for a $65B (paper losses) dollar Ponzi scheme. The largest U.S. securities fraud settlement - Enron shareholders and investors restitution $7.2B. AS OF 2018: more than 27,000 victims worldwide, $19B in principal lost, $13.3B fund overseen by a court-appointed trustee, Madoff Victim Fund of $4B.
Hurricane Gustav (Sep 1) made landfall in Louisiana (near New Orleans) and Hurricane Ike (Sep 13) made landfall on Galveston Island causing 145 deaths and $31.5B of damage - the 3rd most destructive U.S. hurricane (behind Katrina 2005 and Andrew 1992).
4,486 U.S. soldiers lose their lives in Iraq - the Vietnam War claimed 58,220 American lives, the Korean War 36,574 and World War II 405,399.
2008 Beijing Summer Olympics begins with 100 heads of state in attendance, 204 nations participate (87 nations win medals) - Michael Phelps wins a record eight Olympic gold medals (totaling 14 career golds), Natalie Coughlin wins 6 medals and Usain Bolt wins three golds. The United States takes a total of 110 medals while China takes the most golds, 51. Great Britain takes 47 medals 19 are gold heading into the 2012 London games.
Dow 2007: 12,463.15 to 13,264.82
Dow return for 2007: 6.43%
S&P 500 2007: 1,418.30 to 1,468.36
S&P 500 return for 2007: 3.53%
NASDAQ 2007: 2,415.29 to 2,652.28
NASDAQ return for 2007: 9.81%
10 year Treasury: 4.02% yield down -14.10% prices up
World Equity Market: $60.851 trillion up 21.75%
MSCI Europe Index 1,325.54 up 7.04%
MSCI Asia Pacific Index 156.26 up 11.19%
S&P Latin America 40 4,909.01 up 48.46%
MSCI BRIC 442.56 up 55.98%
S&P Middle East & Africa 292.8 up 39.45%
data
* U.S. Total stock market returned 6% in 2007, Stocks have underperformed while Bonds were above their historic average and inflation was above average 4.1%. Gains were punctuated by sell-offs in February/March (NASDAQ -7.9%), July/August (NASDAQ -12.4%) and November (NASDAQ -11.2%).
* Of the 5 largest sectors in the U.S. Economy: Natural Resources performed best 36.7%, Technology 15.5% and Health 7.1% while Financials -18.9% and Real Estate -19% returns were negative. By size: Mid Cap 6.7%, Large Cap 3.5% while Small Cap -1.2% and Micro Cap -9.4% lost. Gold rose 31.6% and oil 57.4% had historic gains with commodity prices (CRB) 16.7%.
* Global markets rose 21.8% of the World's largest economic regions: Asia driven by China (Shenzen 167.7% / Shanghai 96.6% / Hong Kong 39%) and India 47.1%, followed by Latin America 48.5% and Europe 7.0%. Of the World's largest Developed non-U.S. Economies: Germany returned 22.3%, Canada 7.1%, Britain 3.8%, France 1.3% while Japan -11.1% was negative. In the Emerging markets which returned 56%: Brazil 43.6% and Russia 19.2%. Hedge funds returned on average less than 5% with Private Equity outperforming hedge funds (PE had problems in Q4 acquiring funding).
* Those who diversified with MPT did best, a trend which should accelerate indicative are the returns of non-U.S. markets just mentioned. U.S. returns in 2007 were muted because of the 'credit crisis' caused by non-performing, non-prime U.S. mortgage loans.
Months 2005-10 (click)
2007-09 PANIC facts (click)
Federal Reserve loosening cycle - FOMC cut inter-meeting 8/17 - the 'discount rate' to 5.75% from 6.25% citing tighter credit and shaken financial markets. Central banks in the U.S., Europe and Asia had injected more then $400B (Aug 9-16) into the banking system providing liquidity to global credit markets. Libor traded up to 240 bps over 3-month Fed funds rate. Fed Funds rate currently stands at 4.25%.
GDP quarterly growth for 2007 1Q 0.2%, 2Q 3.1%, 3Q 2.7%, 4Q 1.4%.
U.S. Monthly jobs losses begin in July/August 2007: 6/07 71.000, 7/07 -33,000, 8/07 -16,000, 9/07 85,000, 10/07 82,000, 11/07 118,000, 12/07 697.000.
Congress, Federal Reserve and other Federal agencies proposed new guidelines for subprime mortgage loans (7.5 million and approximately 5 million Alt-A or non-traditional / non-prime loans) because of growing delinquencies, foreclosures and bankruptcies. Effecting over 2 million Americans with over $1.9T of subprime mortgage loans.
U.S. 10 yr Treasuries end the year at 4.02%. Inverted Yield curve of U.S. Treasuries ends Jun 7 '07 it began on Dec 27 '05 (75 weeks) - the last U.S. Bond yield inversion was from Feb 24, '00 - Dec 22, '00, 8th time since 1980. Investors shied away from shorter U.S. Treasury maturities impacting global debt markets (10 yr typically exceeds 2 yr yields by aprox. 90 bps). Inversions had averaged 30 weeks (9 to 59 weeks) and -46 bps (-8 to -133 bps). The "carry-trade" (borrowing in low-interest rate countries) fueled M&A activity worldwide.
- U.S. Treasuries returned an average of 8.7% in 2007 - compared with 3.0% in 2006, 2.9% in 2005, 3.5% in 2004 and 2.3% in 2003. U.S. 10 yr. Treasuries rallied 27.8% from 5.32% (Jun 13) to 3.84% (Nov 26) - in 23 weeks.
Dollar ends the year at $1.46 - traded $1.49 (Nov 23) to the Euro falling from $1.17 (Dec '05) a 26% depreciation in 2 years. British pound hits a 26-year high trading above $2.11 to the dollar while the Canadian dollar traded above $1.10.
U.S. GDP in 2007 advanced by 2.2%. GDP advanced by 3.3% in 2006, 3.2% in 2005, 4.4% in 2004, 3.0% in 2003 and 1.9% in 2002.
Earnings for S&P 500 companies in the 3rd quarter of 2007 was negative for the first time since Q4 2001 - Q1 2002.
2007 sales of single-family homes declined 13% and prices dropped 1.8% - the first decrease since 1968 and probably since the 1930's (NAR records began in 1968).
$100B in reported losses at more than 20 of the world's largest banks and securities firms holding SIVs (Structured Investment Vehicles holding non-performing, non-prime U.S. motgage loans).
U.S. venture capital climbed to a 6 year high of $29.4B in 2007 (3,813 deals), $26.6B in 2006 up from $19.7B in 2003 - $40.6B in 2001 (4,500 deals).
Gold ends the year at $838 - traded $848 (Nov 7) - highest in 27 years (when it traded 2 days above $800, 1/18/80, $835 and 1/21/80, $850). Platinum trades at all-time high of $1551.50 (Dec 26). Silver traded $15.90 matching its highest level in December 1980. Uranium traded at an all-time high of $136.
- Oil ends the year at $96 - traded at an all-time high of $99.29 (Nov 21) - up almost 100% from Jan '07 lows.
- Reuters-CRB (Commodity Research Bureau) Index of 17 commodities trades at an all-time high $479.50 (Dec 31) up 26% in 2007.
Total global foreign-exchange reserves surpass $6T - the U.S. dollar accounts for 63% while the Euro accounts for 27%.
ECB raised interest rates to 4% - the 8th increase for the Euro since Dec '05. The Bank of England raised rates up to 5.75% and the Bank of Japan raised interest rates from 0.25% to 0.50%.
Global mergers and acquisitions exceed $4.4T - a record surpassing the $3.55T in 2006.
Europe (24 markets, including Russia and eastern Europe) at $15.7T passes U.S. in stock market value ($15.6T) for the first time since WWI.
BRIC emerging markets - Brazil became the last member to reach $1T in overall stock market value. Russia surpassed $1T in September of 2006, then China (January '07) and India (May '07).
China's CSI 300 index surged 161% - the Chinese stock market overtook the Japanese market (8/07) in capitalization. Shanghai Composite Index rallied from below 1000 (Jun 6 '05) to 6,124 (Oct 16, '07) more than 512%, in little more than 2.3 years - as over $2.3T of Chinese savings (earning less than 3%) flooded into Chinese stocks.
- PetroChina became the first $1T company as it debuted on the Shanghai Exchange, 11/5 (Exxon Mobil is valued at $475B). The People's Bank of China raised borrowing and lending rates in order to cool inflation. Additionally, the Chinese government reduced the tax on personal savings and raised bank reserve requirements to encourage savings and curb a possible asset bubble. 60 million brokerage accounts were opened in 2007.
- China adds gold (also aluminum and steel) becoming the world's largest producer - 276 metric tons of gold in 2007 overtaking South Africa (largest producer since 1905).
Sovereign wealth funds 2007 high-profile purchases: China $20B in China Development Bank (Dec. 31), Singapore up to $5B in Merrill Lynch (Dec. 24), Singapore $9.75B and undisclosed Middle Eastern $1.8B in UBS (Dec. 10), Abu Dhabi $7.5B in Citigroup (Nov. 26), China $2.7B in China Everbright Bank (Nov. 7), Abu Dhabi $1.1B in Och-Ziff (Oct. 29), China $1B in Bear Stearns (Oct. 22), Qatar 20% of the London Stock Exchange and 10% in the Nordic bourse (Sept. 20), Abu Dhabi $1.35B in Carlyle Group (Sept. 20), China $3B and Singapore $2B in Barclays (July 23), Abu Dhabi $750M in ICICI Bank (India's largest bank) (July 13), China $3B in Blackstone Group (May 20) and Abu Dhabi undisclosed stake in HSBC (May 2).
- Sovereign wealth fund (SWF) first established in the 1950s (Kuwait's Kiribati, the oldest) estimated value of $1.8T. 31 SWFs from 23 nations Courier Newnult is Norway's Government Pension Fund ($326B) - 13 are based in the Middle East / North Africa, 10 Asia-Pacific, 4 Sub-Saharan Africa, 3 Non-Pacific Asia and Norway, about half the funds were established since 2000.
UAW workers at General Motors, Ford & Chrysler (Cerberus Capital Management) divested their multi-billion dollar health care obligation to a UAW-run VEBA trust.
Steriods dominated Major League, Olympic and International sports as Barry Bonds, Marion Jones, Flyod Landis and many other faced accusations / reprisals.
Dow 2006: 10,717.50 to 12,463.15
Dow return for 2006: 16.29%
S&P 500 2006: 1,248.29 to 1,418.30
S&P 500 return for 2006: 13.62%
NASDAQ 2006: 2,205.32 to 2,415.29
NASDAQ return for 2006: 9.52%
10 year Treasury: 4.68% yield up 7.59% prices down
World Equity Market: $49.979 trillion up 22.41%
MSCI Europe Index 1,238.31 up 16.71%
MSCI Asia Pacific Index 140.53 up 14.51%
S&P Latin America 40 3,306.69 up 38.37%
MSCI BRIC 283.73 up 52.87%
S&P Middle East & Africa 209.97 down 11.03%
data
* U.S. Total stock market returned 14% in 2006, Stocks outperformed while Bonds underperformed and inflation was average. Most gains for the year were accumulated in the second half of 2006.
* Of the 5 largest sectors in the U.S. Economy: Real Estate performed best 27.5%, Financial 17.8%, Natural Resources 17.2%, Technology 13.4% and Health 6.6%. By size: Large Cap13.6%, Small Cap 14.1% and Micro Cap 14.4% while Mid Cap stocks returned 9%. Gold 22.8% and oil 1.8% had gains with commodity prices (CRB) falling -7.4%.
* Global markets rose 22.4% of the World's largest economic regions: Latin America performed best 38.4% followed by Europe 16.7% and Asia 14.5%. Of the World's largest Developed non-U.S. Economies: Germany returned 22%, France 17.5%, Canada 14.5%, Britain 10.7% and Japan 6.9%. In the Emerging markets which returned 52.9%: China 128.7%, Russia 71.3%, India 46.7 and Brazil 43.6% continue to excel. Hedge funds (8,000, controling $1.3T) and Private Equity firms (over $700M) - returned on average 13% (PE generally outperformed hedge funds).
* Those who diversified with MPT did best, a trend which should accelerate indicative are the returns of non-U.S. markets just mentioned. Returns in 2006 were strong aided by historic corporate earnings, low unemployment and borrowing costs.
Months 2005-10 (click)
U.S. residential housing market cools from its record unsustainable (price) growth rate - over $1.9T of ARMs will reset at higher interest rates in 2007-08 ($11T mortgage loans outstanding).
FOMC Tightening Cycle - Fed Funds rate increases to 5.25% (17 consecutive increases). Fed Funds rate began the year at 4.25% (Fed Funds was 1% from Jun '03 - Jun '04 and 6.5% from May '00 - Jan '01).
U.S. 10 yr Treasuries end the year at 4.68% - trades 5.24% (Jul 5). U.S. inverted yield curve tests markets worldwide (began, Dec 27 '05 - first time since Feb 24, '00 - Dec 22, '00, 8th time since 1980). U.S. Treasuries returned an average of 3.0% in 2006 - compared with 2.9% in 2005, 3.5% in 2004 and 2.3% in 2003.
U.S. unemployment rate falls to 4.4%.
United States (as a nation) for the first time since 1915 owns less assets oversees than foreigners own of U.S. assets - a trend which is expected to increase. $8.4T of U.S. Treasuries outstanding.
Dollar ends the year at $1.32 to the Euro falling from $1.18 at the beginning of the year an 11% depreciation.
U.S. GDP in 2006 advanced by 3.3%. GDP advanced by 3.2% in 2005, 4.4% during 2004, 3.0% during 2003 and 1.9% in 2002.
Oil ends the year at $61 - trades $77.03 (7/10) an all-time cash high - up from $10 (Dec '98). Oil started the year at $60.
- Gold ends the year at $636 - traded $732, highest since February 1980, when Gold spent 3 weeks above $700. Platinum traded $1335 and Copper traded $4.03/lbs at all-time cash highs. Silver traded $15.21 - highest since February 1983. Uranium (actually more common than silver) rose
more than 10-fold from $7.10/lb (1/01) to $72/lb.
- Reuters-CRB (Commodity Research Bureau) Index of 17 commodities trades at an all-time high above $409 (Dec '06).
Global mergers and acquisitions exceed $3.55T - a record surpassing the $3.4T in 2000.
World's financial stock of the 5 wealthiest: US (35%), the Eurozone (32%), Japan (20%), the UK (8%) and China (5%) - estimated at $150T. Foreign exchange reserves - China's reserves surpass $1T eclipsing Japan's $900B - foreign buyers hold $4.4T of $8.4T of U.S. Treasury debt.
European Central Bank (ECB) raised interest rates to 3.5% from 2.00% (6th time since Dec '05) for 12 European nations - Slovenia to become the 13th EU member state to introduce the Euro, Jan. 1. Bulgaria and Romania join the European Union, bringing membership to 27 nations.
Bank of Japan raises interest rate to 0.25% up from 0.0% ends over 7 years of deflation fighting.
China increases interest rates in order to cool domestic economy growing at 9-11%. Industrial and Commercial Bank of China (ICBC) launches the world's largest IPO ever - $21.9B.
Russia ($1T economy) invited to join the World Trade Organisation (WTO) of 149 members - China joined the WTO in 2001.
Inter-American Development Bank estimates that 12.6 million U.S. Latin American-born immigrants will send home more than $45B of about $460B earned in 2006.
U.S. population exceeds 300 million (China, 1.32B and India, 1.10B) 100 million reached in 1915 and 200 million in 1967.
Ben Bernanke succeeds Alan Greenspan as Chairman (retires after 18.5 years) of the Federal Reserve.
NYSE, the world's largest stock market, demutualizes and mergers with Archipelago Holdings Inc. (and Pacific Exchange) then NYSE Group reaches deal to acquire Euronext. NASDAQ purchases a 30% interest in the London Stock Exchange.
Medicare (Part D) Prescription Drug benefit over 38 million of Medicare's 43 million beneficiaries enroll in 2006. 77 million Baby Boomers are estimated to be eligible for Medicare by 2031.
SEC and State Attorney Generals investigate the backdating of corporate options at 140+ companies (resulting in 70+ firings/resignations of corporate officials) - the practice, appears to have originated in Silicon Valley (in companies like Sanmina, Novellus & Juniper Networks pre-9/11).
U.N. Security Council adopts resolutions to impose sanctions on North Korea (for a nuclear-bomb test, Oct 9) and Iran (for its nuclear program, Dec 23).
AIG (Feb 9) settled $1.64B for insurance and securities fraud. Marsh & McLennan settled $850M (February 1, 2005) for insurance bid-rigging.
2006 XX Olympic Winter Games Torino, Italy where German, American, Canadian, Austrian, Russian & Norwegian athletes scoop up medals.
Michael Schumacher retires as the world's first billionaire athlete - Formula One driver. Schumacher, 7-time world champion, 91 race wins & 154 podium finishes - brought wins to Ferrari (2000-04) for the first time since 1979.
Warren Buffett gifts 10 million of Berkshire Hathaway (B shares - over $31B) to the Gates Foundation - surpassing Bill and Melinda Gates' endowment of $25.9B.
Dow 2005: 10,783.01 to 10,717.50
Dow return for 2005: -0.61%
S&P 500 2005: 1,211.92 to 1,248.29
S&P 500 return for 2005: 3.06%
NASDAQ 2005: 2,175.44 to 2,205.32
NASDAQ return for 2005: 1.24%
10 year Treasury: 4.35% yield up 2.35% prices down
World Equity Market: $40.829 trillion up 13.69%
MSCI Europe Index 1,061 up 22.67%
MSCI Asia Pacific Index 122.72 up 21.81%
S&P Latin America 40 2,389.73 up 53.35%
MSCI BRIC 185.61 up 39.81%
S&P Middle East & Africa 236.01 up 71.77%
data
* U.S. Total stock market returned 5% in 2005, Stocks and Bonds underperformed and inflation was average. Most gains for the year were earned in May 3.7%, July 3.9% and November 4.0%.
* Of the 5 largest sectors in the U.S. Economy: Natural Resources performed best 40%, Real Estate 12%, Health 6.4%, Financial 6%, while Technology -0.3% lost. By size: Mid Cap 9%, Small Cap 14.1% and Micro Cap 14.4% stocks outperformed for the 6th year and Large Cap 13.6%. Gold 19.1% and oil 42.9% had gains with commodity prices (CRB)19.1%.
* Global markets rose 13.7% of the World's largest economic regions: Latin America performed best 53.3% followed by Europe 22.7% and Asia 21.8%. Of the World's largest Developed non-U.S. Economies: Japan returned 40.2%, Germany 27%, France 23.4%, Canada 21.9% and Britain 16.7%. In the Emerging markets which returned 39.8%: Russia 82.7% and India 42.3% continue to excel while China fell -7.6%. Hedge fund performance in 2005 was spotty with a wide dispersion of performance (mean 6%).
* Those who diversified with MPT did best, a trend which should accelerate indicative is the Dow Jones: the DJ 30 Industrials returned -0.6%, while the DJ 20 Transportation returned 11% and DJ 15 Utilities 21%. Performance of non-U.S. markets was equally impressive. Returns in 2005 were dampened by increases in borrowing costs (Fed Funds rate) and increases in commodity prices (oil/gasoline, metals etc.) but offset by good corporate earnings, low mortgage rates and a stronger dollar.
Months 2005-10 (click)
FOMC Tightening Cycle - Fed Funds rate increases to 4.25% (13th consecutive increase). Fed Funds rate began the year at 2.5% (Fed Funds was 1% from Jun '03 - Jun '04 and 6.5% from May '00 - Jan '01).
U.S. 10 yr Treasuries end the year at 4.35% - trades 3.80% (Jun '05) lowest since Mar '04 (3.65%) and 3.07% on Jun 16 '03. Greenspan warns that the long U.S. Treasury bond's yield is unusually low - "a conundrum. Inverted yield curve starts (Dec 27, '05) between 2-year and 10-year U.S. Treasury notes for the first time since Dec '00 as investors shy away from shorter maturities. U.S. Treasuries returned an average of 2.9% in 2005 - compared with 3.5% in 2004 and 2.3% in 2003.
World's financial stock of the 5 wealthiest: US (35%), the Eurozone (32%), Japan (20%), the UK (8%) and China (5%) - estimated close to $145T. Foreign exchange reserves - Japan holds $847B and China $819B (foreigners hold $4.2T of $7.9T of U.S. Treasury debt outstanding).
Hedge funds surpass $1T in assets under management - SEC oversight forthcoming.
U.S. GDP in 2005 advanced by 3.2%. GDP expanded 4.4% during 2004, 3.0% during 2003 and 1.9% in 2002.
Gold ends the year at $517 - futures trade $544 (Dec '05, year high) up from $440 at the start of the year. Silver futures trade above $9.30 (18 year high). Platinum futures trade above $1,025 for first time in 25 years. Copper futures trade above $2.20 /lbs. an all-time record high.
Oil ends the year at $60 - trades $55 (Nov '05) down from $70.85 (Aug '05). Oil reaches an all-time record, a 600% rally in years, up from $10 (Dec '98). Oil started the year at $42.
Dollar ends the year at $1.18 to the Euro - trades $1.16 (Nov '05), strongest in 2 years - rallying from an all time low of $1.36 (Jan '05).
Reuters-CRB (Commodity Research Bureau) Index trades a (non-adjusted) all-time high of $351 (Dec '05).
Hurricanes Katrina, Wilma & Rita ravage Gulf Coast residents from Texas to Florida - taking over 2,140 lives, displacing 2 million Gulf Coast residents, costing possibly $250B and years of rebuilding.
National home prices stall. U.S. bank regulators issue new tighter guidelines on mortgage loans ($11T outstanding).
Japan, world's second largest Developed economy, Prime Minister Junichiro Koizumi wins landslide relection and a popular mandate to push through market reforms - Japan Post to be separated and privatised.
Germany, world's third largest Developed economy, Christian Conservative Angela Merkel (Iron Frau) defeats 7 year incumbent Social Democrat Chancellor Gerhard Schroeder to become Germany's first female Chancellor.
European Union agrees on 7 year budget (2007-13, €862.4B). Tony Blair negociates to reduce the U.K.'s EU budget rebate by €10.5B - though the EU constitution was rejected for now.
China decouples the Yuan from the Dollar - pegging instead to a basket of international currencies.
Pope John Paul II (Karol Wojtyla, 1978-05 the first non-Italian in 455 years) is mourned by 5 million people visiting Rome including dignataries. Cardinal Joseph Ratzinger (German) becomes Pope Benedict XVI.
Chief Justice William Rehnquist dies at 80; 16th in U.S. Supreme Court history 1972-2005. John Roberts is confirmed as the 17th Supreme Court Chief Justice, the youngest Chief Justice in over 200 years.
London terrorist bombings on 7/7 kills 52 on subways and one bus - prompting new British laws.
Iraqi people vote and adopt their first democratic constitution and first regional parlimentary General elections - the Council of Representatives, a 275-member body, will shape Iraq's future government.
Kashmir earthquake (October 8) kills over 85,000 and leaves over 3.5 million Pakastanis homeless.
Lance Armstrong wins Tour de France for his 7th consecutive victory (1999-2005).
Chicago White Sox win their first World Series title since 1917.
Dow 2004: 10,453.92 to 10,783.01
Dow return for 2004: 3.15%
S&P 500 2004: 1,111.92 to 1,211.92
S&P 500 return for 2004: 8.99%
NASDAQ 2004: 2,003.37 to 2,175.44
NASDAQ return for 2004: 8.59%
10 year Treasury: 4.25%
World Equity Market: $35.911 trillion up 12.43%
MSCI Europe Index 864.93 up 17.62%
MSCI Asia Pacific Index 100.75 up 15.06%
S&P Latin America 40 1,558.35 up 38.86%
MSCI BRIC 132.76 up 13.63%
S&P Middle East & Africa 137.4 up 20.98%
data
* U.S. Total stock market returned 12% in 2004, Stocks outperformed, Bonds underperformed and inflation was average. Most gains for the year were earned in November 4.5% and December 3.5%.
* Of the 5 largest sectors in the U.S. Economy: Real Estate 23.8% and Natural Resources 22.7% performed best, Financial 7%, Technology 6% while Health 1.3%. By size: Small Cap value stocks 21.6% (fifth year of returns in excess of 20%), Mid & Small Value Cap stocks have appreciated 125% in the past 5 years. Gold 4.3% and oil 31.3% had gains with commodity prices (CRB) 16.6%.
* Global markets rose 12.4% of the World's largest economic regions: Latin America performed best 38.9% followed by Europe 17.6% and Asia 15.1%. Of the World's largest Developed non-U.S. Economies: Japan returned 7.6%, Germany 7.3%, Britain 7.5%, France 7.4% and Canada 12.5%. In the Emerging markets which returned 13.6%: Russia 8.3% and India 13.1 continue to excel while China fell -15.4%. Hedge fund performance 8% was disappointing (compared to '00-'03), generally underperforming the Stock market. U.S. Treasury bills yielded an (inflation adjusted) loss of 2% due to historic low Fed funds rate of 1%.
* Those who diversified with MPT did best, a trend which should accelerate. Despite a rally from March 03 through the end of 2004 Large Growth Technology stocks still lag (worth 2/5 of their values from their peak). The NASDAQ Composite Average fell from 5,132.52 (its Mar 10, 2000 peak) to 1,253 (its Mar 12, 2003 low) a 77% decline. The S&P 500 is still down about 21% from its peak of 1552.87 on Mar 24, 2000.
* 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.
FOMC Tightening Cycle - Fed Funds rate increases 5 consecutive times to 2.5% from 1% (from Jun 25, '03 - Jun 30, '04 rate was 1%, in 2000 Fed Funds rate was 6.5%).
U.S. 10 yr Treasuries end the year at 4.25% - U.S. Treasuries returned an average of 3.5% in 2004 up from 2.3% in 2003.
Dollar ends the year at an all-time low of $1.36 falling from $0.8228 (October 26, 2000) to $1.36 in the past 4 years (a 65% decline) to the Euro. The Euro began trading on Jan 1, 1999 between European banks at $1.17.
Oil ends the year at $42. Oil started the year at $27 then traded just below $50 at Halloween. In December 1998 oil was $10.
Gold ends the year at $440 with highs of $470 and lows of $385 (up from $250 in April of 2001).
Prescription Drug Bill, Medicare (Part D) signed into Law.
Sumatra-Andaman earthquake occurs on Dec 26. The 9.2 earthquake lasted nearly 10 minutes causing the entire planet to vibrate (the total fault slip measured nearly 50 feet over about an hour). The subsequent Tsunami (may have reached as high as 100 feet) and killed between an estimated 223,000 - 283,000 making it one of the worst natural disaster in recorded human history. Donor nation pledges exceeded $13.6B.
President George Bush defeats John Kerry in 2004 Elections for 2nd term.
U.S. and Coalition forces had successes and failures in Iraq after toppling Saddam Hussein's Ba'ath Party government. More than 200,000 people are estimated killed/"disappeared" during Saddam's rule, and more than 1 million were killed during the Iran-Iraq War (1980-1988), the first Persian Gulf War (1991) and the current Operation Iraqi Freedom (2003-).
9/11 Commission hearings undertaken and reports released.
Madrid terrorist train blasts kill 190 people, which consequently effects Spanish Elections.
Chechen militants seize school in Russia more than 330 children and adults killed.
China undergoes first peaceful leadership transition since the 1949 Communist revolution.
Afghanistan holds its first democratic Presidential election since the removal of the Taliban. Operation Enduring Freedom returned rule to the Afghani people in 2002.
North Korea and Iran are pressured by U.N. member states on their nuclear programs.
European Union admits 10 new members, mostly from the former Soviet bloc - Czech Republic, Cyprus, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia.
Sudan's Darfur region ravaged by violence - a humanitarian crisis claim tens of thousands of lives.
Hurricanes (4) hit Florida: 117 killed, damage tops $22B.
President Ronald Reagan dies at 93; 40th President of the United States from 1980-88. Reagan abandoned detente instead indentifying the Soviet Union as the "Evil Empire" and demanding that East Germany "tear down" the Berlin Wall. Reagan, Margaret Thatcher, Pope John Paul II, Solidarnosc and the power of the American economy forced Mikhail Gorbachev in 1986 to introduce glasnost ("openness") and perestroika ("restructuring") effectively ending the Nuclear Arms Race and the Cold War. Russian Economic and Political reforms followed in 1988 dismantling the totalitarian state (established in 1917 by Lenin and Stalin) and freeing Eastern European states from Soviet control for the first time since 1945. Reagan introduced supply-side economics lifting the U.S. economy out of stagflation, creating 16.7 million jobs and the greatest economic recovery since post-WWII.
Athens defies skeptics and hosts a successful 2004 Summer Olympics. American swimmers stand out - Jenny Thompson becomes the most decorated swimmer in Olympic history with 12, Michael Phelps won 8 medals a record for a non-boycotted Olympics Games and Natalie Coughlin won 5 medals tying her for the most medals by a U.S. woman in any sport in a single Summer Olympics.
Boston Red Sox win their first World Series title since 1918, beating the New York Yankees (ending the "Curse of the Bambino" the infamous trade of Babe Ruth to the New York Yankees following the 1919 season) and then the St. Louis Cardinals in 8 straight games.
NASA's 2 rovers reach Mars and transmit images and data. Hubble Space Telescope estimates the age of the universe at 13.78 billion years.
Is it time to take advantage of Opportunities?