Today, the British economy released its fourth quarter preliminary GDP data showing that economy rebounded to 0.3% from 0.2% contraction in the third quarter. The reading showed improvement but it will be subject to another revision. Annually, GDP came in at -3.3% from -3.2%, according to today’s report.
Japanese & China Report Strong Economic Data
February - 26 - 2010
Today will be a critical day for major currencies with a number of major economic releases. Germany and the Eurozone CPI will be the key highlights of the morning, with the latter forecast to slow dramatically by -0.8% MoM, thereby keeping interest rate expectations for the Euro area well and…
Euro Zone M3 Money Supply Expands After Two Months Of Contraction
February - 26 - 2010
On Thursday, the news flow on Greece and the correction on the stock markets were euro negative factors, but the test of the key 1.3443 support level failed. This might be an indication that enough bad news for the euro has been priced in, at least for now. Ongoing BOE…
Brad Miller’s Old Solutions to New Mortgage Problems
February - 26 - 2010
President Obama’s key initiative on the mortgage situation, the Home Affordable Modification Program (HAMP), has serious problems. Besides low modification rates, the biggest problem has to do with borrowers being underwater. It’s well known that being underwater is correlated with higher default rates, defaults that destroy value through foreclosures for homeowners and add large costs to already struggling municipalities.
It is one thing if these modifications were mostly ineffectual. But, as was found in a recent report issued by the State Foreclosure Prevention Working Group, 70% of modifications lead to mortgages with a higher balance, and are then deeper underwater than when they started. This is the exact opposite of what we want to happen.
Short-Term Rates Cause Long-Term Problems
February - 26 - 2010
Andy Sutton submits:
One of the first orders of business that goes on during most initial meetings with a mainstream financial advisor is an inventory of assets, income, and other particulars. What generally follows next is a series of pie charts that lumps you into one of three or four categories along with ‘projections’ of your future wealth if you’ll only contribute $3,000/year to that IRA for two decades. We’ve all heard the spiel. By contributing a mere pittance, you too can retire to "Millionaire Acres" in just 30 years. While there have been many candidates for "Financial Crime of the Century" (even though we’re only 10 years in), this one has to rank right up there.
We have chronicled the damage that Bernanke’s pursuit of QE and near-zero rates have done to savers. Mainly, we’ve focused on short-term implications for those investors who rely on their savings to create income for immediate consumption. But what about the folks who are looking at the pie charts and the promises of over a millions dollars in retirement income? Ah, the powers of compounding. Yes, I have in front of me the literature from 2 national financial service firms that strongly suggest that you too can retire a millionaire for as little as $60/week. Of course there are no guarantees, but the details and assumptions to this rosy scenario on steroids are buried in fine print that you’d need an electron microscope to read.
Six Reasons to Be Bearish the Euro in the Coming Months
February - 26 - 2010
Cliff Wachtel submits:
EUR/USD Outlook for the Coming Months
Here’s the trend for the EURUSD for nearly the past year (click to enlarge).
Why Is Telestone Technologies So Volatile?
February - 26 - 2010
Southhill Partners submits:
Telestone Technologies (TSTC), a small wireless equipment manufacturer in China, has attracted quite some attention since late last year when its stock price ran from below $5 to over $20 in several months. Riding the opportunity of the 3G buildup in China, Telestone Technologies supplies wireless coverage products to the three wireless operator giants: China Mobile (CHL), China Unicom (CHU) and China Telecom (CHA), and is expected to double its revenue and earnings in 2009.
However, TSTC’s stock is notoriously volatile, often moving up or down 10% in a single day. After hitting an all-time high of $24 in January, it plunged to a low of $12 intraday on February 1st and is currently trading at around $20.
Shares seen up; focus on macro-economic data (Reuters)
February - 26 - 2010
Futures for the Dow Jones industrial average, the S&P 500 and the Nasdaq 100 rise 0.1 to 0.3 percent, pointing to a rise on Wall Street on Friday, the last trading day of the month.