Financial Communique » USA

The increased debt limit in USA grew the crude oil prices

Viliyana Filipova — Mon, 01 Aug 2011 08:42:59 +0000

The crude oil prices started the new week with a promotion that night after Barack Obama announced that he had agreed to lift the ceiling on the debt of the United States. This prompted optimism in the market since at least in the short term threat of default on U.S. debt disappeared. The electronic platform of the New York Stock Exchange oil contracts for delivery in September increased its price by 1.2 percent to 96.87 dollars per barrel. Earlier in the night the price of black gold moved with an increase of 1.7 percent. Traded in London Brent oil price increases with 1.2 percent to 118.15 dollars a barrel.
The increase in oil prices contributed data to higher than expected manufacturing activity in China. The index, which tracks attitudes of managers in the sector has given way to 50.7 points in July. Expectations were to shrink to 50.2 points in June after its value was 50.9 points.

The crude oil decreased

Viliyana Filipova — Thu, 14 Jul 2011 08:15:07 +0000

The crude oil price fall in the electronic trading in New York after the U.S. credit rating was placed under surveillance for possible reduction. This increased the speculations that the economic is slowing down and may reduce demand for raw materials in the U.S. The futures fell 0.5% after ratings agency Moody’s announced it would review the country’s Aaa rating for the first time since 1995. Oil prices affect the data of the U.S. Department of Energy, which announced yesterday that gasoline demand fell by 3.2% during the week ended 8th July.
“This revision of ratings is worrying”, said Anthony Noonan, the assistant general manager of Mitsubishi Corp in Tokyo. “The uncertainty that this creates a market is scary. Crude demand has stagnated, and this is not healthy for the U.S.”, he added. The price of oil for delivery in August fell 51 cents to 97.54 dollars a barrel in electronic trading in New York. Contracts yesterday rose 62 cents to 98.05 dollars a barrel – the highest level since July 7. Prices have risen by 27% last year. The price of Brent crude oil for delivery in August was 118.40 dollars a barrel, down 38 cents.

The wealth of the US households increased

Viliyana Filipova — Wed, 08 Jun 2011 17:35:48 +0000

The wealth of U.S. households increased by 943 billion USD in the first quarter of 2011, after rising stock prices have offset the decline in housing prices. The net wealth of households and nonprofits increased by 6.8% yoy to 58.1 trillion. dollars after growth of 19% for the previous three months, according to the Federal Reserve. Furthermore, U.S. households have reduced their duties for the 12th consecutive quarter. The growth of 5.4% of index Standard & Poor’s 500 in the past quarter of Americans supported the wealth that remains below the levels before the recession. The decrease of the indexes ofweak housing market and rising unemployment during the current quarter may mean that households will continue to save and reduce debt. Since reaching a five-year low of 49.4 trillion. dollars in the first quarter 2009 net wealth grew by 8.7 trillion. This is a 7.7 trillion. dollars below the record high of 65.8 trillion. dollars, reached in the second quarter of 2007, six months before the recession. The value of financial assets of Americans, including stocks and investments of pension funds increased by 1.16 trillion. dollars in the first quarter, according to the data. The property values, however, decreased by 298.5 billion dollars.
The real estates prices may continue to decline because of unemployment and involuntary accumulation of stolen property. The index for housing prices in the country’s S & P / Case-Shiller is a decline of 4.2 percent in the first quarter compared with the previous, which is the largest quarterly decline since the first quarter of 2009.
“In general I would not be surprised” by a further downturn in property prices of 10 to 25% over the next five years, said during a conference in New York today, Robert Shiller, co-founder of the index.

New bankruptcies in USA

Viliyana Filipova — Sat, 29 Jan 2011 15:45:23 +0000

The U.S. regulators have closed four banks with total assets of 3.38 billion dollars. One of the failed bank is First Community Bank in Taos, New Mexico, it will be acquired by US Bancorp – the fifth largest commercial bank in the U.S. in size of deposits. Is spite of the debt reduction of the creditors the bank realized terrible financial report and bankrupted. The U.S. Bancorp now has 38 branches and over 1.8 billion dollars in deposits. The other bankrupted banks in Colorado, Oklahoma and Wisconsin, says the message of the FDIC for deposit insurance (FDIC). The closure of banks will cost the fund for insuring deposits FDIC total 545.5 million dollars. The main reason for the bankruptcy is the credit card debt. In spite of the credit card debt relief, which the bankrupted banks made to their clients, the payment was impossible for the citizens. Since the beginning of the year in the U.S. are 11 banks failed, but by early 2008 their number reached 333. Continued failures due to bad loans in the portfolio of banks to the sector of commercial real estate. From the government offered debt settlement lawyers for the credit owners, who will renegotiate their terms.
From the FDIC said in November that the list of troubled banks by the regulator, ie those who are at increased risk of bankruptcy, rose by 3.7 percent in the third quarter to 860 financial institutions – the highest number in 17 years.

US indexes closed on unstable position

Viliyana Filipova — Wed, 06 Oct 2010 12:18:19 +0000

The U.S. indexes ended the session mixed on Wednesday, amid disappointing data on job creation and once on Tuesday went up to 5-month high. Data for new jobs “disappointed on all paragraphs,” says analyst Action Economics. After a highly volatile session Dow Jones Industrial Average rose 0.21 percent to 10,968 points. General Electric Co. was the best performing company in the index and the shares gained over 2%. General Electric, the largest U.S. conglomerate announced a deal for $ 3 billion acquisition of Dresser Inc. and also announced it will buy assets for 1.6 billion dollars from Citigroup Inc. Shares of aluminum producer Alcoa Inc also increased. The S & P 500 Index fell 0.07 percent in 1160 points from the ten sectors of the index, the least is known telecom companies and the most energy. The Nasdaq Composite Index fell 0.80 percent to 2381 points. Data on Employment Agency revealed that in September lost 39 thousand jobs instead discovered 20 thousand new as predicted – the first loss positions in seven months. Despite the negative report on employment encourages bearish sentiment, it also feeds speculation that the Fed may take further actions to support the U.S. economy.
The yield on the 2-year and 10-year U.S. government bonds hit a record low. In early November, the Fed is expected to decide on acquisition of additional quantities of U.S. bonds.

The Fear prevents economy recovery in USA

Viliyana Filipova — Tue, 05 Oct 2010 11:49:15 +0000

Although U.S. investments in fixed capital rose moderately this year, this growth was much weaker than the levels that had to be reached, given the impressive increase in corporate profitability, wrote in the Financial Times comment former President of Federal Reserve Alan Greenspan. Combined with the collapse in long-term illiquid investments of households that undermined economic recovery, he said. These problems – the result of widespread private sector concerns about the future of America – blurred largely if not wholly, effects of fiscal stimulus to the administration. Moreover, the implementation of similar government programs alone causes concerns. Instinctive reaction of investors and households to uncertainty is to distance themselves from anything that requires an accurate forecast for the future. For non-financial corporations (creating a half of gross domestic product of USA), distancing is best measured by the percentage of cash flow allocated to illiquid long-term fixed investments. In the first half of 2010 this share fell to 79 percent – the lowest level in 58 years, from when actually keep statistics. The corresponding growth in investments in liquid assets after the bankruptcy of Lehman, was fastest in postwar history, reaching $ 400 billion. By mid-2010’s liquid assets rose to 1.8 trillion dollars – the highest share of total assets of nearly half a century. Without this unprecedented diversion of cash flows, the growth rate of capital expenditure on non-financial corporations would be twice as high compared with moderate growth we see in the first half of the year.
In such an environment premiums in share capital (the return of a share over that of government bonds, which are considered risk-free) significantly increased. Assessment JPMorgan, these premiums are currently on the 50-year high. U.S. households have shifted their income from illiquid real estate and consumer goods to capital repayment of mortgages and consumer loans. Commercial banks demonstrate similar low tolerance for risk and to some extent to credit secured by illiquid assets. About one trillion dollars remain virtually unused, as interest rates the Fed is anchored to only 25 basis points. Meanwhile, commercial banks are not looking for higher returns through increased lending. Just this growing distrust of illiquid assets explains much of the anemic recovery in the U.S.. Investment in construction, almost all long-term, declined by 43% from record levels in 2006 and recorded the sharpest falls in the category of fixed assets. The lack of tolerance for illiquid investment risks is in contrast with the current relatively low spreads on corporate bonds. Once an investment portfolio of 10-year, liquidity, corporate bonds can be sold in practice as it is the equivalent of a very short asset that has a high cost and volatile profitability. The difference between liquid and illiquid assets is no fiscal reason corporations whose assets are largely illiquid, have greater equity reaching 45% of total assets at the end of 2006 (just before the crisis) than 10% for commercial banks. In these extremely troubled days is not surprising that disputes are rising on the right approach to deal with the situation. Almost everyone agrees that the active intervention of the U.S. administration immediately after the bankruptcy of Lehman had been correct. Support of U.S. banks, the Fed’s support for the stock and currency markets were key to limit the financial collapse. The cost of fiscal incentives, however, was the subject of extensive debate. Fiscal incentives – Output reduced taxes and increased federal spending – is about 480 billion dollars. From the initiation of programs in early 2009 over the same period the overall decline in fixed capital investment measured in terms of long-term average share of cash flows is around 325 billion dollars. Most investors attribute their insecurity to the collapse of economic activity, but after the release of the recession, that feeling remains widespread due to restructuring the financial system and huge federal deficit. The main issue of course is how to shrink deficits and the extent to slow frenetic pace of adopting new regulations to allow investors to overcome their sense of fear of the future. This process will be accelerated if the premiums are lower the share capital and share prices rise accordingly. This in turn would cause an increase in capital investment and consumption and economic growth will eventually lead to a much needed drop in unemployment.

USA extended the embargo against Cuba

Viliyana Filipova — Fri, 03 Sep 2010 05:32:16 +0000

The U.S. President Barack Obama continued for one year trade embargo against Cuba. President underlines that punitive measures “comply with the national interests of the United States. Thus, sanctions remain in force until September 14, 2011. Trade embargo in 1962 and aimed to overthrow the communist government of the island, prohibits links to U.S. companies in Cuba. The only exception is allowed for trade in agricultural products and some medicines. The unofficial position of Cuba is that the embargo restricts access to so many products that compels people to resort to piracy, says Reuters. Several weeks after the premiere of the comedy “Murderers” in the U.S., the film can now be seen in the cinemas of communist Cuba about 9 U.S. cents. Strip adventures of Ashton Kutcher as a CIA assassin and is available on DVD. The problem is that the film will be officially released on DVD on September 7 in the U.S. and even then, because the U.S. embargo against Cuba, it can spread to the island. The years of embargo against Cuba cost the American business and countless missed opportunities at the same time the island became a haven for pirated goods. Although the embargo prohibits U.S. companies such as Microsoft’s software export to Cuba, the island’s most computers have installed unlicensed versions of the operating system.
Pirated copies of Windows 7 available for months on the black market, while last hit movie, James Cameron’s “Avatar” is broadcast on Cuban national television in February. “The reality is that American products and services offered in Cuba whether companies that manufacture them, sell them there or not,” said Jack Kolvin, vice president of the National Foreign Trade Council. “Worrying point is that U.S. companies get nothing for it,” he added. According to the Washington-based Business Software Alliance in 2009 63% of software in Latin America worth 6.2 billion dollars was unlicensed. In Cuba, the proportion of pirated software is about 80%, if not higher, analysts indicate. “Until you fix your relationship as the two governments begin to talk and do not establish diplomatic relations, ensuring the rules of doing business, you can not solve the problem of piracy,” says Kolvin. In April, Obama has removed many restrictions on travel to Cuba for U.S. citizens of Cuban origin.

Ten US banks spent 16.3 million USD for lobbying

Viliyana Filipova — Wed, 01 Sep 2010 13:02:30 +0000

Ten U.S. banks that have received assistance with rescue money taxpayers have spent over 16 million dollars for lobbying during the first six months of the year. Money is spent to influence the participants in the debate on financial sector reform in the U.S. The regulatory data show that the ten banks that have received the largest share of state aid in 2008 and 2009 spent a lot to influence the views of members of Congress, representatives of the White House, Treasury, Federal Reserve, and some of the federal agencies involved in designing the new regulatory framework. “I’m not surprised that these banks have spent so much money because I saw every day how it happens,” said Ed Mirtsvinski, director of the US Public Interest Research Group. He said reform of the financial sector have worked over 2000 lobbyists. The new regulatory framework, signed by President Barack Obama in July, with volumes in 2300 pages and outlines new rules for derivative trading, charging and regulation of transactions with debit and credit cards. Many of the new rules laid down by banks as too harsh and cause discontent. The sum of 16.32 million dollars set aside for lobbying during the first half, with 26 percent more than the money allocated to this activity for the same period last year.
Most active lobbyists were JPMorgan Chase, which received 3.03 million dollars in the first half. Spent amount of Citigroup is 2.78 million dollars, and Goldman Sachs spent 2.77 million dollars. Top five is completed by Bank of America and Wells Fargo, which were separated by 2 million dollars. None of the financial institutions did not wish to comment on what was spent this money ends of AP material.

Global foreign direct investment will reach 1.2 tillion USD in 2010

Viliyana Filipova — Sun, 18 Jul 2010 17:25:49 +0000

The Global foreign direct investment (FDI) reached a new nadir in the second half of 2009, then had a modest recovery in the first part of this year, which raised optimism about prospects for FDI out annual survey of global trends in investments of the United Nations Conference on Trade and Development (UNCTAD). Recovery appears to gaining strength as global FDI is expected to surpass 1.2 trillion. dollars in 2010 to reach 1.3 to 1.5 trillion. dollars in 2011 and to near 1.6 to 2 trillion. in 2012, however, these perspectives on foreign direct investment are filled with risks and uncertainties, including that global economic recovery seems fragile at this point. For 2009, the conference reported nearly 40% decline in global FDI. Some major changes in trends in global FDI preceded global crisis and is likely to escalate in the short and medium term, the report provides. The relative importance of developed economies and transition economies as destinations and sources of global FDI is expected to continue to increase. Although FDI inflows to developed economies and economies in transition decreased by 27% in 2009 and outflows of FDI from these two groups of economies have shrugged by 21%, they are still made almost half of the inflows of foreign direct investment in 2009 , and have provided a quarter of global FDI outward.
The trend of further contraction in manufacturing FDI in comparison with those in the service sector and primary sectors most likely to continue. Because of cross-border mergers and acquisitions manufacturing sector was most affected in 2009, showing a decline of 77% compared to 2008 contraction in the primary sector and service sector was slightly more pronounced as a whole, 47% and 57% respectively. While some industries in these sectors were affected – the value of transactions in the financial sector, for example, fell sharply by 87%. Large emerging markets continued to perform well. Although the U.S. remained the main recipient of FDI in 2009, China is second. Half of the six major destinations for foreign investment are now developing economies or economies in transition to gain positions and as important sources of global FDI flows. Transnational corporations from developing economies are more optimistic than corporations in developed countries and they expect that their foreign investment will recover more quickly, says the report. In addition, global investors have shown increasing interest in developing economies, especially in South, East and Southeast Asia. Parties that are particularly attractive investment points are Brazil, Russia, India and China.

Regional deficits in USA are scaring the investors

Viliyana Filipova — Mon, 05 Jul 2010 03:39:15 +0000

The investors are worried that increased the risk of non-performing the duties of local authorities in the U.S.. Is increasing evidence that some regions are facing the same difficulties to curb the budget deficit and pension system, as some eurozone countries. The yield on certain municipal bonds related to infrastructure projects has increased compared with that of government treasury bonds because of fears that the difficult financial local authorities will have problems paying their debts, says the Financial Times. Data Release of borrowing costs to local governments (in absolute terms) remain relatively low in historical perspective, thanks to high-liberal monetary policy of the Federal Reserve (U.S. central bank). Any variation in the yield of municipal bonds, however, will be closely monitored by investors, since they assume that the fiscal concerns about the eurozone could be conveyed in the USA. “In the second half there is a risk investors to shift its attention from Europe to the U.S.,” said Robert Parker, senior adviser at Credit Suisse Securities. He said parts of California and individual cities in the states Illinois, Michigan and New York are among the most vulnerable. “Inevitably, concerns among investors about these cities will be reflected in widening the spread on yields of municipal bonds,” he says.
If spreads remain high, the cost of loans to local governments will increase, which in turn will put under pressure and the federal budget. According to the National Conference of State Legislatures several states are facing deficits amounting to 89 billion dollars for fiscal 2011, which for most of them started on July 1st. Municipalities could stop service their debts, and according to the state in which they are located, to declare bankruptcy. If you go there, which currently is not expected, many say they are likely to receive federal aid. The sector of municipal bonds were little known cases of non-performing its obligations. This threat, however, came to the fore because of the problems that some states have to balance the budget after years of lower revenues due to weakening and federal incentives.