- AOL paid some hefty sums to its former employees – $28.4 million to be exact – to its four top executives it replaced last year. “Want to make money? Become a former AOL executive,” MediaMemo blogger Peter Kafka says.
- Housing starts tumbled 5.9% in February. “This level of starts is both good news and bad news,” Calculated Risk says. “The good news is the excess housing inventory is being absorbed – a necessary step for housing (and the economy to recovery. The bad news is economic growth will probably be sluggish – and unemployment elevated – until residential investment picks up.”
- Bearish stance from Albert Edwards, Societe Generale strategist, isn’t losing steam. He questions recovery’s sustainability in large part because “credit is disappearing at this debilitating dehydrating rate.”
- Google’s (GOOG) Nexus One sales only 135,000 after 74 days at market, according to analytics firm Flurry. “A piddling amount,” Digital Daily blogger John Paczkowski says, especially since Apple’s (AAPL) iPhone and Motorola’s (MOT) Droid sold 1M and 1.05M, respectively, after their first 74 days on the market.
- A downgraded US credit rating wouldn’t be pretty. Good thing Tim Geithner says there’s no way that will happen.
- “Don’t kid yourself: the hype currently surrounding short sales and the HAFA program will prove to be short-lived, and REO expertise will be prove to be the key to recovery, as it has been in prior cycles,” Paul Jackson writes at Housing Wire.
- What does corporate America think about financial reform? “It’s actually really hard to say,” Justin Fox says.
- Columbia Journalism Review argues blogs have been doing a better job covering the examiner’s report on Lehman’s collapse when compared to mainstream media’s coverage.
- The worry about the Fed ending its MBS purchase program is it will cause long-term interest rates to rise, which will hinder recovery. But if that happens, the Fed’s capable of restarting the program “very quickly if needed,” Mark Thoma writes.
- NJ Gov Chris Christie proposes steep spending cuts that will hit “the poor, elderly, schoolchildren, college students and inner-city residents hardest, while largely sparing the wealthy and businesses,” NYT says.
Usually, when somebody’s “staying the course,” it implies smooth sailing. We hope that’s the case with the Fed, but there are reasons to at least keep the life vests handy, should the sailing get a bit rough.
US stocks rise after the Fed once again leaves short-term interest rates near zero, and indicates it’s going to keep them there for some time.
DJIA rises 44 to 10686, S&P 500 gains another 9 to 1159, Nasdaq Comp adds 16 to 2378. S&P climbs comfortably over the much-eyed 1150 level, a bullish development. Crude climbs close to $82/barrel, while the dollar slips. The Dow’s risen six straight sessions, and 11 of the past 13. It also hasn’t seen a 100-point swing in 11 of those 13 sessions, as the indexes have just quietly been rising steadily.
FOMC leaves interest rates alone, great for banks that get to borrow cheaply (financials not surprisingly had a good day,) and offers some optimistic words on the economy. Central bank also says it’s going to end its MBS-buying program on schedule (see the previous post for our thoughts on that.)
What does it say about the Fed’s real opinion of the economy that it feels compelled to keep interest rates pinned to the floor, and almost explicitly promise to keep them there for the foreseeable future?
The FOMC committee released its March meeting statement, and while it tweaked a couple of minor words here and there, and offered a relatively sunny outlook, it didn’t do anything, and that’s where you should be focused, not the hyperbolic outlook.
Sure, they gave some lip service to perceived improvements (household spending “expanding at a moderate rate”; labor market “stabilizing.”) But as long as the Fed’s got interest rates down on the sawdust-covered floor with the spilled beer and peanut shells, I don’t know how you can argue that the economy’s on any kind of firm footing.
Information received since the Federal Open Market Committee met in January suggests that economic activity has continued to strengthen and that the labor market is stabilizing. Household spending is expanding at a moderate rate but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software has risen significantly.
Given what we wrote yesterday about corporate financing, I wonder just how “significantly” business spending is really growing. I think we’re still talking about a second-derivative kind of thing here, where x — whether the labor market, consumer spending or business investment — is better than it used to be, not necessarily good on its own.
So not only didn’t anybody seemed particularly perturbed by the Valukas report on Lehman Brothers’ nefarious book keeping, but reports today have the company, get this, reforming as an asset manager.
Yes, the people who brought you Repo 105 and other great hits want to transfer the company’s remaining assets to a reorganized asset manager, currently being called LAMCO (they couldn’t have squeezed an E in there after the M?)
“The concept is we built an enterprise. The idea is can we capitalize on it? The answer may be no or it may be yes,” said John Suckow, Lehman’s president. The point of the new company would be to manage the assets in order to pay off the $875 billion in creditor claims.
The company didn’t put a value on its assets, but if they’re having trouble making their numbers, we’re sure they’ll come up with something creative to bridge the gap.
The plan needs to be approved by the bankruptcy court. It doesn’t appear that LameCo, er, LamCo, would be looking to drum up new business. At least, we hope not.
Premarket tone for US stocks is a bit subdued, with equity futures pointing to a modestly higher open. Mixed action in Asia overnight, while European markets are rallying.
Most of the focus is on this afternoon’s FOMC statement, with some expectation that the committee may tweak its “extended period” language regarding its zero interest rate policy. But before the communique around 2:15 p.m. ET, we’ll see February import prices and housing starts, both at 8:30 a.m.
US dollar ran up overnight, but has since retreated, USD index at 80.15. Oil back above $80/bbl, gold looks frisky. S&P futures up 1.70, DJ futures up 10. Ten-year lower, yield at 3.71%.
J.P. Morgan reported some strong earnings today. But what this bloggers eye were some of the sub-numbers in the earnings report. The bank booked $1.8 billion in investment banking fees. But don’t be fooled – that wasn’t from big M&A advising. But $429 million was in advisory fees. Instead, that $1.3 billion + remaining fees […]
David Oreck, founder of a well-known maker of vacuums and air purifiers, says he’s upset his namesake company is in bankruptcy. He says Nashville, Tenn.-based Oreck Corp. was a perfectly profitable company when he sold his stake in it to a private equity firm in 2004. He blames the firm, New York-based American Securities Capital […]
