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Jun 19, 2013

Our Broken Social Contract: The New York Times: ALERT FGC BOLSA - FGC FINANCIAL MARKETS; June 19, 2013.


Compiled: June 19, 2013 10:38:25 PM


Our Broken Social Contract
At their core, are America’s problems primarily economic or moral?

Asian Latest Markets News, at the time; June 19, 2013.


Hong Kong stocks hit after Fed, before China data HONG KONG (MarketWatch) -- Hong Kong stocks tumbled early Thursday after the Federal Reserve indicated plans to scale back its bond purchases, with worries about the health of the Chinese economy also weighing on sentiment. The Hang Seng Index sank 1.7% and the Hang Seng China Enterprises Index tumbled 2.2%, with markets looking ahead to HSBC's preliminary result of a survey on Chinese manufacturing sector. The Shanghai Composite lost 0.7%, dropping further after ending Wednesday's session at a six-month low, amid lingering worries over a recent rise in interbank interest rates. Losses in Hong Kong were led by the property sector, with China Overseas Land & Investment Ltd. losing 3.5% and Henderson Land Development Co. shedding 2.7%. Also weighing on the market, heavyweight China Construction Bank Corp. dropped 2.6% ahead of the HSBC data.  
Australia, Korea lead Asian stock fall after Fed Asian stocks fall after the Federal Reserve signals it may gradually wind down its bond purchases if the U.S. economy continues to improve, weighing down shares on Wall Street. 9:21 p.m. Today
Australia stocks hit as Fed talks slower stimulus LOS ANGELES (MarketWatch) -- Australian stocks fell early Thursday, declining after Wall Street slid following indication from the U.S. Federal Reserve that . The S&P/ASX 200 index stumbled 1.4% to 4,795.30, with banking issues, which offer high-yield dividends, rattled as the Australian dollar [s:CUR_audusd] was knocked below 93 U.S. cents. Shares of Westpac Banking Corp. lost 2.4%, and shares of Commonwealth Bank of Australia and Macquarie Group Ltd. dropped more than 2% each. Mining stocks suffered as prices for gold and other metals skidded lower after the Fed's announcement. Fortescue Metals Group Ltd. was off 3.7%, gold miner Newcrest Mining Ltd. shares gave up 1.6% and BHP Billiton Ltd. moved down 1.8%. The benchmark S&P/ASX 200 was facing its third consecutive loss. 8:30 p.m. Today

Senate Confirms Economic Adviser as Trade Representative, by The Associated Press: The New York Times: ALERT FGC BOLSA - FGC FINANCIAL MARKETS; June 19, 2013.


Compiled: June 19, 2013 10:10:19 PM

Senate Confirms Economic Adviser as Trade Representative
Michael Froman, currently a senior White House economic adviser, will lead an agency involved in two significant trade deals.

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Dow Skids 200, Stocks End Down 1% as Fed Hints at Stimulus Slowdown: Wall Street at Close Report by CNBC; June 19, 2013.

Stocks accelerated their selloff in the final hour of trading to end near session lows Wednesday, after the Federal Reserve said it will maintain its bond-buying program, though Chairman Ben Bernanke hinted that the central bank plans to moderate purchases later this year.
(Read More: After-Hours Buzz: NOK, MSFT & More)

"They don't tie themselves officially into anything but it's clearly what they're going to do," said Jim Paulsen, chief investment strategist at Wells Capital Management. "I think he's more clearly said today than at any other time that he's going to taper before the end of the year, and there's a possibility he could be done by the middle of next year."
Name Price Change %Change
DJIA Dow Jones Industrial Average 15112.19 -206.04 -1.35%
S&P 500 S&P 500 Index 1628.93 -22.88 -1.39%
NASDAQ Nasdaq Composite Index 3443.20 -38.98 -1.12%

The Dow Jones Industrial Average tumbled 206.04 points, or 1.35 percent, to end at 15,112.19, wiping out most of its gains from the last two sessions. All 30 Dow components finished in the red, dragged by Verizon and AT&T. The blue-chip index logged its seventh-straight triple-digit move.
The S&P 500 slumped 22.88 points, or 1.39 percent, to finish at 1,628.93. And the Nasdaq fell 38.98 points, or 1.12 percent, to close at 3,443.20.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, finished above 16.

All key S&P sectors finished firmly lower, dragged by the defensive sectors such as telecoms and utilities.
Market Volume Is Coming Back: Trader
Parsing market reaction to the Federal Reserve's policy statement, with Jeff Saut, Raymond James; Brian Gendreau, Cetera Financial Group; Gordon Charlop, Rosenblatt Securities; and CNBC's Rick Santelli. 
Fed policymakers said in a statement the Fed would keep buying $85 billion in bonds a month and modestly raised its expectations for GDP growth for 2014, from 2.9 to 3.4 percent to 3.0 percent to 3.5 percent. But in a press conference, Bernanke said if the economy continues to improve the asset-purchasing program could start winding down towards the end of 2013 and wrap up in 2014. Interest rate hikes however, he said, are a separate issue and "still far in the future." "Wall Street traders expected exactly what the Fed delivered today: slight forecast improvements while providing a crutch to continue with its aggressive monetary policy measures," said Todd Schoenberger, managing partner at LandColt Capital. "Interestingly, the language in the statement provides a mulligan on the recent 'tapering' comments. But Wall Street has already 'traded out' those statements and bulls will now focus on the comments about the likelihood of an increase in rates not occurring until 2015. Keeping rates low indicates a continued bull run in equities for the foreseeable future." Treasury prices fell after the announcement, with the benchmark 10-year yield hitting its highest level since 2011. Gold prices briefly dipped below $1,350 an ounce for the first time in more than four weeks and the SPDR Gold Trust fell to close at its lowest level since February 2011. Major averages have been volatile since Bernanke said last month that the Fed could begin to pare back its stimulus efforts if the U.S. economy gains momentum. President Barack Obama added to uncertainty about Fed policy on Tuesday, when he gave a press interview in which he suggested that Bernanke would leave at the end of his term in January. Obama said Bernanke had "already stayed a lot longer than he wanted or he was supposed to." But Bernanke refused to address questions about his future at the central bank. Fed Vice Chairman Janet Yellen is widely seen as the leading candidate to replace Bernanke, but there are other possibilities, including former Treasury Secretary Larry Summers. Yellen's views are viewed as similar to those of Bernanke.
In company news, FedEx reported a bigger-than-expected quarterly profit, thanks to its ground shipment business and amid lower jet fuel prices. But the company, considered a bellwether for economic activity, issued disappointing guidance. Adobe surged to lead the S&P 500 gainers after the software maker beat earnings expectations and said it expects the number of paid subscribers for Creative Cloud in the current quarter to top the 221,000 subscribers who signed up in the second quarter, increasing the total to 700,000. Micron Technology, Red Hat and Jabil Circuit are expected to post earnings after the closing bell. Men's Wearhouse declined after men's apparel retailer said it terminated CEO George Zimmer, providing no immediate reason for the ouster. In addition, the company postponed its annual shareholder meeting to renominate the existing slate of directors without Zimmer. Following the termination, Zimmer told CNBC, "Over the past several months I have expressed my concerns to the Board about the direction the company is currently heading. Instead of fostering the kind of dialogue in the Boardroom that has in part contributed to our success, the Board has inappropriately chosen to silence my concerns through termination as an executive officer." Meanwhile, Dish Network Corp said it would not make a new offer to buy No. 3 Sprint Nextel, and would instead focus on its tender offer for Clearwire Corp.The decision may be good news for Japan's SoftBank, which is also trying to buy Sprint. On the economic front, interest rates on home mortgages gained for the sixth-straight week to hit their highest level in over a year, according to the Mortgage Bankers Association, pushed higher by worries that the Fed could slow its stimulus program sooner than expected.
By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: (Read More: Bernanke Is 'the Ultimate Lame Duck': Langone)

U.S. stocks sink, yields rise after Fed move: Wall Street at Close Report by MarketWatch; June 19, 2013.

By Kate Gibson, MarketWatch 
NEW YORK (MarketWatch)U.S. stocks fell sharply and Treasury yields surged on Wednesday after Federal Reserve Chairman Ben Bernanke said the central bank may scale back its bond purchases this year, depending on the economic outlook. 

Diane Swonk on Fed’s outlook
If the FOMC could be summed up in one take, it would be that the Federal Reserve’s policy shifts will remain data-driven and nothing is predetermined, according to Mesirow Financial chief economist Diane Swonk. 

Benchmark indexes initially cleared their losses after the Fed ‘s policy statement, then fell hard as Bernanke said the Federal Open Market Committee currently anticipates moderating the monthly pace of purchases later this year, so long as incoming data support the Fed’s forecast. 

“The market was looking for some kind of commitment of no tapering, and he (Bernanke) is saying the labor market is improving,” said Joe Heider, principal at Rehmann Financial in Westlake, Ohio.
In its announcement, the Fed said it would continue to purchase $85 billion in bond purchases each month, but noted that the outlook for the economy and the labor market has improved since the fall. The FOMC reiterated that it was ready to hike or cut the pace of its asset buys, depending on the labor market and inflation. 

Stocks, which were modestly lower before the decision, fell more after the statement and forecast. They lost further ground after Bernanke, at a press conference, said depending on the economic data, “the Committee currently anticipates that it would be appropriate to moderate the monthly pace of purchases later this year.” 

Treasury prices fell, with the yield on the 10-year note 10_YEAR +0.04% used in setting mortgage rates and other consumer loans soaring to 2.33%, the highest level since March 2012.
With equities down and Treasury yields rising, “the market is suggesting that tapering could begin, even though Bernanke is saying no at this point,” said Heider.
“Markets love certainty; they don’t like uncertainty. When are they going to start backing off their purchases, and when will we have rising interest rates? We don’t know, so therefore we don’t like it,” added Heider. 

Extending its streak of triple-digit moves into a seventh session, the Dow Jones Industrial Average DJIA -1.35% lost 206.04 points, or 1.4%, at 15,112.19. 

“The market is trying to position itself for a less-active Fed, and maybe a more normalized interest-rate environment,” said Randy Frederick, director of active trading and derivatives at Charles Schwab, of the market’s volatile state, in display ever since Bernanke indicated in testimony to Congress four weeks ago that the central bank might begin scaling back its bond purchases should the economy show sustainable improvement. 

The S&P 500 index SPX -1.39% fell 22.88 points, or 1.4%, to 1,628.93. Telecommunication stocks paced declines among its 10 major sectors, with high dividend payers getting hit hardest as yields climbed. 

Shares of FedEx Corp. FDX +1.07% rose 1.1% after the airfreight company reported a better-than-expected profit. 

Adobe Systems Inc. ADBE +5.58% climbed 5.6% a day after the design-software maker reported second-quarter profit that beat expectations. 

Tesla Motors Inc. TSLA +1.25% jumped 1.3%. The electric-car maker late Tuesday said it was recalling some of its 2013 Model S cars due to a mounting defect involving rear seats. 

Sprint Nextel Corp. S -4.37% declined 4.4% after Dish Network Corp. DISH +0.46% opted to not hike its bid for the wireless carrier. 

The Nasdaq Composite COMP -1.12% lost 38.98 points, or 1.1%, to 3,443.20.
For every stock rising, nearly six fell on the New York Stock Exchange, where 760 million shares traded. 

Composite volume surpassed 3.5 billion. 

The U.S. dollar DXY 0.00% gained against other currencies including the yen USDJPY +0.29% .
On the New York Mercantile Exchange, crude oil CLN3 -0.41% lost 20 cents to $98.24 a barrel and gold ended floor trade at $1,374, up $7.10 an ounce. 

In its announcement, the Fed said it would continue to purchase $85 billion in bond purchases each month, but noted that the outlook for the economy and the labor market has improved since the fall. The FOMC reiterated that it was ready to hike or cut the pace of its asset buys, depending on the labor market and inflation. 

Wall Street had risen sharply both Monday and Tuesday on thinking the Fed would not signal any immediate plan for scaling back on its $85 billion in monthly bond purchases. 

Kate Gibson is a reporter for MarketWatch, based in New York.

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Gulf Banks Debating Currency Peg, Gregor Stuart Hunter: MoneyShow Investors Daily Alerts; June 19, 2013.

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Fed More Optimistic About Economy but Maintains Stimulus: The New York Times Alert FGC BOLSA - FGC FINENCIAL MARKETS; June 19, 2013.


Compiled: June 19, 2013 02:37:09 PM

Fed More Optimistic About Economy but Maintains Stimulus
Federal Reserve policy makers, more confident about the economic recovery, on Wednesday maintained their current pace of monetary stimulus.

European stocks drop with Fed update in sight: European Markets at Close Report by MarketWatch; June 19, 2013.

By Sara Sjolin, MarketWatch 
LONDON (MarketWatch) European stock markets moved lower in choppy action on Wednesday, as investors remained cautious ahead of the much-anticipated monetary-policy decision from the U.S. Federal Reserve. 

“Markets are clearly in wait-and-see mode and won’t be moving much until we get the Fed statement,” said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets.
“Investors don’t want to take too big positions ahead of this because it will happen during U.S. trading hours. That makes it difficult to trade and explains why markets have been flat for most of the day,” he added. 

The Stoxx Europe 600 index XX:SXXP -0.23%  ended the session 0.2% lower at 292.36, after swinging between small gains and losses for most of the day. 

The next 24: Waiting for Bernanke
Investors remain cautious Wednesday ahead of the Fed statement and news conference. Photo: Associated Press. 

The index has lost 5.3% over the past month on concerns the Federal Reserve will start scaling back its asset purchases if data continue to improve. 

“Normally the Fed is careful not to spook the markets, so I think Bernanke will try to take away some of the uncertainty, while also keeping some flexibility for adjusting monetary policy,” said Gijsels.
Among notable movers in the pan-European index, shares of Nordea Bank AB SE:NDASEK -4.70%  gave up 4.7% to 75.05 Swedish kronor ($11.74) after the Swedish government sold 260 million ordinary Nordea shares at 75 kronor. The sale reduced the government’s share holding in the bank to 7% from 13.4%. 

Shares of Aggreko PLC UK:AGK -5.25%  dropped 5.3% after UBS cut the temporary-power products firm to neutral from buy.

All eyes on Fed

For most investors, however, the focus was firmly on the U.S. Fed’s policy meeting later in the day. A statement is expected after the European markets close, followed by a news conference by Chairman Ben Bernanke, where market participants will be looking for any hints about tapering the bank’s quantitative-easing program. Read: How to trade the Federal Reserve decision 
After a strong spring-rally boosted by central bank liquidity, markets started selling off in late May on worries the U.S. central bank will soon scale back its aggressive easing program. 

Getty Images Enlarge Image
All eyes are on Bernanke on Wednesday as the Fed concludes its two-day policy-setting meeting.
“Today could dictate the rest of the summer and decide whether it will be one of very short or long nights for markets. The reality is that not much has changed data-wise since Bernanke’s [Joint Economic Committee] testimony on May 22, and therefore he has an opportunity to say that the Fed are still data-dependent and leaving no set timetable for tapering,” said analysts at Deutsche Bank in a note. 

“However, we have to acknowledge that the minutes to the May 1st meeting were on the hawkish side and there are those in the Fed that want to start to pull back from the current levels of stimulus. Our best guess is that the FOMC statement will actually be pretty similar to the last one but that the Q&A will be where all the fun will start,” they added. Read: 7 charts that tell the Fed not to taper QE3
U.S. stocks traded lower on Wall Street.


Back in Europe, shares of Alcatel-Lucent FR:ALU +6.17%  jumped 6.2% after the telecoms-equipment firm announced a cost-cutting plan aimed at trimming 1 billion euros ($1.34 billion) and selling at least €1 billion of assets by 2015. 

France’s CAC 40 index FR:PX1 -0.55% , however, dropped 0.6% to 3,839.34. Shares of oil giant Total SA FR:FP -0.59%   TOT -2.15%  fell 0.6%, tracking oil prices lower

Germany’s DAX 30 index DX:DAX -0.39%  gave up 0.4% to 8,197.08. 

The U.K.’s FTSE 100 index UK:UKX -0.40%  lost 0.4% to 6,348.82. 

Shares of BT Group PLC UK:BT.A -1.75%  dropped 1.8% after the telecom firm said Chief Executive Ian Livingston will take up the role as U.K. Minister of Trade and Investment in September. BT Group named Gavin Patterson as the successor. 

Also of interest in the U.K., minutes from the Bank of England’s June meeting showed the rate-setting committee voted unanimously to keep interest rates unchanged at a record low 0.5%, while three out of the nine members voted in favor of increasing the bank’s asset purchases.
Outside the major index, shares of Konecranes Oyj FI:KCR1V -6.71%  slid 6.7% after the industrial crane firm lowered its full-year outlook

Sara Sjolin is a MarketWatch reporter based in London. Follow her on Twitter @sarasjolin.