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Jan 7, 2010



Fed Shouldn't Wait Too Long to Tighten Policy: Hoenig
The U.S. Federal Reserve should tighten policy sooner rather than later to contain longer-term inflation pressures and avoid sowing the seeds of the next crisis, a top Federal Reserve policy-maker said Thursday.
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Weekly Claims Show Mild Rise as Jobs Climate Improves
The number of U.S. workers filing new applications for unemployment insurance rose less than expected last week and a measure of underlying trends hit a nearly 16-month low, underscoring the improving labor market tone.
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Political Pressure Rises for Democrats to Boost Employment
President Barack Obama's top domestic test this year is to cut unemployment, but his push for more spending on jobs reflects political need more than economic necessity and any new stimulus is likely to be small.
»read more

CNBC 360 Planet of the Apps: A Hand-Held Revolution - Tonight 10p ET|PT
Hosted by CNBC's Scott Wapner, the one-hour documentary looks at the recent "app" explosion and how they have changed the way we live. Meet the entrepreneurs behind the current day gold rush. From engineers to everyday people, see how anyone can become an app developer.
»More about the show

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1. Crisis Just Beginning: MIT Economist 
Simon Johnson, an economist at MIT Sloan School of Management, says the crisis is just beginning.

2. NY Fed to AIG: Withhold Swap Info 
During the height of the financial crisis, the Federal Reserve Bank of New York told AIG to withhold details from the public about the insurer's payments to banks. CNBC's Mary Thompson and Steve Liesman discuss.

3. Morningstar Domestic Manager of the Year 
The Fairholme Fund's Bruce Berkowitz, Morningstar's domestic fund manager of the year, shares his investment secrets with CNBC.

4. CES: Panasonic's Really, Really Big 3D TV 
Panasonic is at CES with a 152-inch 3D television demo model. The company's chief technology officer, Eisuke Tsuyuzaki, talks about the technology with CNBC.

5. Stop Trading, Listen to Cramer! 
Mad Money host Jim Cramer shares his stock picks with CNBC's Erin Burnett.

Press Release : FDIC ISSUES Intrest Rate Risk Advisory

Press Release
FDIC Issues Interest Rate Risk Advisory

January 7, 2010
Media Contact:
David Barr (202) 898-6992

The Federal Deposit Insurance Corporation (FDIC), in coordination with the other member agencies of the Federal Financial Institutions Examination Council (FFIEC), released an advisory today reminding institutions of supervisory expectations for sound practices to manage interest rate risk (IRR). This advisory, adopted by each of the financial regulators, reiterates the importance of effective corporate governance, policies and procedures, risk measuring and monitoring systems, stress testing, and internal controls related to the IRR exposures of depository institutions. It also clarifies elements of existing guidance and describes some IRR management techniques used by effective risk managers.
The financial regulators recognize that some IRR is inherent in the business of banking. At the same time, institutions are expected to have sound risk-management practices to measure, monitor, and control IRR exposures. The financial regulators expect each depository institution to manage its IRR exposures using processes and systems commensurate with its complexity, business model, risk profile, and scope of operations.
The financial regulators remind depository institutions that an effective IRR management system does not involve only the identification and measurement of IRR, but also addresses appropriate actions to control this risk. If an institution determines that its core earnings and capital are insufficient to support its level of IRR, it should take steps to mitigate its exposure, increase its capital, or both.
The member agencies of the FFIEC include the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the FFIEC State Liaison Committee. The FDIC currently chairs the FFIEC.
Attachment: FFIEC Advisory on Interest Rate Risk Management - PDF (PDF Help)
# # #
Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 8,099 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars – insured financial institutions fund its operations.
FDIC press releases and other information are available on the Internet at, by subscription electronically (go to and may also be obtained through the FDIC's Public Information Center (877-275-3342 or 703-562-2200). PR-2-2010

The Economist : Business this week

Business this week

Jan 7th 2010
From The Economist print edition

Novartis, a Swiss drugmaker, agreed to pay Nestlé, the world’s biggest food company, $28.1 billion for Nestlé’s 52% holding in Alcon. The American eye-care company is best known for its contact-lens products, but also has significant businesses in eye-treatments and surgery. Novartis bought an initial 25% stake in Alcon from Nestlé in 2008. Including an offer to buy out minority shareholders, the deal is worth $49.7 billion, the biggest takeover in Swiss corporate history. See article
At the same time, and in another sign that it is refocusing on its core business, Nestlé said it would buy Kraft Foods’ American frozen-pizza division for $3.7 billion. Nestlé said the deal was a “natural fit”, as it sells “wholesome and nutritious frozen food”.

Kraft then announced that it would put the proceeds from selling its pizza division towards increasing the cash proportion of its hostile bid for Cadbury. This is partly in response to angry Kraft investors, such as Warren Buffett, who argue that Kraft’s proposal to issue up to 370m new shares to acquire Cadbury would destroy shareholder value.
Google entered the smartphone market with Nexus One, which runs on the web giant’s Android operating system and is made by HTC of Taiwan. Advertised as a rival to Apple’s iPhone, the Nexus One will be sold in an “unlocked” state to let users choose their own wireless provider.
In a speech at the annual meeting of the American Economic Association, Ben Bernanke again blamed the worst financial crisis in decades on weak regulatory oversight that failed to put a stop to the lax lending practices that precipitated the housing bubble. The chairman of the Federal Reserve has been deflecting criticism from those in Congress who want to curb the central bank’s powers. Some say it was mostly the Fed’s loose monetary policy that caused the bubble.
A $24 billion lawsuit filed on behalf of investors in four luxury resorts in the American West and the Bahamas accused Credit Suisse of running a “predatory” scheme that inflated the value of the properties to burden the owners with debt so that it could take over. A spokesman for the Swiss bank said the claims were “without merit”.

Japan’s Sumitomo Mitsui Financial Group became the latest big financial institution to bolster capital by announcing another huge share issue, which it hopes will raise ¥800 billion ($9 billion). It also confirmed that Goldman Sachs will convert ¥100 billion of SMFG preferred shares into common stock. A committee in Basel that sets capital standards for banks worldwide has called for a shake-up in the way capital is measured, with more weight given to equity.
Reacting to a slump in Japan Airlines’ share price, which fell by nearly a quarter in a day, the Japanese government doubled the credit facility it is extending to the stricken carrier, to ¥200 billion ($2.2 billion). JAL’s share price rallied in response. But it fell again when it emerged that the government is still weighing the option of pushing the airline into bankruptcy protection, which would make it one of Japan’s biggest corporate failures. A decision is expected later this month. See article
Analysts pored over the details of Rusal’s recently published prospectus for its initial public offering in Hong Kong. Stockmarket officials delayed their approval for the aluminium company’s listing, the first in Hong Kong by a Russian business, amid concerns about the risks posed by its huge debt load. Retail investors will not be allowed to buy the shares. See article
Total, a French oil company, joined the recent rush of big energy companies into American shale gas by agreeing to pay up to $2.25 billion for a stake in Texas’s Barnett Shale. The attractiveness to energy companies of comparatively clean natural gas was underscored last month by Exxon Mobil’s $41 billion acquisition of XTO Energy, a gas producer in Texas.
Dubai officially opened the $1.5 billion Burj Khalifa tower, which at 828 metres is the world’s tallest building. It will also contain the planet’s highest mosque and swimming pool. In mid-December Dubai received a $10 billion bail-out from Abu Dhabi, a wealthier neighbouring emirate, to aid Dubai World, a state-backed conglomerate which faces a debt crisis caused by its commercial-property arm.

Bitterly cold temperatures in America as far south as Florida broke some local records and snow caused travel havoc in Britain, where perennial gripes were aired about icy roads not being gritted. The wintry weather helped push the price of oil to a 15-month high as demand for heating oil rose.

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