Tuesday, November 23, 2010
Sunday, November 21, 2010
Insider – Trading…Under the Radar
U.S. in Vast Insider Trading Probe - The Wall Street Journal
By SUSAN PULLIAM, MICHAEL ROTHFELD,JENNY STRASBURG and GREGORY ZUCKERMAN
Federal authorities, capping a three-year investigation, are preparing insider-trading charges that could ensnare consultants, investment bankers, hedge-fund and mutual-fund traders, and analysts across the nation, according to people familiar with the matter.
The criminal and civil probes, which authorities say could eclipse the impact on the financial industry of any previous such investigation, are examining whether multiple insider-trading rings reaped illegal profits totaling tens of millions of dollars, the people say. Some charges could be brought before year-end, they say.
The investigations, if they bear fruit, have the potential to expose a culture of pervasive insider trading in U.S. financial markets, including new ways non-public information is passed to traders through experts tied to specific industries or companies, federal authorities say.
One focus of the criminal investigation is examining whether nonpublic information was passed along by independent analysts and consultants who work for companies that provide "expert network" services to hedge funds and mutual funds. These companies set up meetings and calls with current and former managers from hundreds of companies for traders seeking an investing edge.
Among the expert networks whose consultants are being examined, the people say, is Primary Global Research LLC, a Mountain View, Calif., firm that connects experts with investors seeking information in the technology, health-care and other industries.
"I have no comment on that," said Phani Kumar Saripella, Primary Global's chief operating officer.
Primary's chief executive and chief operating officers previously worked at Intel Corp., according to its website.
In another aspect of the probes, prosecutors and regulators are examining whether Goldman Sachs Group Inc. bankers leaked information about transactions, including health-care mergers, in ways that benefited certain investors, the people say. Goldman declined to comment.
Independent analysts and research boutiques also are being examined. John Kinnucan, a principal at Broadband Research LLC in Portland, Ore., sent an email on Oct. 26 to roughly 20 hedge-fund and mutual-fund clients telling of a visit by the Federal Bureau of Investigation.
"Today two fresh faced eager beavers from the FBI showed up unannounced (obviously) on my doorstep thoroughly convinced that my clients have been trading on copious inside information," the email said. "(They obviously have been recording my cell phone conversations for quite some time, with what motivation I have no idea.) We obviously beg to differ, so have therefore declined the young gentleman's gracious offer to wear a wire and therefore ensnare you in their devious web."
The email, which Mr. Kinnucan confirms writing, was addressed to traders at, among others: hedge-fund firms SAC Capital Advisors LP and Citadel Asset Management, and mutual-fund firms Janus Capital Group, Wellington Management Co. and MFS Investment Management.
SAC, Wellington and MFS declined to comment; Janus and Citadel didn't immediately comment. It isn't known whether clients are under investigation for their business with Mr. Kinnucan.
The investigations have been conducted by federal prosecutors in New York, the FBI and the Securities and Exchange Commission. Representatives of the Manhattan U.S. Attorney's office, the FBI and the SEC declined to comment.
Another aspect of the probe is an examination of whether traders at a number of hedge funds and trading firms, including First New York Securities LLC, improperly gained nonpublic information about pending health-care, technology and other merger deals, according to the people familiar with the matter.
Some traders at First New York, a 250-person trading firm, profited by anticipating health-care and other mergers unveiled in 2009, people familiar with the firm say.
A First New York spokesman said: "We are one of more than three dozen firms that have been asked by regulators to provide general information in a widespread inquiry; we have cooperated fully." He added: "We stand behind our traders and our systems and policies in place that ensure full regulatory compliance."
Key parts of the probes are at a late stage. A federal grand jury in New York has heard evidence, say people familiar with the matter. But as with all investigations that aren't completed, it is unclear what specific charges, if any, might be brought.
The action is an outgrowth of a focus on insider trading by Preet Bharara, the Manhattan U.S. Attorney. In an October speech, Mr. Bharara said the area is a "top criminal priority" for his office, adding: "Illegal insider trading is rampant and may even be on the rise." Mr. Bharara declined to comment.
Expert-network firms hire current or former company employees, as well as doctors and other specialists, to be consultants to funds making investment decisions. More than a third of institutional investment-management firms use expert networks, according to a late 2009 survey by Integrity Research Associates in New York.
The consultants typically earn several hundred dollars an hour for their services, which can include meetings or phone calls with traders to discuss developments in their company or industry. The expert-network companies say internal policies bar their consultants from disclosing confidential information.
Generally, inside traders profit by buying stocks of acquisition targets before deals are announced and selling after the targets' shares rise in value.
The SEC has been investigating potential leaks on takeover deals going back to at least 2007 amid an explosion of deals leading up to the financial crisis. The SEC sent subpoenas last autumn to more than 30 hedge funds and other investors.
“Today two fresh faced eager beavers from the FBI showed up unannounced (obviously) on my doorstep thoroughly convinced that my clients have been trading on copious inside information.... We obviously beg to differ, so have therefore declined the young gentleman's gracious offer to wear a wire and therefore ensnare you in their devious web.”
John Kinnucan, of Broadband Research, in an Oct. 26 email to clients
Some subpoenas were related to trading in Schering-Plough Corp. stock before its takeover by Merck & Co. in 2009, say people familiar with the matter. Schering-Plough stock rose 8% the trading day before the deal plan was announced and 14% the day of the announcement.
Merck said it "has a long-standing practice of fully cooperating with any regulatory inquiries and has explicit policies prohibiting the sharing of confidential information about the company and its potential partners."
Transactions being focused on include MedImmune Inc.'s takeover by AstraZeneca PLC in 2007, the people say. MedImmune shares jumped 18% on April 23, 2007, the day the deal was announced. A spokesman for AstraZeneca and its MedImmune unit declined to comment.
Investigators are also examining the role of Goldman bankers in trading in shares of Advanced Medical Optics Inc., which was taken over by Abbott Laboratories in 2009, according to the people familiar with the matter. Advanced Medical Optics's shares jumped 143% on Jan. 12, 2009, the day the deal was announced. Goldman advised MedImmune and Advanced Medical Optics on the deals.
A spokesman for AstraZeneca and its MedImmune unit declined to comment.
In subpoenas, the SEC has sought information about communications—related to Schering-Plough and other deals—with Ziff Brothers, Jana Partners LLC, TPG-Axon Capital Management, Prudential Financial Inc.'s Jennison Associates asset-management unit, UBS AG's UBS Financial Services Inc. unit, and Deutsche Bank AG, according to subpoenas and the people familiar with the matter.
Representatives of Ziff Brothers, Jana, TPG-Axon, Jennison, UBS and Deutsche Bank declined to comment.
Among hedge-fund managers whose trading in takeovers is a focus of the criminal probe is Todd Deutsch, a top Wall Street trader who left Galleon Group in 2008 to go out on his own, the people close to the situation say. A spokesman for Mr. Deutsch, who has specialized in health-care and technology stocks, declined to comment.
Prosecutors also are investigating whether some hedge-fund traders received inside information about Advanced Micro Devices Inc., which figured prominently in the government's insider-trading case last year against Galleon Group hedge fund founder Raj Rajaratnam and 22 other defendants.
Fourteen defendants have pleaded guilty in the Galleon case; Mr. Rajaratnam has pleaded not guilty and is expected to go to trial in early 2011.
Among those whose AMD transactions have been scrutinized is hedge-fund manager Richard Grodin. Mr. Grodin, who received a subpoena last autumn, didn't return calls. An AMD spokesman declined to comment.
Write to Susan Pulliam at susan.pulliam@wsj.com, Michael Rothfeld at michael.rothfeld@wsj.com, Jenny Strasburg at jenny.strasburg@wsj.com and Gregory Zuckerman at gregory.zuckerman@wsj.com
The war with China
Bernanke Steps Up Stimulus Defense, Turns Tables on China
By Scott Lanman - Nov 19, 2010 8:02 PM GMT+0500
Federal Reserve Chairman Ben S. Bernanke defended his monetary stimulus to fellow central bankers, saying it will aid the world economy, and made some of his strongest criticism of China’s weak-currency policy.
The best way to underpin the dollar and support the global recovery “is through policies that lead to a resumption of robust growth in a context of price stability in the United States,” Bernanke said in a speech in Frankfurt today. Countries that undervalue their currencies may eventually inhibit growth around the world and risk financial instability at home, he said.
The Fed chief is confronting criticism from officials in countries including China and Brazil who say the Nov. 3 decision to buy $600 billion in Treasury securities has weakened the dollar and contributed to flows of capital to emerging markets. The policy has also come under fire in the U.S., where critics, including Republican members of Congress, have said it risks fueling inflation and asset bubbles.
“Globally, both growth and trade are unbalanced,” Bernanke said. “Because a strong expansion in the emerging- market economies will ultimately depend on a recovery in the more advanced economies, this pattern of two-speed growth might very well be resolved in favor of slow growth for everyone if the recovery in the advanced economies falls short.”
As Bernanke spoke, the Chinese central bank said it will raise the reserve ratio requirement for the nation’s banks by 50 basis points from Nov. 29. The dollar fell to $1.3671 per euro at 9:35 a.m. in New York from $1.3643 yesterday. The Standard & Poor’s 500 Index fell 0.2 percent to 1,194.17.
‘Not so Sure’
Norman Chan, chief executive of the Hong Kong Monetary Authority, the city’s de facto central bank, said he’s “not so sure” if the Fed’s purchases will help spur growth or lower the jobless rate. The “side effect” of the easing for emerging markets is adding risks of asset bubbles in the region, including in Hong Kong, Chan told reporters in the city today.
While Bernanke didn’t identify China in his speech, he took aim at “large, systemically important countries with persistent current-account surpluses.” Bernanke’s comments come a week after leaders of the Group of 20 developed and emerging nations meeting in South Korea failed to agree on a remedy for trade and investment distortions. At the summit, President Barack Obama attacked China’s policy of undervaluing its currency.
“He’s essentially saying, ‘Don’t blame us, you’re part of the problem,’” Robert Eisenbeis, a former Atlanta Fed research director, said on Bloomberg Television’s “InsideTrack.”
Bernanke said the “sense of common purpose has waned” after officials around the world united to fight the financial crisis. “Tensions among nations over economic policies have emerged and intensified, potentially threatening our ability to find global solutions to global problems,” he said.
Promote Exports
China has tied the yuan to the dollar to promote exports that helped produce the fastest gains in gross domestic product of any major economy. China, which surpassed Japan’s GDP to become world No. 2 in the second quarter, recorded 9.6 percent annual growth in the three months through September. It holds about $2.6 trillion in foreign reserves, the most in the world.
China’s foreign ministry had no immediate comment when asked for a response to Bernanke’s speech. A China central bank spokesman couldn’t immediately be reached for comment.
‘Quite Skeptical’
After the speech, Bernanke spoke during a panel discussion and responded to audience questions, saying that the use of securities purchases for monetary policy affects asset prices “quite significantly.” He said he’s “quite skeptical” of the criticism that central bankers are “pushing on a string.”
At the same time, policy makers “don’t want to overpromise” on a program whose effects are “meaningful” yet “moderate,” he said on the panel with European Central Bank President Jean-Claude Trichet, International Monetary Fund Managing Director Dominique Strauss-Kahn and Brazil’s central bank president Henrique Meirelles.
It’s Bernanke’s first trip abroad since the Federal Open Market Committee made the decision, dubbed QE2 by economists and investors, to implement a second round of so-called quantitative easing. Bernanke said the term is “inappropriate” because it usually refers to policies that change the quantity of bank reserves, “a channel which seems relatively weak, at least in the U.S. context.”
‘Worthwhile Gamble’
Fed officials are trying to make the case “it was probably a worthwhile gamble for the U.S. to try to print a little bit more money to stimulate the economy without triggering inflation,” former Fed economist David Cohen, now a director of Asia forecasting at Action Economics in Singapore, said in a Bloomberg Television interview.
German Finance Minister Wolfgang Schaeuble said Nov. 5 he was “dumbfounded” at the Fed’s actions, which he said won’t aid growth and will instead contribute to imbalances by driving down the currency. U.S. monetary policy is creating “grave distortions” and causing “collateral effects” on faster- growing economies such as Brazil, Meirelles said in October.
“I don’t think anybody’s going to be all that convinced one way or the other,” said Eisenbeis, now chief monetary economist with Cumberland Advisors Inc. in Sarasota, Florida. “Everybody has their own views, particularly the Germans and the Chinese.”
Bernanke said that different economies “call for different policy settings.” In the U.S., inflation has slowed since the most recent recession began in December 2007, and “further disinflation could hinder the recovery,” he said.
“Insufficiently supportive policies in the advanced economies could undermine the recovery not only in those economies, but for the world as a whole,” he said.
‘Slow Pace’
America’s unemployment rate at 9.6 percent last month is currently “high and, given the slow pace of economic growth, likely to remain so for some time,” Bernanke said. He said that “we cannot rule out the possibility that unemployment might rise further in the near term, creating added risks for the recovery.”
The asset purchases will be used in a way that’s “measured and responsive to economic conditions,” Bernanke said. Fed officials are “unwaveringly committed to price stability” and don’t seek inflation higher than the level of “2 percent or a bit less” that most policy makers see as consistent with the Fed’s legislative mandate, he said.
Bernanke, 56, also appealed to human concerns to justify the Fed’s policy.
“On its current economic trajectory the United States runs the risk of seeing millions of workers unemployed or underemployed for many years,” he said. “As a society, we should find that outcome unacceptable.”
The former Princeton University economist devoted the majority of his speech to discussing global policy challenges and tensions.
China’s vice foreign minister, Cui Tiankai, said Nov. 5 “many countries are worried about the impact of the policy,” echoing concern across Asia over the risk of a flood of capital that causes asset bubbles. Economies from Taiwan to Indonesia and Brazil have taken steps to counter inflows of speculative money, and South Korea yesterday said it will back legislation restoring a tax on foreign investment in the nation’s bonds.
Currency Intervention
Bernanke used one of nine charts to show how countries including China and Taiwan are intervening to prevent or slow appreciation in their currencies. Allowing stronger currencies would help result in “more balanced and sustainable global economic growth,” Bernanke said.
Bernanke, a scholar of the Great Depression, drew a comparison between the current period and events leading to the 1930s economic disaster. The U.S. and France maintained “persistently undervalued” exchange rates by preventing inflows of gold from feeding into money supplies, which created deflationary pressures in other countries and helped bring on the Depression, Bernanke said.
“Although the parallels are certainly far from perfect, and I am certainly not predicting a new Depression, some of the lessons from that grim period are applicable today,” Bernanke said. “In particular, for large, systemically important countries with persistent current-account surpluses, the pursuit of export-led growth cannot ultimately succeed if the implications of that strategy for global growth and stability are not taken into account.”
To contact the reporter on this story: Scott Lanman in Washington at slanman@bloomberg.net.
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
Politics vs. Policies…. Why don’t they just let the economy recover on it’s own? We might have a better possibility at it…. What do you think?
Geithner Warns Republicans Against Politicizing the Fed
By Ian Katz - Nov 20, 2010 10:00 AM GMT+0500
U.S. Treasury Secretary Timothy F. Geithner said the Obama administration would oppose any effort to strip the Federal Reserve of its mandate to pursue full employment and warned Republicans against politicizing the central bank.
“It is very important to keep politics out of monetary policy,” Geithner said in an interview airing on Bloomberg Television’s “Political Capital with Al Hunt” this weekend. “You want to be very careful not to take steps that hurt our credibility.”
The Republican congressional leadership, including John Boehner, nominated as the next House speaker, has criticized the Fed’s plan to buy $600 billion in assets, saying it would fuel inflation and asset bubbles. Senator Bob Corker, a Tennessee Republican who serves on the Banking Committee, said he favors confining the Fed’s mandate to promoting price stability.
Geithner, 49, declined to say what compromise the Obama administration would be willing to consider on extending Bush- era tax cuts, while ruling out making permanent the reductions for the wealthiest Americans.
“It is not responsible, and I could not recommend to the president in good conscience, that we go out and borrow $700 billion to make those high-end tax cuts permanent,” Geithner said.
He said he doesn’t think the tax cuts for the middle class will be allowed to expire in December, or that all of the tax cuts, including those for the wealthy, will be extended permanently.
General Motors
On General Motors Co., Geithner said the government would get back “a very substantial part” of its investment and all the money the Obama administration spent on bailing out the automaker. Taxpayers put about $13.4 billion into GM under former President George W. Bush and $36.1 billion under Obama.
GM, which went bankrupt last year after almost a century on the New York Stock Exchange, raised more than $20 billion in an initial public offering Nov. 18.
Asked about Europe, Geithner said a financial rescue of Ireland could mark an end to the continent’s sovereign debt crisis. Officials from the European Union, International Monetary Fund and European Central Bank spent a second day in Dublin yesterday discussing a possible bailout of Irish banks.
“I believe they will achieve that because this government, Ireland has demonstrated that they are willing to do some very, very difficult, very, very hard things to dig their way out of this mess,” Geithner said. “And leaders of Europe have made some very tough political choices.”
China Currency
He said China is allowing its currency to strengthen, and that “we want to make sure they sustain that.”
The Fed’s monetary easing, which Chinese officials have said weakened the dollar, hasn’t hurt U.S. efforts to convince China to let the yuan rise, Geithner said. The yuan has gained about 2.6 percent against the dollar since Sept. 1.
Fed Chairman Ben S. Bernanke defended the monetary stimulus in a speech in Frankfurt yesterday and in a meeting with U.S. senators Nov. 17.
The best way to underpin the dollar and support the global recovery “is through policies that lead to a resumption of robust growth in a context of price stability in the United States,” Bernanke said in his speech.
The asset purchases will be used in a way that’s “measured and responsive to economic conditions,” Bernanke said. Fed officials are “unwaveringly committed to price stability” and don’t seek inflation higher than the level of “2 percent or a bit less” that most policy makers see as consistent with the Fed’s legislative mandate, he said.
Letter to Bernanke
Also this week, 23 people, including former Republican government officials and economists, urged Bernanke to halt the stimulus. Among those who signed the letter: Douglas Holtz- Eakin, a former Congressional Budget Office director; Weekly Standard Editor William Kristol, and Stanford University Professor John Taylor, creator of a monetary-policy formula on interest rates used by the Fed.
The Republican attacks on the Fed have been among the harshest since the central bank rushed to rescue the financial system with support for Bear Stearns Cos. and American International Group Inc. during the financial crisis.
“It is very important that we respect and honor what the Congress did when it set up our independent central bank with a mandate to keep prices low and stable over time and to make sure” it promotes “sustainable economic growth,” said Geithner, who was president of the Federal Reserve Bank of New York before taking over as Treasury secretary last year.
To contact the reporters on this story: Ian Katz in Washington at ikatz2@bloomberg.net.
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
Unemployment extension defeated in house...do you agree or disagree with their decision?
Arthur Delaney | HuffPost Reporting
WASHINGTON -- The House of Representatives on Thursday voted down a measure that would have reauthorized extended unemployment insurance for another three months, leaving no clear path forward to prevent the benefits from lapsing as scheduled on Nov. 30.
Without a reauthorization, the Labor Department estimates that two million long-term unemployed will prematurely stop receiving benefits before the end of the year.
"I think it's a sad moment," said Rep. Alan Grayson (D-Fla.) after the vote. "It appalls me that the Republicans keep pitching and pitching and pitching the tax cuts for the rich and won't join in a bill to help people keep their homes and not have to live in their cars."
The bill was brought to the floor under a "suspension of the rules," meaning it required approval from two-thirds of the House. It failed 258 to 154, with mostly Democratic support. Twenty-one Republicans voted in favor and 11 Democrats voted nay.
Even if it had passed the House, it's unclear how it would get through the Senate, where Democrats will need at least three Republicans to switch sides. No GOP moderates have signaled a willingness to support an unemployment reauthorization that isn't "paid for" with spending cuts -- something Democrats have refused to do all year. In most recessions, the cost of federally-funded jobless aid is usually paid for with deficit spending.
It's likely there will be another effort in Congress to reauthorize the benefits before the Christmas break, though lawmakers will be off next week for Thanksgiving.
"My understanding is the Senate is trying figure out what vehicle they can add it to and how they can include and we'll see, but I don't think we should be going home over the holidays when people are losing their unemployment benefits, and especially when the struggle seems to be how you can give more money to rich people," Rep. George Miller (D-Calif.), chairman of the House Education and Labor committee, told HuffPost.
Democrats may attempt to attach a reauthorization of the extended benefits to a broader bill, such as a measure reauthorizing some of the Bush-era tax cuts set to expire at the end of the year.
Advocates for the unemployed want a bill that preserves existing benefits for the entirety of 2011.
White House spokesman Robert Gibbs on Thursday said Congress ought to reauthorize the benefits before its Christmas break.
"When we discuss how to get our economy moving again, there isn't an economist in the country who won't tell you that ensuring [that] those who lost their jobs have the ability to pay their rent, support their families, isn't in and of itself a great boost to the economy," he said.
I do not think that we want to leave here having fought for tax cuts for millionaires and against... unemployment insurance for those who lost their jobs."
Federally-funded extended benefits, which give the unemployed up to 73 weeks of benefits once they exhaust 26 weeks of state benefits, have needed several reauthorizations in the past year, and Congress has let them lapse three times. The shorter lapses didn't cause too much of an interruption in benefits, but over the summer, as Senate Republicans filibustered a reauthorization for 50 days, 2.5 million people stopped receiving checks for several weeks.
"Sadly, Congress is once again heading out of town just as the federal unemployment insurance programs are slated to expire, this time right as the holiday season begins," said Christine Owens, director of the National Employment Law Project, in a statement. "It is critical that a full-year renewal of the program moves to the top of the agenda when Congress returns on November 29th, to minimize the hardship and disruption to families and the economy that will result from the November 30th cut-off."
Sam Stein contributed reporting.
And we still keep helping them....something is wrong with this picture!
MortgageRates unveils the truths behind the banking industry.
Are consumers spending more? What should we expect on Black Friday?
Consumer, Business Spending Probably Climbed as U.S. Recovery Accelerated
By Bob Willis - Nov 21, 2010 10:01 AM GMT+0500 Bloomberg
Consumer spending probably picked up in October, and factories took more machinery orders, showing the U.S. recovery strengthened entering the final quarter of 2010, economists said before reports this week.
Household purchases rose 0.5 percent after a 0.2 percent gain in September, according to the median estimate of 61 economists surveyed by Bloomberg News ahead of Nov. 24 figures from the Commerce Department. The same day, another report from the agency may show bookings for durable goods excluding cars and aircraft climbed 0.6 percent.
A better job market and bigger paychecks may give consumers the confidence to keep spending during the holiday season, broadening the economic rebound beyond manufacturing. Minutes from the Federal Reserve’s meeting this month may help explain why policy makers decided to begin supplying the world’s largest economy with an additional $600 billion in monetary stimulus.
“As businesses invest more and hire more, it fuels consumer spending in what we hope becomes a self-sustaining cycle,” said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit. “We’re seeing evidence of consumer demand returning.”
Companies like Dell Inc. and Caterpillar Inc. are among those benefiting from gains in exports and investments to replace outmoded equipment. Businesses added 159,000 workers to payrolls in October, a fourth month of gains exceeding 100,000, according to Labor Department figures on Nov. 5. Unemployment held at 9.6 percent.
Incomes Grow
The Commerce Department’s consumer spending report will also show personal income rose 0.4 percent last month after dropping 0.1 percent in September, according to the median estimate of economists surveyed.
Auto dealers are among retailers seeing demand improve. Car sales in October rose to a 12.25 million unit annual pace, the highest since the government’s cash-for-clunkers program in August 2009, industry data showed this month.
The projected gain in durable goods bookings excluding volatile demand for transportation equipment would follow a 0.4 percent decline the prior month. Total durable goods orders were little changed after a 3.5 percent gain in September, according to economists surveyed.
Dell, the third-largest supplier of personal computers, last week posted earnings in the fiscal third quarter that beat analysts’ predictions. Dell benefited from cheaper prices for parts and buoyant spending from companies that are updating aging personal computers and servers.
‘Refresh Cycle’
“The refresh cycle is very much in full bloom,” Chief Executive Officer Michael Dell said on a Nov. 18 call with analysts.
Manufacturers like Caterpillar, the world’s biggest maker of earthmoving equipment, are filling orders from China and Brazil and domestic customers as firms upgrade equipment and boost plant capacity to meet rising consumer demand.
“The recovery is happening,” Doug Oberhelman, Caterpillar’s chief executive officer, said in an Oct. 21 interview with Bloomberg Television. “The numbers are increasing monthly for us in North America and elsewhere.”
The strength in investment helps explain why shares of machinery and parts makers have outperformed the broader index. The Standard & Poor’s Supercomposite Machinery Index is up 34 percent this year, compared with a 7.6 percent gain for the S&P 500.
The economy grew at a 2.4 percent annual pace in the third quarter, more than 2 percent pace estimated last month, according to the median forecast of economists surveyed ahead of revised figures from the Commerce Department on Nov. 23.
Home Sales
Housing, the industry that triggered the worst recession in seven decades, is struggling to recover after a homebuyers’ tax credit expired in April and foreclosures keep adding to inventory.
Home sales dropped to a 4.80 million annual pace in October from a 4.84 million rate the prior month, reflecting decreasing demand for existing houses, according to economists surveyed.
The median forecast of economists projected a report from the National Association of Realtors on Nov. 23 will show purchases of previously sold houses fell 1.1 percent to a 4.48 million pace last month. Foreclosure moratoriums across the country along with government investigations into faulty paperwork threaten to delay a recovery as houses slated for repossession take longer to come to market.
Foreclosures
Distressed purchases, which include foreclosures and short- sales in which the bank agrees to take less than the full amount of the mortgage, accounted for 35 percent of existing-home sales in September, according to the agents’ group.
Demand for new homes rose 2.4 percent to a 315,000 annual pace in October, economists forecast before a Nov. 24 report from the Commerce Department. Sales in September were 78 percent below the record reached in July 2005.
On Nov. 23, the Fed will release the minutes of its Nov. 2- 3 policy meeting that led to a second round of unconventional monetary easing in a bid to lower unemployment and prevent inflation from slowing even more. The report will also contain policy makers’ updated economic forecasts.
Jeremy Grantham talks about the economy....
Jeremy Grantham, is convinced that stocks are overpriced and cash is NOW the avenue. He notes that the Feds dropped the ball and that Congress needs to take control. And he predicts for 2011, 2012, to and 20 to be less handsome than it used to be!
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